- The first Dunkin’ opened in Massachusetts in 1950 as a doughnut-and-coffee shop
- As Americans became more health-conscious, it pivoted to become a coffee-first brand
- By 2021, it was selling more than 4bn cups of coffee per year – on par with Starbucks
IN JANUARY 2019, as a new year dawned, Dunkin’ Donuts made a bold decision. Despite owning one of the most recognisable brand names in the world, the multinational coffee and doughnut company decided that it would change its name forever. Virtually overnight, Dunkin’ Donuts – the trade name it had gone by since the 1950s – became just Dunkin’.
For many, this reflected a new era for the company, which had seen not only its own sales change but the demands of consumers generally, particularly in the US. Between the late 1990s and early 2000s, Americans had started becoming more health-conscious. At the same time, Starbucks was gaining popularity thanks to its wide range of caffeinated coffees available to go.
While the public was falling out of love with doughnuts, the number of coffee shops in the US was exploding. Between 1996 and 2001, they doubled to nearly 13,000. And Dunkin’, with a robust coffee setup already in place, wanted to widen its share of the market.
What few could have anticipated, however, was the speed and ferocity with which the company would come to dominate.
Having begun to shift the focus away from doughnuts to coffee around the turn of the century, Dunkin’ was selling more hot and iced coffee than any other fast-food chain in the US by 2011 – including Starbucks. In some states, it had claimed nearly 60% of the coffee market.
Today, more than 5 million customers a day visit Dunkin’ stores around the world and it is considered a key member of the Big Three coffee chains in the US, alongside Starbucks and McCafé. But why was its pivot so successful?
How coffee became the driving force
The insatiable demand for baked breakfast goods defined the latter half of the 20th century. But as a new breed of health-conscious consumers emerged, Dunkin’ knew it had to reimagine its core identity, focusing on a product consumers would buy every day, rather than something that was increasingly being considered as a “treat”.
“Everyone likes their morning coffee and it’s a ritual,” told the Wall Street Journal last year. “People often go to get coffee every morning, whereas they might not go to get a doughnut or some kind of food.”
In 2006 the company ran the famous marketing campaign “America runs on Dunkin’”, a nod towards its caffeinated drinks and the first time that coffee was deliberately placed front and centre. In the same year, Dunkin’ issued an open challenge to Starbucks, releasing an advert in which the Seattle-based chain’s complicated coffee menu was contrasted with the simplicity of Dunkin’s offerings.
This set the tone for Dunkin’s positioning in the US market as the provider of simple, down-to-earth coffee compared to Starbucks, which had established a reputation for “third wave coffee” and higher quality beans.
This theme is still reflected today in the layout of stores and the ordering process, where there is a clear focus on convenience and speed, as opposed to the working space set-up of Starbucks. The company ploughed $60 million into redesigning their NextGen stores, which helped to add further convenience and speed, by equipping them with an eight-headed tap system, an efficient coffee line and a pick-up area dedicated solely to mobile ordering.
“We’re all about serving great coffee fast,” said Dunkin’ Brands’ CEO and US President of the firm, David Hoffmann, back in 2018.
Around the same time, it expanded its drinks menu, moving from predominantly espresso-based drinks to include ones that would appeal to a younger audience, such as cold brew and nitro coffee. As part of this move, it also encouraged staff to behave like baristas, while prioritising convenience and aesthetics above all else.
According to Robert Bryne, a senior manager at Consumer Insights, this is largely thanks to its rivalry with Starbucks. “The initiative to modernise has absolutely come from its largest competitor, which is Starbucks,” he told CNBC. “They reinvented what coffee means to consumers on a daily basis.”
However, its true success lies in having taken the best parts of coffee chains like Starbucks and adapting them to the Dunkin’ model of making trends fast, accessible, and affordable.
All this has been phenomenally successful for Dunkin’. While their doughnut orders continue to slide, coffee has become the key driver of growth. Recent estimates suggest the company is sells 4.4bn coffees annually.
New battlegrounds
Dunkin’s successful transition from doughnuts to coffee has established it as one of the sector’s undisputed giants.
In addition to selling billions of coffees every year from its stores, it has also developed a strong retail presence since partnering with Proctor & Gamble in 2007, selling millions of bags of coffee to home consumers.
In its unofficial rivalry with McCafé and Starbucks, Dunkin’ appears to be on top. Its clever pivot to social media marketing and a dedicated focus on cold coffee drinks served at speed has helped it grow across nearly all its markets, from China to Germany.
However, one market in which it has struggled is India. In November 2022, the company announced that it would be overhauling stores and revamping its menus in a bid to attract younger consumers, after citing a lack of profitability and operational inefficiencies for a wave of closures in 2018 that saw its store numbers cut in half.
Abhinav Mathur is the CEO of Something’s Brewing, a coffee retailer based in Bangalore. He says that in India, Dunkin’ “has actually shrunk from approximately 25 stores and now has only around 9-12. By contrast, McCafé and Starbucks are both at 300 plus stores and growing.
“They may need to implement their success from other markets in India, but it has not happened yet.”
As coffee consumption in more developed countries like the US climbs towards capacity, non-traditional coffee-drinking countries are becoming key battlegrounds for multinational companies.
Dunkin’ has the advantage of being a franchised business model, which allows it to adapt and cater to local markets. However, whether its brand name will continue to carry weight as domestic competitors launch their own coffee chains remains to be seen. Although Dunkin’ has moved away from its association with doughnuts, the proof, in this case, will very much be in the pudding.
