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Dunkin’ Donuts Whisper

Research Question: Will Dunkin’ Donuts be able to replicate its success as it expands West and maintain sales growth in existing markets?

Company: Dunkin’ Brands Group (DNKN)

 

Blueshift’s initial research indicates uncertainty surrounding Dunkin’ Donuts westward expansion.

 

Observations
  1. Dunkin’ Donuts plans to more than double its number of U.S. locations from 7,000 to 15,000 stores in the next 20 years, with 5,000 new stores planned for western markets. Dunkin’ plans to add 260-280 restaurants throughout the U.S. this year. Currently, it only has 130 stores across the western half of the U.S., with Seattle and Colorado ticketed to add stores in the next year.
  2. Past attempts to expand into states such as California and Minnesota where regional brands are strong were unsuccessful. This time, Dunkin’ believes it has a better understanding of regional cultural differences, and will adjust menu offerings accordingly. Also working in Dunkin’ Donuts favor as it expands westward is the company’s low coffee prices, allowing it be competitive with more expensive brands such as Starbucks. Dunkin’ is also nearly 100% franchised, limiting operating expenses.
  3. Dunkin’ experienced 7.2% same store sales growth year to year in Q1 2012, though key items such as breakfast sandwiches and K-Cups are coming up on their first anniversary this summer. To maintain its presence within its core Northeast territory, Dunkin’ entered partnerships with New York and Boston sports celebrities Eli Manning, Rob Gronkowski, Terry Collins, and Joe Girardi in recent months.

 

To gauge whether Dunkin’ Donuts will be able to achieve success with its westward expansion while simultaneously maintaining its position as a leading quick-service restaurant chain in the East, Blueshift will gather data and issue a market research report from sources in the following areas: Dunkin’ Donuts franchise owners, suppliers, Dunkin’ Donuts personnel in the Northeast and West, customers, and industry specialists.