Introduction
On one hand there are no fast food chain restaurants that are operated 100% on a franchise based business, whether one thinks of McDonald’s, KFC, Starbucks, to name a few. But on one hand there’s Dunkin’ Donuts, which is operated 100% on a franchise business. It is one of the largest ‘Donut chains’ in the world, but very few know it is one of the largest ‘coffee chains’ as well. With over 13,200 stores in more than 40 countries, the business of Dunkin’ Donuts is very special and worth taking learnings from.
History
In 1948, William Rosenberg opened a restaurant by the name of ‘Open Kettle’ in Quincy, Massachusetts, USA. He used to sell many snacks which included sandwiches, sweets, donuts, coffee, etc. He soon notices that more than 50% of his sales and profit are due to the donuts and coffee his restaurant is selling. In 1950, he renamed his restaurant Dunkin’ Donuts and shifted his focus only to donuts and coffee. The outlet started to get recognised due to the great quality and pricing. Now it was the time to expand and William wanted to expand through the franchise model. In 1955, William opened his first franchise store in Worcester and by 1979, he had already achieved the number of 1000 outlets. In 1963, his son, Robert M. Roosenberg becomes the CEO of Dunkin’ Donuts. The sooner the culture of franchise was growing, the scams related to this business were not far behind. To tackle this hurdle, William came up with a strategy to maximize his profits and help the franchise owners of Dunkin’ Donuts and he established the International Franchise Association (IFA) in 1961.
Strategies under the International Franchise Association
William followed three strategies to grow his franchise business and keep up with the competition. These strategies included site selection, training of employees and staff and establishing various Central Production Facilities.
Site Selection
To run a business like restaurants, the location is what matters the most. Here, William focused on four factors because of which he was able to achieve remarkable growth. First was the ‘population density’ in the area. He recorded the total population and the size of different areas and selected the best ones to offer a franchise in. William always wanted a minimum population of 35,000-50,000 people within 0.5-3 miles from the store. Second was the ‘traffic flows’. This was the data recording what is the number of people that regularly leave their homes for work. Third was the ‘spending capacity’ in which the purchasing power parity of the people was measured. Fourth was the ‘store proximity’, which means how close is the store of Dunkin’ Donuts to the population on which the data is collected upon. One fact that everyone else neglected but William didn’t was that during the peak hours of afternoon and evening, the area should be accessible to at least 1000-1200 cars. Now, whenever someone wants a franchise of Dunkin’ Donuts, he is given an option to choose from the preferred locations according to the data collected by the Dunkin’ Donuts team.
Acquisition
The chain was acquired by Baskin-Robbins’s holding company Allied Lyons in 1990; its acquisition of the Mister Donut chain and the conversion of that chain to Dunkin’ Donuts facilitated the brand’s growth in North America that year Dunkin’ and Baskin-Robbins eventually became subsidiaries of Dunkin’ Brands, headquartered in Canton, Massachusetts, in 2004, until being purchased by Inspire Brands on December 15, 2020. The chain began rebranding as a ‘beverage-led company’
Employee Training
In 1996, the company opened the Dunkin’ Donuts University (DDU). Whenever a new franchise is opened the staff and owner are given training for 6 months. This training includes enhancing skills related to ‘bakery and equipment handling, quality control, health and safety standards, human resource management, etc.’
Central Production Facilities
In 1994, Dunkin Donuts opened its first Central Production Facility in Virginia, USA, by the name of ‘Kitchen’. Today, it has more than 70 Central Production Facilities. Here, doughnuts are prepared in bulk and shipped to the nearby franchise. They use the ‘Shop Infamous System’ (SIS) to estimate the production. Dunkin’ Donuts uses the data sales of various stores during certain events and prepares the doughnuts in advance to cover up the demand. This ensures no franchise store faces any sort of shortage during any day during the year.
Renaming of the brand
In 2019, the brand renamed itself from Dunkin’ Donuts to Dunkin. This was very strategic as people in America started to shift their focus on their health and lifestyle. Doughnuts are seen as an unhealthy option anytime during the day. So, to counter this problem, they decided to remove ‘Donuts’ from its name. Apart from renaming itself, they started to expand their beverage options. Their sales for their hot and iced coffee cups in 2019 was 1.6 billion cups which grew to 4.4 billion cups in 2022.
Sources
- https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://franchisebusinessreview.com/post/dunkin-donuts-franchise/%23:~:text%3DDunkin%27%252C%2520on%2520the%2520other%2520hand,everything%2520you%2520need%2520to%2520know.&ved=2ahUKEwjTytmJj_uDAxUZ4TgGHaenC54QFnoECBAQBQ&usg=AOvVaw1mEQUh1YPDE4QKLqo_NA9Q
- https://www.google.com/amp/s/businessmodelanalyst.com/dunkin-donuts-business-model/amp/%3fmc_cid=d71ab49b72&mc_eid=048510851b/
- https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://s3.amazonaws.com/cms.ipressroom.com/285/files/201610/Dunkin%2527%2BDonuts%2BHistory_11%2B3%2B16.pdf&ved=2ahUKEwiwjP3rjfuDAxU0wjgGHWxjCf0QFnoECDkQAQ&usg=AOvVaw3KvZwihAkugPtc-rZ9vwey
- https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.dunkindonuts.com/en/about/about-us%23:~:text%3DFranchising%2520Company%2520Snapshot-,COMPANY%2520SNAPSHOT,information%252C%2520visit%2520InspireBrands.com.&ved=2ahUKEwiCr6mt0YaEAxWdSGwGHZfqASIQFnoECBEQBQ&usg=AOvVaw2hM6abt5r6QZkakTiuszy3
