How Drinks Helped Dunkin' Become a $9 Billion Empire

Harshit Verma Harshit Verma Shashank Bhatt Shashank Bhatt
Dec 23, 2022 8 min read
How Drinks Helped Dunkin' Become a $9 Billion Empire

Food is the most basic necessity of life. It has been like that since the beginning of time and life. For ages, we humans have tried to figure out a lot of stuff and eventually provide food for our society. As society grows as a whole, we see change everywhere. Even in the food business. Food is not just a basic necessity anymore, it has outgrown that definition of medieval times. Food is now taste and experience in the modern world and not just some source of nutrition and fuel for work.

Of all that has happened to food, one thing is supremely visible. Food has become faster, its chain has been becoming faster and faster. People want it fast and now without compromising the quality of food. Fast food stores like Mcdonald's, and Domino's are the new kitchen for the young and fast-living generation. Here in this article, we will talk about one such food joint. It is famous and has evolved so much in its lifetime and continues to evolve and reinvent the wheel every time something change in society and behavior. The name is Dunkin Donuts, the famous donut joint that got rid of the donuts from its name and its menu recently in 2018. Let us see why they left the donut alone and moved on with the beverage rage in the world.

The Name
Rebranding
The shift to Beverages
Beverages Expansion
Evolution since Inception
Conclusion

The Name

Dunkin Donuts is a popular name, it is almost everywhere in the market these days. You go to a mall and you see DD, you go to a nearby market, and you see it there too. They are a fast food chain that primarily caters to its customers with donuts and supplement beverages. These beverages could include a range of options, from cold coffee to shakes to tea.

It took its steps in the market in 1948 and since then it is one of the most famous and most liked brands by foodies. Donuts were famous in the past as they were fast to prepare and eat. These were the most common breakfast around that time. War soldiers and when they returned to their homeland, were given these to quench their hunger. Slowly from that culture, donuts picked up and quickly moved to the general public and became a hit breakfast. This fashion in breakfast habits turned out a seed for ideating dunkin' donuts into what it is today. Started by restaurateur William Rosenberg, it is today one of the most valuable fast food businesses with franchises that can be situated all over the world.

Starting from a humble donut and coffee on their menu they moved to more lines of business. Now they serve coffee, burgers, wraps, and everything in between. They have their game in and around 42 countries of the world, which is pretty insane. This is an example of business around the morning ritual of people who love their cup of coffee and any beverage that they could think of. Caffeine is fuel for many people and others just want to pour something into the neck, this is where Dunkin comes into the picture. A one-stop destination to quench every sort of thirst.

Rebranding

The starting was good but the late time was not so good. Dunkin saw some trends in the food market and the behavior of customers. This made them rethink some of their strategies, or even shift their entire focus to one or more lines of product. Let us see how they got to know the shift in preferences and later shifted to a whole new business sphere. This was considered one of the biggest business shifts in this line of business and Dunkin is applauded for the same.

Dunkin has always been about business and food combined. They know when something is not fit with food and behavior and then they change that. Starting in 2009, Dunkin noticed that the sales of donuts were repeatedly slowing down. On the other hand, the beverage side was getting heavier and heavier every day. This made them think about their strategies for the future. So they decided to put more weight on the beverages on their menu. That is what they did and saw great results. Let us see how much and how.

Over the year 2009 to 2019, Dunkin has gone through a lot of changes and branding, and rebranding. With all that rebranding, the food joint has been able to benefit and has incorporated more and more branches into its belt. With beverages at their side, They went from having 6000 stores to adding 3600 more branches to their franchise list. Thus, making them 9630 in 2019. Moving from all sorts of donuts and stuff to beverages mainly, This was not an easy shift to make but somehow the company took it. This was a slow and tedious process but what we see now is one of the biggest business moves that shifted the company from dying to flying numbers. Anything could go wrong but this move made billions not millions. Let us see how the shift actually happened and what were some of the reasons behind this shift in business.

The shift to Beverages

In the year 2018, Dunkin Donuts decided to drop the donut from its name and move on with beverages mainly and supremely. This move came after the fact that out of all the revenue, about 60% was coming from the beverages side of the total menu. This made them drop the donut in 2018. There were several reasons why beverages were becoming the new rage in the new century. Let us see some of the most noticed reasons -

First, Coffee - Coffee was all the rage (still is) at the time. The new generation is just some people with short attention spans running on less sleep. Which makes them people who would jump on caffeine to power them or fuel them. This fuel can most abundantly be found in coffee. Coffee is easily available, it is cheaper than others, and has fast and rapid consumption. This built-in coffee demand led to an increase in the Dunkin business of beverages. So people would just come and drive through with a coffee cup in their hands. Mornings are always like this for people in the operating areas of Dunkin. Thus, leaving or lessening donuts was probably the most straightforward way to look at this new trend.

Caffeine is Addictive - As this new beverage, coffee got to the taste of people, they all got addictive. Caffeine is the prime ingredient in coffee and it is not some surprise that it is addictive. As more and more people got the hit of caffeine, that became an addictive habit.

Consumer Habits - This was the time when Starbucks was expanding its business operations all over. The coffee business is a habit business and Starbucks was building customer buds for a long time now. Dunkin really thought to benefit from this effect in the market and tried selling cheaper expressions to the public. With advancements in its beverage menu, it provided more and more beverages to its customers to build a habit in them to ditch Starbucks and eventually save some bucks.

Beverages Expansion

Dunkin knew that about sixty percent of its revenue comes from selling beverages. These were fast and easily made donuts, so they thought about getting rid of the donut and continuing with the beverages section. Over the next few years from 2009, they built more and more beverages to cater to its customers. This was also an effect of fighting with Starbucks and lurking customers from their side. In those years, they introduced many drinks and beverages that were cheaper and better than Starbucks. This move also proved to be beneficial later as people would like to come and go take a beverage. It is fast and you could get it on the go.

Evolution since Inception

Donuts were the prime show stopper for Dunkin Donuts since the inception of the store in 1948. Dunkin was started by William Rosenberg. Rosenberg was a restaurateur and wanted to start a chain of stores for something that is fast and can be easily eaten. Not a fine dining restaurant but a quick meal sort of place. Thus, came the idea of Dunkin Donuts. It was a store made for donuts and beverages like tea and coffee. The name comes from the fact that people used to dunk donuts into tea and other beverages before putting them in their mouths. So the name stuck and it became ‘Dunkin Donuts'

After the inception of donuts, they grew, as people wanted those quick meals a lot. It was good for the business until it was not. Eventually, they got to know that beverages were more famous than donuts and could easily influence sales for them in the future. So they decided to drop the donuts and move to beverages. Moreover, they increased the offerings on their menu and provided their customers with more flavors and tastes to choose from. This was a good move and was responsible for the multifold growth of the franchise. It was fast to take, easy to carry around and it just stuck with people. This rebranding helped them move from having 6000 stores to having 9630 stores in 2019. Which is pretty much good growth.
Then came the covid 19. The virus attack in 2019 halted everything all over the world. Every business was affected and Dunkin too had some rough days. As people moved to a model of working from home, their breakfast habits changed. So, people began making breakfasts for themselves and stopped ordering the basic Dunkin order. As this picked up later in the year, Dunkin reported a cut in sales and revenue. This was a clear effect of the coronavirus pandemic. As the virus changed eating habits, new habits were formed too. Like that of evening snacking.

Evening snacks which were not mostly covered by Dunkin, they now got involved. Soon after the pandemic and even towards the end of the pandemic, markets faced something. People begin to order Dunkin 'in the evenings. This proved good for the business but eventually faded away as old habits kicked back in. Soon people were back to the normal routine of having breakfast at the Dunkin.

Looking back we can track that Dunkin went from serving coffee and donuts in the 1950s to a big shift in menus. They moved to more and more beverages. They dropped donuts off the name and also the menu. They moved to the beverage market and then started to control and dominate the market in that sphere. In a report by NPD, it was reported that Dunkin's share of the coffee market was a whopping 58%. On the other hand, other brands like Starbucks and everybody else had a combined share of 42%. This was the effect of Dunkin's focusing on only beverages and making them their specialties.

With advancements in business etiquette, they were also faced with franchising opportunities. They had a lot of deals and people wanted to start a Dunkin for the return on investment. So they were flooded with franchises.
With all these rebrandings that took from 2009 to the year 2019, they went from having 6000 stores to more than 9650 stores. Their share in the beverages market grew from 60% to 70%. They were the topmost coffee sellers in the year 2011 in the whole country. In 2011 they had about 6800 locations which were focussing on beverages and breakfast like that.

Conclusion

A famous name in the fast food chain market, Dunkin made its appearance in the markets in 1948. William Rosenberg, who was the founder of Dunkin Donuts, thought of starting something which catered to quick customers. Something that was not a fine restaurant but more of a breakfast option for the consumers. That was how the company was born.

Since its inception, it went on a ride to change and edit and re-edit its menu and business strategies. They went from selling donuts with coffee in the 1950s to focusing more on beverages.  Then they left the donut alone and cut it out from their name in 2018. This was by far the best decision that Dunkin ever made since its inception. Moving into the beverage line, their profits and revenue multiplied. Their franchises rose by a significant number and their business got through the roof. The reason is that coffee is love for people and caffeine is highly addictive. Also, Dunkin now not only serves coffee but a hundred more beverages and people love to drown themselves in choices. This single move to the line of beverages made this business a billion-dollar machine.

FAQs

Who owns Dunkin?

Dunkin is owned by Inspire Brands.

Who is the CEO of Dunkin?

David Hoffmann is the CEO of Dunkin.

Where is the headquarters of Dunkin?

The headquarter of Dunkin is in Massachusetts, United States.

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