Dunkin’ Donuts is reportedly testing delivery, eyeing the service as the next step after it launches mobile ordering next year.
Nigel Travis, chairman and CEO of parent company Dunkin’ Brands Group Inc. told CNBC Monday that delivery is “clearly a big opportunity” for the brand.
Curbside service is also under consideration, Travis said.
“The trend in this country is convenience,” he told CNBC. “So I think delivery plays very strongly. I think the next few years you’re going to see us get more and more into delivery.”
Travis didn’t say whether the fully franchised chain is testing delivery with in-house staff or a third-party provider. The latter is an increasingly common move, as tech-based providers like Postmates, DoorDash, and OrderUp move aggressively into the restaurant space with an Uber-like model of independent contractors.
Competitor Starbucks Corp., for example, is planning a test of two delivery formats in the second half of 2015. In New York, the coffeehouse operator will test “Green Apron” delivery by baristas, designed for dense urban areas. In Seattle, the company will test delivery via Postmates.
Dunkin’ Donuts’ mobile ordering app is the first step, Travis indicated. Earlier this year, the chain launched a mobile payment option using Google Wallet. This week, Dunkin’ Donuts joined the growing number of retailers using Apple Pay, which also allows users to accumulate rewards.
The challenge for Dunkin’ Donuts is that about 60 percent of its U.S. sales come from beverages, which may not travel well.
At the 35th annual Piper Jaffray Consumer Conference in New York Tuesday, Dunkin’ Brands chief financial officer Paul Carbone and Chris Fuqua, vice president of Dunkin’ Donuts brand marketing and global consumer insights and product innovation, said beverages will be a key focus going forward, including more coffee blends and espresso-based beverages, new frozen blended drinks to debut in July, and tea later this year.
The goal, Fuqua said, is to drive ritual, and the DDPerks loyalty program will play an important role as the chain shifts to more targeted marketing.
“We’re taking it from a macro segmentation, where we went after everybody, to much more micro segmentation,” Fuqua said.
More than 13 million users have downloaded Dunkin’ Donuts’ mobile app, and 3 million are loyalty club members.
The use of pre-loaded loyalty cards offers franchise operators lower transaction costs compared with credit cards, so the growth of the loyalty program will further increase franchisee profitability.
Food innovation will also continue, with new breakfast sandwiches and premium doughnut offerings, like co-branded Chips Ahoy! and Oreo limited-time offers, filled croissants, Cheesecake Squares and more, Fuqua said, but beverages will be the primary focus.
“Any dollars we ask franchisees to put into their stores will be focused on beverages,” he said.