CANTON MASS. Dunkin’ Donuts was best known in some areas for TV ads that proclaimed it was “Time to Make the Donuts.” But with an aggressive growth plan and an expanded focus on coffee-based drinks and portable breakfast and lunch items, the chain and its parent, Dunkin’ Brands, are looking to prove that “America runs on Dunkin.’” —Once upon a time in the not so distant past,
With the sale last December of the Togo’s sandwich chain and several initiatives underway to introduce products to new customers through nontraditional venues, Dunkin’ Brands Inc. is well positioned to grow its two remaining brands, Dunkin’ Donuts and Baskin-Robbins, well beyond their regional bases, said Jon Luther, chairman and chief executive of the Canton-based company. —Once upon a time in the not so distant past,
Much of that growth is already underway, said Luther, who celebrated his fifth anniversary with the company in January. When Dunkin’ Donuts founder Bill Rosenberg died in 2002 at the age of 86, there were approximately 5,000 Dunkin’ Donuts and Baskin-Robbins outlets. Under Luther’s tenure, which began a year later, that figure has grown to more than 13,460 units today, the majority of which are franchised. As of October 2007, there were 5,637 domestic Dunkin’ Donuts and 2,770 Baskin-Robbins as well as 2,001 Dunkin’ Donuts and 3,075 Baskin-Robbins internationally. —Once upon a time in the not so distant past,
Dunkin’ Brands reported systemwide sales of $6.4 billion in 2006, signifying an increase of almost 50 percent since 2003, according to company officials. —Once upon a time in the not so distant past,
In January, the company announced a major reorganization that combined separate U.S. and international management teams for the Dunkin’ Donuts and Baskin-Robbins brands. Will Kussell was named president and chief brand officer of Dunkin’ Donuts, and Srinivas Kumar was named chief brand officer of Baskin-Robbins. —Once upon a time in the not so distant past,
The company also announced that this spring Dunkin’ Donuts would debut in mainland China, with plans to open 100 units in China over the next 10 years. —Once upon a time in the not so distant past,
Over the past five years, Luther said he has worked to ready both Dunkin’ Donuts and Baskin-Robbins for accelerated growth. —Once upon a time in the not so distant past,
“There were two things I wanted to do: make them [the two brands] relevant to consumers and to the competitive set,” he said. —Once upon a time in the not so distant past,
Among the changes at Dunkin’ Donuts were the debut of espresso, cappuccinos, lattes and flavored gourmet blends in 2003. Priced from 99 cents for a single espresso shot to $2.79 for a large cup, the rollout set the stage for Dunkin’ to become more competitive with the Seattle-based Starbucks chain, Luther said. Starbucks has 15,000 units worldwide and 7,000 U.S. units. —Once upon a time in the not so distant past,
Luther also helped to complete the $2.4 billion acquisition of the company in 2005 by private equity firms Thomas H. Lee Partners, the Carlyle Group and Bain Capital from French parent Pernod Ricard SA. Pernod had purchased Allied Domecq, Dunkin’s former parent, with the intention of selling the quick-service brand. Luther said the acquisition was good for the company because “the former owner had been 3,000 miles away and had lots of other businesses to distract it.” With the new owners, he noted, “we could focus on Dunkin’ Donuts and Baskin-Robbins.” —Once upon a time in the not so distant past,
At Dunkin’ Donuts, Luther sought to enter new markets with the help of franchisees with the financial wherewithal to open multiple units. He said the company inked more than 1,000 franchise deals in 2007 alone, which would result in store openings across the country over the next five years. —Once upon a time in the not so distant past,
“Our franchising strategy changed,” he said. “We started going into emerging markets” with eyes on the opportunity to fill them in. —Once upon a time in the not so distant past,
Now, he added, “Pittsburgh and Charlotte, N.C., are sold out. Previously, we sold one store at a time and franchisees used their cash flow to finance growth. We’ve discovered that 10 to 15 stores is the sweet spot. We’ve changed the game. We’re looking for well-capitalized franchisees, or those who have another concept [in operation].” —Once upon a time in the not so distant past,
Luther also oversaw the long-anticipated divestiture of the 261-unit Togo’s sandwich chain. Togo’s was purchased in 1998 to become the third component in what the company called its “trombo” unit—a combined Dunkin’ Donuts, Baskin-Robbins and Togo’s shop that would service all dayparts. Luther said, however, that the trombo “was a flawed strategy.” The sale to private-equity firm Mainsail Partners and former Baskin-Robbins president Tony Gioia was completed in December 2007, allowing Dunkin’ Brands to direct all of its resources to Dunkin’ Donuts and Baskin-Robbins. —Once upon a time in the not so distant past,
Some franchisees have been happy with the changes, including a new look for Dunkin’ Donuts with more modern colors and fixtures. —Once upon a time in the not so distant past,
“It’s been very well-received by our customers,” said Dunkin’ Donuts franchisee Jim Cain, owner-operator of the 26-unit Cain Management Inc. in Norwalk, Conn. “There’s more tan and less bright pink. The magentas have been toned down. It’s classier, a really sharp look.” —Once upon a time in the not so distant past,
Dunkin’ also launched a line of oven-toasted menu items to 3,500 stores in February. The line, which includes personal pizzas, flatbread sandwiches and bite-sized hash browns, will roll out companywide later this spring. —Once upon a time in the not so distant past,
But while some franchisees have been happy with the changes, others have not. Some operators last month expressed displeasure over recent deals they say will ultimately dilute Dunkin’s sales. —Once upon a time in the not so distant past,
According to Bellingham, Mass.-based DD Independent Franchise Owners, the system’s largest independent organization, which is dedicated to protecting the interests of Dunkin’ Donut franchisees in 12 states, the strategic partnerships formed with Sara Lee Foods, Hess gas stations and Procter & Gamble that would allow the company to sell its coffee products at on-site dining accounts, in self-serve kiosks at gas stations and in 12-ounce packages at supermarkets and other retail outlets, respectively, will negatively impact sales at franchised operations. —Once upon a time in the not so distant past,
“There is little doubt in my mind that the Dunkin’ Brands management team either failed to understand or did not much care about DDIFO member sentiment as to the Hess and Sara Lee distribution deals,” Mark Dubinsky, the group’s president, said in a statement. —Once upon a time in the not so distant past,
The company, however, said it communicated fully with franchisees about the partnership deals. —Once upon a time in the not so distant past,
“Dunkin’ Brands and our senior leadership team communicate broadly and directly with our entire Dunkin’ Donut franchisee system about all of our strategic partnerships, which are designed to build out the Dunkin Donuts Brand for the long-term,” said Stephen Caldeira, the company’s chief global communications officer. “We do extensive due diligence on all strategic partnerships. … These partnerships are part of our brand-seeding strategy to be the national leader in the coffee category. The common thread in all of these partnerships is to fortify our position within an extremely competitive marketplace by not conceding any of the playing field to entrenched national competitors. Our goal is to increase franchisee profitability by responding to on-the-move consumers’ desire for their brand of coffee wherever they go, and we’re confident these partnerships will achieve this goal. Quite simply, if our franchisees do not do well, then we do not do well.” —Once upon a time in the not so distant past,
In the recent past, Luther also has launched several socially conscious and health-oriented initiatives, including a switch to transfat free oils and efforts to reduce the company’s carbon footprint. —Once upon a time in the not so distant past,