Dunkin’ Donuts was first established in 1950, in Quincy, Massachusetts, by William Rosenberg. Over the years the company expanded and now is the largest coffee and baked goods chain in the world. They serve over 5,500 retail outlets; selling more than 4 million doughnuts and 2.7 million cups of coffee daily!
Dunkin’ Donuts are famous for their many varieties of doughnuts and their wide range of bakery products - muffins, bagels and munchkins® donut hole treats. Their products are represented by more than 6,590 worldwide points of distribution, including approximately 4,815 units in the United States alone.
History of Dunkin’ Donuts
1946: Bill Rosenberg invests $5,000, forms Industrial Luncheon Services.
1948: Bill Rosenberg opens donut shop "Open Kettle" in Quincy, Massachusetts.
1950: "Open Kettle" name changed to Dunkin’ Donuts.
1955: First franchise agreement signed and executed in Worcester, Massachusetts.
1960: Bill Rosenberg founds the International Franchising Association.
1963: 100th Dunkin’ Donuts shop opens.
1966: Dunkin’ Donuts University (DDU) is created.
1970: First overseas Dunkin’ Donuts shop opens in Japan.
1972: MUNCHKINS® donut hole treats are introduced.
1978: Introduction of freshly baked muffins. First network TV commercials are aired.
1979: 1,000th U.S. Dunkin’ Donuts shop opens.
1980: Largest Dunkin’ Donuts shop in the world opens in Thailand with seating for 130.
1982: Fred the Baker, TIME TO MAKE THE DONUTS® television campaign begins.
1990: Allied Domecq purchases Dunkin’ Donuts.
1995: 1000th international Dunkin’ Donuts shop opens in Thailand. Hazelnut and French Vanilla coffees are introduced as companions to Dunkin’ Donuts' famous Original Blend.
1996: Dunkin’ Donuts introduces freshly baked bagels.
1997: Dunkin’ Donuts revolutionizes the summer beverage category with the introduction of the COFFEE COOLATTA´ slush drinks
1999: Celebration of their 8 billionth cup of coffee sold since opening in 1950.
2000: Dunkin’ Donuts opens its 5,000th shop worldwide in Bali, Indonesia.
Dunkin’ Donuts celebrates its 50th anniversary.
Dunkin’ Donuts introduces Hot Chocolate and the all-new DUNKACCINO™
2001: Dunkin’ Donuts introduces Vanilla Chai, a creamy combination of tea, vanilla, honey and spices.
Dunkin’ Donuts launches its new logo.
2002: Dunkin’ Donuts launches its new advertising tagline, JUST THE THING™.
Allied Domecq Alliance
Dunkin’ Donuts and was purchased by Allied Domecq in 1990. Allied Domecq is a dynamic, marketing-led branded company. They focus on delivering results by maximizing the strength of their portfolio. The company operates on a global level and operates in the business of spirits, wine, quick service restaurants. Further, they own an international chain of franchises consisting of three established brand names; Dunkin’ Donuts, Baskin Robins and Togo’s- and is among the top five players in the food and beverage industry with more than 11,300 outlets worldwide.
Dunkin’ Donuts Case Study (2-1)
The Bagel Introduction was Dunkin’ Donuts’ largest initiative ever. However, an upsurge of problems erupted mostly in the supply and distribution channels, with two weeks left before the largest advertising campaign the bagel industry had ever experienced; the supply chain dried up.
1. Defining the Product/Market Scope
Dunkin’ Donuts was first introduced as a retailer designed to bring quality donuts and the freshest coffee to consumers. They rapidly became an intrinsic part of the American culture — as much a part of growing up and eating hot dogs, hamburgers and apple pie. Dunkin’ Donuts are famous for their bakery goods- muffins, cookies, scones, donuts and munchkins donut hole treats. Dunkin’ Donuts also has a wide range of coffees- espressos, lattes and cappuccinos, which are freshly brewed and made from real espresso beans. Their new products are Bagels and the cream cheese that comes on the side. According to them, “bagels are the food of the nineties” and are the next great food platform upon which sandwiches and snacks- and greater profit- can be built.
2. Analyzing The Internal and External Environment (SWOT Analysis)
a. Strengths: Dunkin’ Donuts is very popular in its industry and has established a powerful brand and image through its efficient operations, low prices and the wide range of high quality products it offers. Moreover, the company experiences economies of scale as it has many operations worldwide. In addition they have significant bargaining power against their suppliers due to the experience they obtained and the support they acquire from Allied Domecq, one of the strongest companies in the market.
b. Weaknesses: Dunkin’ Donuts considers themselves as a retailer, for that reason, they are not well-equipped to produce the bagels themselves. They rely on outsourcing- this can have its drawbacks as they become too dependant on suppliers.
c. Opportunities: The increased acceptance and the growing demand for bagels as a breakfast and lunch item has estimated to spread across the boundaries of the United States and seep into the international arena- particularly Europe. Bagels appeal to consumers because they are a versatile product- they can appeal to many different tastes by simply changing the flavor.
d. Threats: Considering the bagel industry is in the growth stage there is an upsurge of competitors. The main competitors though are Bruegger’s, Manhattan Bagel, Einstein Bros. and Starbucks Coffee. With Dunkin’ Donuts’ grave dependence on its supplier, Harold’s Bakery, they are experiencing some difficulties as Harold’s Bakery is having troubles with their Co-packers (A third party contract manufacturer that produces and packs items for another company)
3. Setting Strategy Objectives
By transforming their image from quality donut seller to bagel expert, Dunkin’ Donuts' goal is to have the best product in the market. Dunkin’ Donuts planned a ‘rollout’, which called for 2,700 stores around the United States to be supplied with bagels within one year at a target to grow by 10% in sales.
4. Identifying Strategic Alternatives
Dunkin’ Donuts faced problems with Harold’s Bakery and their co-packer instigating the slowing down of the “rollout” plan that they had anticipated. As Will Kussell, company President stated:
“Bagels are a tremendous opportunity for our company. It is once in a lifetime that an opportunity comes along in the food service industry with this kind of growth. The speed at which the bagel market is growing is the kind of growth that high technology companies in the Internet are seeing.
We cannot afford not to be in the game. Another point, however, is a business decision. I want to be out ahead of competition. I don’t want to send the message that we are pulling back, only that we are plowing ahead.”
This stresses the importance of bagels to the company and a brief overview of the incredible growth opportunities present in the bagel market. Three options were uncovered in order to overcome the problem. These are:
a. Continue the rollout at the current pace with a partial product line.
b. Slow down the rollout by limiting advertising or limiting the pace of store expansion.
c. Stop the rollout until there was certainty of supply, by that they would have to do one of two things: (1) work with Harold’s to find more co-packers in the short term or (2) terminate the contract with Harold’s, since Harold’s had been unable to keep its short term supply commitments, and begin the process of finding a new supplier.
5. Selecting the Optimal Alternative
Due to the growth in the bagel industry, all U.S. production facilities capable of making bagels were signing long term supplier contracts with different firms hence leaving very few opportunities for additional capacity to be obtained. In order to still thrive in the bagel industry, Dunkin’ Donuts should not terminate their contract with Harold’s Bakery. Rather, they should gradually continue with the rollout by limiting advertising and the pace of store expansion. In the meantime they should assist Harold’s Bakery to find more co-packers in the short term.
6. Designing the Marketing Program
7. Implementing and Evaluating the Marketing Strategy
References:
• http://www.twincitybagels.com/html/bagel_history.html
• http://time-proxy.yaga.com/time/magazine/0,9263,7601960401,00.html
• https://www.dunkindonuts.com/
• http://en.wikipedia.org/wiki/Dunkin_Donuts
