- Dunkin has just declared bankruptcy in the Netherlands and Belgium
- Only 12 months ago, the Van der Valk hotel group took a majority stake in its Benelux franchises
- This is a stark reminder of the difficulty in replicating domestic success abroad
DUNKIN’, one of the most recognised names in American fast food and coffee, recently declared bankruptcy in the Netherlands and Belgium.
The closure of Dunkin’s operations in these countries has raised questions about the viability of its business model in certain European markets.
Despite an aggressive push just 12 months ago, with significant investments aimed at expanding its footprint, the company was unable to crack the code of success in the Benelux region.
Dunkin’ announced its bankruptcy in the Netherlands and Belgium this month, less than a year after making substantial investments in new stores and marketing in both countries. Despite opening multiple locations, Dunkin’ struggled to gain a foothold in markets where local coffee and bakery traditions are strong, and competition from established European chains was fierce.
Efforts have been ongoing since 2016, when Dunkin opened 25 stores in the Dutch market – based on the Netherlands having “the highest per capita coffee consumption in the world,” according to Bill Mitchell, president of Dunkin in 2016.
Dunkin’s downfall in these countries isn’t just down to a single issue. First, the fast-paced, grab-and-go culture that Dunkin’ thrives on in the US did not resonate as strongly with Dutch and Belgian consumers.
In these countries, coffee culture tends to lean towards higher-quality, more leisurely experiences, often centred around socialisation and relaxation. Local consumers show a preference for artisanal cafés and bakery offerings that emphasise intentional consumption over speed and price – a direct contrast to Dunkin’s model of mass-market, low-cost items.
“Takeout culture is far less common in the Netherlands,” says Stuart Ritson, Director of Sales for Europe and the UK at Osito Coffee, based in the Netherlands.
“While roadside stops and chains like McDonald’s succeed, I can’t imagine many of my Dutch friends stopping specifically for a donut. In this market, something sweet with coffee is typically a sit-in experience. Dunkin’s stores, with their emphasis on takeaway, failed to adapt to the preferences of a customer base that values a more relaxed, service-oriented experience.”
Moreover, Dunkin’s heavy focus on sugary products like donuts and sweet beverages didn’t align with the growing health-consciousness in Europe. Many consumers in the region are gravitating toward healthier options, something Dunkin’s menu did not adequately address.
Dunkin’s expansion in the Benelux was also hampered by strong competition from local players like Belgium’s Le Pain Quotidien and The Netherlands’ Coffeecompany, both of which are more closely aligned with local tastes and preferences.
Lastly, the pandemic-related shift in consumer behaviour further strained Dunkin’s operations. As more people began working from home, foot traffic in urban areas decreased, severely impacting Dunkin’s business, which depends heavily on commuter culture.
Dunkin’s successful US business model
Despite these setbacks abroad, Dunkin’ remains a powerhouse in its home market, the United States.
Its business model there thrives on three key pillars: convenience, consistency, and affordability. Known for its quick-service coffee and donut offerings, Dunkin’ has positioned itself as the go-to place for busy Americans looking for a fast and affordable caffeine fix on the way to work or school.
One of Dunkin’s core strengths in the US is its ability to consistently offer the same products across its thousands of locations, building a loyal customer base that values predictability and speed. In the US, Dunkin’ serves more than 5 million customers daily across its network of over 9,000 locations, with a large focus on drive-thru services that appeal to on-the-go consumers.
Another factor driving Dunkin’s success in the US is its strong brand identity. For decades, Dunkin’ has marketed itself as an affordable alternative to pricier coffee chains like Starbucks, appealing to a broad customer base that appreciates its no-frills approach.
The company’s slogan, “America Runs on Dunkin’,” perfectly encapsulates its focus on convenience and familiarity.
Dunkin’ has also capitalised on its beverage offerings, especially with its wide range of iced coffees and seasonal drinks, which cater to a younger demographic. These popular drinks, paired with a menu of affordable, easy-to-eat items, have helped the brand maintain its status as a staple in American daily life.
In Belgium and the Netherlands, these success factors don’t necessarily hold the same appeal.
“I believe Dunkin’s main issue in this market is its business model – as a fan of the chain in the US, I enjoy the indulgent donuts and think the coffee is decent for a chain of its kind,” says Stuart.
“However, Dunkin’s focus on small shops and takeout-heavy operations is not a winning strategy in the Benelux region. Here, cafes and coffee vendors thrive on sit-in purchases with a service element. For instance, at a local specialty coffee van in my area, even in rainy and windy weather, most customers choose to sit and enjoy their coffee outdoors rather than grab it to go.”
Franchise success and failure abroad
Franchises often face a difficult path when expanding internationally. While a successful business model may work well in the home market, exporting that model abroad requires adaptation to local tastes, cultures, and consumer behaviours.
Dunkin’s failure in the Benelux region is a clear example of how challenging it can be to replicate domestic success in a foreign market.
Franchises that succeed globally, like Subway, understand the importance of local adaptation. Subway, which operates over 37,000 stores in 100 countries, has tailored its menu in many regions to reflect local tastes. In the Benelux countries, Subway offers local flavours and ingredients, allowing consumers to feel a connection to the brand while still enjoying something familiar.
“Subway is successful here because the Dutch love sandwiches, and Subway offers both sit-in and takeaway options,” says Stuart.
“In contrast, Dunkin’ in my city, before it closed, was exclusively focused on takeaway. While they sold donuts, they were considered pricey compared to local donut shops that also offered a stronger sit-down experience. Without adapting to local preferences, Dunkin’ couldn’t compete with local businesses that better understood the cultural expectations around coffee and sweet treats.”
Another success story is McDonald’s, which has become an international icon. McDonald’s adapts its menu to include local flavours and preferences in each country it operates in. In the Benelux, for example, McDonald’s serves the McKroket, a sandwich that incorporates the popular Dutch croquette snack. This strategy of cultural sensitivity and menu diversification has been crucial to McDonald’s global success.
On the other hand, Dunkin’s failures in the Benelux underscore the challenges faced by franchises that struggle to adapt. Dunkin’ remained too reliant on its US-based model, failing to localise its offerings or adequately address European consumers’ preferences for higher-quality coffee and more health-conscious products.
This inability to align with local market demands ultimately led to its downfall. Other international franchises have followed the same path because of a lack of social understanding – Walmart in Japan, Home Depot in China, and Starbucks in Australia are some examples.
“I don’t know the exact reasons behind Dunkin’s failure, but for a franchise to succeed across borders, the concept must be adaptable to the local market,” says Stuart.
“Take Hai Di Lao, a successful hot pot chain in China – while it’s expanding globally, I doubt it would thrive in a small Dutch city because Mongolian or Sichuanese hot pot is simply too niche for that market. It’s not that markets like the Netherlands are resistant to new concepts; it’s that those concepts need to be adapted to fit the local culture.”
Dunkin’s bankruptcy in the Netherlands and Belgium highlights the complexities of expanding a franchise into foreign markets. The dine-in culture and local competition, combined with a growing emphasis on health-consciousness, made it difficult for Dunkin’ to find its footing.
Franchise success abroad depends on the ability to localise and adapt. As the franchise world continues to globalise, those that can strike the right balance between consistency and localisation will be the ones that thrive.
Coffee Intelligence
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