Why Dunkin’ Donuts Is Now Just Dunkin’ | WSJ The Economics Of

Summary

Dunkin' has evolved from a donut-centric business to a beverage powerhouse over its 70-plus years. Founded as 'Open Kettle' in 1948, it capitalized on coffee and donuts, but shifted its focus in response to health trends and competition from brands like Starbucks. The slogan 'America runs on Dunkin'' marked a pivotal change towards drinks, which now account for 60% of sales. Despite pandemic challenges, Dunkin' thrived by introducing cold beverages and leveraging social media for engagement, selling over 4.4 billion cups in 2021. This transformation highlights Dunkin's adaptability in a changing market landscape.

Takeaways

• 🍩 Dunkin' has evolved from a donut-centric brand to a beverage-focused company, reflecting changes in consumer preferences.
• 📈 Between 2009 and 2019, Dunkin' expanded from around 6,000 to over 9,000 locations, largely due to a shift toward drink offerings.
• ☕ The company initially served coffee and donuts, but recognized the rising demand for coffee and other beverages, especially amidst increasing health consciousness.
• 🔄 Dunkin' introduced the slogan "America runs on Dunkin'" in 2006, marking its first significant move away from donuts towards beverages.
• 💼 By 2011, Dunkin' sold more hot and iced coffee than any other fast food chain in the U.S., surpassing Starbucks in the process.
• 🔄 Dunkin' rebranded to simply "Dunkin'" in 2018, with beverages making up 60% of sales that year.
• 🥤 The brand expanded its drink menu to include espressos, cappuccinos, lattes, and specialty drinks, directly competing with Starbucks.
• 📊 During the pandemic, cold drinks became increasingly popular, accounting for a significant portion of sales and creating new consumer habits.
• 🍂 Dunkin' introduced new seasonal drinks and flavors to maintain relevance and attract customers during changing market conditions.
• 🔮 Dunkin's ability to adapt and innovate in its drink offerings positions it well for future growth, despite ongoing challenges from the pandemic.

Q & A

What inspired William Rosenberg to change the diner name to 'Dunkin' Donuts'?

William Rosenberg changed the name to 'Dunkin' Donuts' after observing customers dunking their donuts into coffee, which was a popular trend.

How did Dunkin' adapt to the trend of increasing health consciousness in the 1990s?

In response to growing health consciousness, Dunkin' began diversifying its menu to include more beverage options and healthier food items, moving away from a sole focus on donuts.

What was the significance of the slogan 'America runs on Dunkin'' introduced in 2006?

The slogan marked a pivotal shift in Dunkin's marketing strategy, emphasizing their beverage sales and positioning coffee as a central part of American breakfast culture.

How did Dunkin' perform in the coffee market compared to Starbucks by 2011?

By 2011, Dunkin' was selling more hot and iced coffee than any other fast-food chain in the U.S., including Starbucks, dominating the market particularly in New England and New York.

What changes did Dunkin' implement in 2018, and why?

In 2018, Dunkin' rebranded simply as 'Dunkin'' to reflect its broader focus on beverages, as coffee accounted for 60% of their sales, marking a significant shift from their traditional donut offerings.

What role did cold beverages play for Dunkin' during the pandemic?

Cold beverages became a crucial part of Dunkin's sales strategy during the pandemic, as they gained popularity and helped offset declines in breakfast sales due to changes in commuting patterns.

How has social media influenced beverage sales at Dunkin'?

Social media, particularly platforms like TikTok, has contributed significantly to the rise in popularity of cold drinks, with many consumers ordering these beverages in the afternoons, creating a new customer base.

What kind of new beverage options did Dunkin' introduce to compete with Starbucks?

Dunkin' expanded its beverage menu to include espressos, cappuccinos, lattes, Americanos, and specialty drinks like Matcha and Chai, directly competing with Starbucks' offerings.

How did Dunkin' utilize its leftover dough from donuts?

In the early 1970s, Dunkin' introduced 'munchkins,' which were made from the leftover dough from the centers of donuts, allowing them to minimize waste and create a new product.

What are the key factors that have allowed Dunkin' to evolve over the years?

Dunkin's ability to adapt to market trends, focus on high-margin beverage sales, innovate its menu, and successfully rebrand have been key factors in its evolution from a regional diner to a global coffee chain.