What We Know
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The Breakfast Industry Legend has it that coffee was discovered by an Ethiopian goat herder who noticed that when his goats ate the berries of a certain plant, they became so energetic that they refused to sleep at night. The goatherd reported this to the abbot of a local monastery, who made a drink from the berries and discovered that it helped him stay awake throughout his long hours of evening prayer. From these humble beginnings, coffee has become a worldwide staple and Dunkin Brands has been a familiar name to the food and beverage segment for fifty years. Millions of people drink this beverage every morning, the average male drinks 1.9 cups of coffee and the average woman drinks 1.4 cups of coffee per day. The NCA (National Coffee Association) also states that “...figures show that those drinkers’ demand fueled sales of 18.5 million 132-pound bags of roasted coffee beans in the U.S. in 2001, or 2.44 billion pounds of coffee sold for the year.” According to a report from Perishables Group Inc., annual breakfast sales (including coffee) are estimated to be $65 billion dollars. Donut sales contributed a significant amount to overall bakery sales that averaged $511 with sales increasing to $651 during lent season. The central region of the U.S. posted the most sales for donuts with $725 a week in 2006 and increased to $832 a week in 2007(AIB Int’l). Industry Trends Industry experts say Starbucks and other quick-service chains are waking up and noticing the $40 billion morning food market – a category dominated for years by burger giant McDonald's (OC News). Now, not only are these chains serving breakfast but they are keeping it available all day, including Dunkin’ Donuts. People want breakfast all day, and this is helping businesses keep a competitive edge, also saving the customers a stop at another store. Another trend that has emerged from the past and spread into the present is combo meals and value menus. Breakfast chain servers have all started to cash in on value meals, including Starbucks, Dunkin’s and even Taco bell, whose breakfast menu now exists. Also, although coffee is mainly associated as a morning beverage, it is becoming an all day drink that is enjoyed in early afternoon and night hours as well. Economy Trends As of right now, it is obvious our economy is swirling around the drain. On the upside, Dunkin’ Donuts offers a much lower price on coffee products. Dunkin' Donuts coffee-by-the-pound, retails for $6.99/lb. Further, while Starbucks seems to barely have their nose above water, Dunkin’ Donuts is running various promotions and investing in new advertising and stores. Dunkin’ Donuts also introduced a new $2,99 breakfast special that recently ran on called the waffle sandwich. Dunkin' also was aggressive on coffee in the New York Tri-State Area, offering 99-cent lattes all day. According to the article New, Affordable Food Indulgences for 2009 in the Wall Street Journal, another positive note is that since the breakfast/coffee industry does not contain high priced commodities, it is considered an affordable luxury and does not get hit too hard during tough times. The National Association for the Specialty Food Trade anticipates a 4% downturn for the industry this year. But sales in subcategories like specialty beverages, snacks and premium chocolate continue to grow. The reason being is these items can still be a means for consumers to treat themselves when times are challenging, says Ron Tanner, NASFT's vice president of communication and education. Consumer Trends Consumption trends of coffee have rarely gone anywhere but up since 1668 when it replaced beer as New York City's favorite beverage. In 1999 there were 108,000,000 coffee consumers in the United States spending an approximated 9.2 billion dollars in the retail sector and 8.7 billion dollars in the foodservice sector every year (SCAA 1999 Market Report). It is inferred that coffee drinkers spend, on average, $164.71 per year on coffee. The National Coffee Association found, in 2000, that 54% of the adult population of the United States drinks coffee daily. They also reported that 18.12% of the coffee drinkers in the United States drink gourmet coffee beverages daily (NCA). In addition to the 54% who drink coffee everyday, 25% of Americans drink coffee occasionally (NCA). According to a 2007 ‘National Coffee Drinking Trends’ by the National Coffee Association; young adults are the fastest-growing coffee drinking segment. Older consumers are the greatest coffee drinkers as a whole: 74 percent of those 60 and over said they were coffee drinkers in 2007, up from 73 percent in 2006. Consumption attitudes on the other hand have changed tremendously. The most over-used word of 2008 that has leaked into 2009 has to be the word 'green'. Going green is the new black, also the movement toward fair-trade coffee to help coffee sustainability amid troubling times for many coffee farmers. Dunkin’ Donuts has been the first national brand to sell all espresso beverages made exclusively with fair trade coffee. Also, Dunkin’s can claim that they are organic and grow their coffee without herbicides and pesticides and have just opened their first green store in St. Petersburg FL.,which will serve as a prototype for futures stores (organic.com) Another attitude is the healthier lives trend. Now more than ever people are watching their sugars and complex carbohydrates. This has a huge impact in what breakfast and coffee chains including Dunkin Brands should think about offering to the people. Company Overview Dunkin' Brands claim is that "soul" purpose is to lead and build a great brand. For 50 years Dunkin' Brands has been the "Quick Quality" segment of the food and beverage industry. Dunkin' Brands delivers a best-in-class menu and goes beyond what people expect form a traditional quick-service experience. With more than 14,000 points of distribution in 44 counties and approximately 120 years of combined experience Dunkin' Brands is a very well established company. A consortium of private equity companies owns Dunkin’ Brands: Bain Capital, The Carlyle Group, and Thomas H. Lee Partners. Dunkin' Brands consists of Dunkin' Donuts and Baskin-Robbins, both of which are 100 percent franchised and has total global system wide sales of $6.6 billion dollars. With 13,862 worldwide locations in 44 countries and 8,500 in 47 states in the U.S. it is easy to see why Dunkin' Brands is home to two of the world's most recognized and lovable brands, sharing both the same vision of conveniently delivering high-quality food and beverages in a welcoming environment, quickly and at affordable prices. Dunkin' Donuts is America's favorite everyday, all-day stop for coffee and baked goods. Dunkin' Donuts is the No. 1 retailer of hot and iced regular coffee-by-the-cup in America, and the largest coffee and based goods chain in the world according to the Dunkin Doughnuts website. Being socially conscious, Dunkin' Brands has started up a "Dunkin's Brand Community Foundation" that gives back to communities in a meaningful way. The Dunkin' Brand Community was created in partnership with the franchise owners of Dunkin' Donuts and Baskin- Robbins to support emergency response organization before a crisis occurs. The foundation's goal is to help ensure that those heroes we depend on during a disaster have the training, equipment and resources they need to rise to any occasion. The Foundation is funded by contributions by all stakeholders: Franchiser and franchisees, corporate employees, suppliers and customers. Grants that have been added are Do Something, Feeding America, Homes for our Troops, The National Volunteer Fire Council, The Leary Firefighters Foundation and National Fallen Firefighters Foundation. Dunkin' Brands prides themselves on three values and principle; eat, drink and think. Dunkin' Brands goes beyond fast food to deliver innovative product choices at the right price served fresh, meeting the needs of people who have busy living. Dunkin' Brands offers original fun and fresh food, on-trend best-in-class coffee and succeeds by being smart and strategic with innovative approaches. Company SWOT Strengths Dunkin’ Donuts most known for brewing high quality coffee for more than fifty years. Along with coffee they serve high quality breakfast items alongside their world famous donuts. Dunkin’ has an extremely loyal customer base. They are America’s largest retailer of coffee-by-the-cup, serving nearly 1 billion cups of brewed coffee each year, which is an average of approximately 2.7 million cups per day. Dunkin’ Donuts uses 100% Arabica coffee beans and has its own coffee specifications, which are recognized as a superior grade of coffee. This superior grade of coffee beans is available to the public to purchase on Dunkin’s website. Dunkin’ is not only a superior donut and coffee shop, but they have recently released a new low fat food and beverage line. The DDsmart menu consists of many different low fat, great tasting sandwiches, pastries, and low fat coffees. Weaknesses Although Dunkin’ Donuts has a newly released low fat menu, they continue to carry the persona of having unhealthy food options. Due to minimal advertising about the DDsmart menu consumers aren’t thoroughly aware of the low fat food options that Dunkin’ now offers. Consumers not knowing about these food options is a key factor in losing business to tough competitors such as Starbucks and McDonalds. Opportunities Dunkin’ Donuts has many opportunities to expand upon the brand. Establishing a more welcoming coffee shop atmosphere could take the Dunkin’ brand to the next level of superiority in the industry.