Dunkin Donuts

Ponder if you will your own experience with Dunkin Donuts durings its tenure as your local donut chain. So maybe the donuts aren't great, but it's been a convenient, relatively inexpensive experience, no? I submit that Dunkin Donuts has evolved one of the strongest business models of any company anywhere.

Ignoring the legitmacy of their "We beat Starbucks in a national coffee taste test" survey, let's instead look at the broader picture: People talk about Dunkin Donuts' coffee. Regardless of where the coffee is from or how it tastes, and probably even independent of the price, Dunkin Donuts has made their "Donut shop" much less about the donuts and much more about the coffee. It was a foregone necessity to do this to stay afloat, yes, but they've made the transition into a drink first, eat later business with efficiency and they've done it right. In our fast paced society they have correctly embraced and encouraged the "get in and get out" philosophy which seems to trump Starbucks' "come in and hangout" style in efficiency. Overall it's a more convenient approach, even if you're sacrificing quality and/or taste, something consumers are apparently not finding. You can even hang out in Dunkin Donuts too if you want, just don't expect couches or an indie hipster to share glances with because that's simply not their clientelle.(They tend not to intententionally scare people away by being uber pretentious. Surprise, surprise, Starbucks is failing.)And by the way, Dunkin Donuts IS cheaper across the board.

Challenges: With modest success they've already entered into the specialty drinks arena with lattes, etc. They need to make sure the drinks are of at least marginal quality without affecting average speed of transaction. There are the coffee connoisseurs out there that DD will never be able to win over, no matter what. Leave them alone. The expansion into breakfast and lunch food products other than donuts (which I perceive as lesser quality) and bagels is probably a dumb move. It increases transaction time (albeit not by much...they are pretty fast)and attempting something like egg patties might make consumers look down on the product. Finally, Dunkin Donuts are expanding globally, no doubt as a result of their success of diversification in the drink market. It's important that they approve franchises in strategic locations (not across the street from one another like Starbucks) to maximize profits.

Dunkin' Donuts Beat Starbucks