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Dunkin’ Goes After Telecommuters’ Dough

From July 15, 2013 MediaPost: Dunkin’ Goes After Telecommuters’ Dough by Thom Forbes

Dunkin’ Donuts hasn’t been primarily about doughnuts for quite some time. And it’s not just about breakfast, although it has “listened to all our customers out there,” as CEO Nigel Travis put it on “CBS This Morning” last week, as he answered questions about the rollout of a 360-calorie “sweet-and-savory” Glazed Donut Breakfast Sandwich that is purportedly “going where no breakfast has gone.” It wants to be, well, a daylong destination like a lot of other fast-food chains who are emulating Starbucks and trying to entice the untethered workforce.

“Coffee war brewing as Dunkin’ Donuts introduces new upmarket design which looks a lot like rival Starbucks,” screams the hed in yesterday’s Daily Mail. It’s “rolling out a revamped design for its coffee houses and if it all looks rather familiar then that’s because it is following the hottest trend in fast food restaurants right now, known as ‘fast casual,’” David McCormack writes in his lede.

Foodservice Equipment & Supplies had the lowdown on the store redesign -– the chain’s first in nearly seven years — back in June, writing that it “incorporates new features in a warmer environment for guests who prefer a longer, relaxing visit. Seating areas include updated furniture and lighting as well as electrical outlets and bar tops for using smartphones and computers.” And, of course, WiFi.

There are four options –- with variations in layout, color scheme, graphics, textures, furniture and lighting — from which each franchise owner may choose. They carry the java-inspired names Original Blend, Cappuccino Blend, Dark Roast and Jazz Brew. What’s more, franchisees can mix and match from the designs and build a virtual store using an online app.

Mintel foodservice analyst Kathy Hayden says that the chain hopes to capitalize on two trends.

“As more people telecommute, they’re looking for places where they can get out of their home or apartment and still get work done,” NBC News’ Martha C. White writes. “Also, a more mobile work force means more demand for places that can serve as locations for on-the-go business meetings.”

“Offering wi-fi is not enough. You need to have a welcoming atmosphere,” Hayden tells White.

Time’s Josh Sanburn wrote in June that Dunkin’ Donuts shift away from donuts toward coffee has been almost two decades in the making, pointing out that “in 2012, espressos, Dunkacinnos, sweet teas, and its two dozen other beverages accounted for 58% of all sales at Dunkin’ Donuts locations in the U.S.”

And, according to Darren Tristano, EVP at Technomic, “since the recession, many consumers have rationalized paying a dollar or two more on coffee as an ‘affordable indulgence.’”

What’s more, the profit margin on those cups of Joe can be as high as 95%. No wonder that Technomics has scrapped the “doughnut” category entirely in favor of “Coffee/Cafes — where Starbucks, Tim Horton’s, and Dunkin’ now belong — along with Bakery/Cafes, which includes restaurants like Panera Bread,” Sanburn reported.

Not that Fred the Baker hasn’t been busy paying attention to other developing trends. Dunkin’ will be offering gluten-free donuts and muffins in all its U.S. stores by the end of 2013, Jefferson Adams reports on this morning. “This news is certainly much heralded by many gluten-free eaters,” he writes, pointing out that the market is rapidly expanding and is predicted to reach $6.6 billion by 2017.

“Moreover, a recent survey by market research firm The NPD Group, Inc. found about one in three American adults say they want to reduce or eliminate gluten from their diets,” Adams writes.

For the record, Dunkin’ Donuts CEO Travis is playing down any rivalry with Starbucks. “We don’t think we have any direct competitors. Starbucks does a great job,” he told CBS’ Gayle King. “What we’re very proud of is, we’re made up of small business people. We only have 32 corporate stores.”

Indeed, as NBC’s White points out, “for years, the chain has styled itself as the anti-Starbucks, even selling a T-shirt on its website that reads, ‘Friends Don’t Let Friends Drink Starbucks.’”

An updated version might read, “Friends Don’t Let Friends Telecommute From Starbucks.”


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