Why Dunkin' Donuts Is Failing in India

Summary

Dunkin' struggled in India due to mismatched consumer preferences and operational missteps. Entering in 2012, it relied on a breakfast-focused strategy, but Indians preferred local cuisine and sit-down meals over grab-and-go options. Dunkin' attempted to localize offerings with unique doughnuts and savory items, but doughnuts were seen as indulgent treats, not daily staples. Attempts to pivot with burgers diluted its brand identity, and rapid expansion led to high costs. While Baskin-Robbins thrives in India by sticking to its core product, Dunkin' is now shifting towards smaller stores and tea-based beverages to recover.

Takeaways

• 🍩 Dunkin' is synonymous with breakfast globally but has struggled to capture attention in India.
• 🚫 In 2018, Dunkin' closed over half of its stores in India due to a lack of profitability and operational efficiency.
• 🍴 Indian consumers prefer sit-down meals rather than the American grab-and-go breakfast style Dunkin' is known for.
• 🍩 Dunkin' tried to localize its menu by offering custom doughnuts and spicy sandwiches but still faced challenges.
• ☕ Dunkin' downplayed its beverage segment, which usually accounts for 60% of its sales, but India isn't a strong coffee market.
• 🍔 To diversify, Dunkin' introduced burgers, but this diluted its brand and didn't resolve the core issues.
• 💼 Rapid expansion with large retail spaces led to high operational costs, contributing to store closures.
• 🍩 The doughnut market in India has stagnated due to rising health consciousness and a shift away from sugary foods.
• 🍦 Baskin-Robbins, another brand under Dunkin' Brands, has thrived in India by focusing on its core product, ice cream.
• 💡 Dunkin' is now pivoting to smaller stores, kiosks, and introducing tea-based beverages to better cater to Indian preferences.

Q & A

Why did Dunkin' fail to capture national attention in India?

Dunkin' struggled in India due to a mismatch with local breakfast habits and consumer preferences. Indians preferred a sit-down meal over grab-and-go breakfast, which clashed with Dunkin's breakfast-first strategy.

What strategy did Dunkin' initially adopt when entering the Indian market in 2012?

Dunkin' entered India with its typical breakfast-first strategy, targeting morning traffic and offering products like doughnuts and coffee.

How did Dunkin' try to localize its menu in India?

Dunkin' attempted to localize its menu by introducing doughnuts with flavors like mango and Lychee coladas, along with a spicy sandwich lineup to cater to Indian tastes.

Why didn’t Dunkin's localization efforts succeed in India?

Despite localizing its menu, Dunkin' was still seen as a doughnut-first brand, and Indian consumers did not prefer sweet baked goods like doughnuts for breakfast. Additionally, India is not a coffee-centric market, which affected Dunkin’s usual beverage-based appeal.

What major operational change did Dunkin' implement in response to its initial failure in India?

Dunkin' pivoted by downplaying doughnuts and introducing burgers as the anchor product to attract more foot traffic. However, this move diluted Dunkin’s brand image.

What were some operational mistakes Dunkin' made during its expansion in India?

Dunkin' expanded too quickly and opened large retail spaces, which increased operational costs. This aggressive expansion plan backfired, leading to higher losses.

How did Dunkin’s competitors, like Krispy Kreme and Mad Over Donuts, fare in India?

Krispy Kreme and Mad Over Donuts initially experienced a surge in popularity due to the novelty of doughnuts, but the market for doughnuts began to stagnate as consumers became more health-conscious.

Why is Baskin-Robbins, another brand under Dunkin' Brands, more successful in India compared to Dunkin'?

Baskin-Robbins succeeded by focusing on its core product—ice cream—while Dunkin' struggled with a diluted brand identity and failed localization efforts.

What changes has Dunkin' implemented to attempt a turnaround in the Indian market?

Dunkin' has shifted its focus to smaller stores and kiosks to reduce operational costs. Additionally, they plan to offer more tea-based beverages to align with Indian preferences.

What factors make India an attractive market for fast food chains despite challenges like Dunkin's experience?

India has a large population and a growing market for chain restaurants, which account for only 3% of food establishments. This represents a significant growth opportunity for international brands that find the right formula.