Dunkin Donuts Essay

Dunkin Donuts first obtained fame through their wonderful tasting donuts - Dunkin Donuts Essay introduction. Today Dunkin Donuts has a total of forty-nine different kinds of donuts to choose from. They come in flavors like Apple ‘N’ Spice, Éclair and Bow Tie donut. As time progressed Dunkin Donuts not only included donuts on their list of treats but other products as well. These added products consist of muffins, bagels and sandwiches and an innovative creation called munchkins. Munchkins are in actuality the missing dough from the center of a donut. When they make the donuts, the middle of the donut is cut out. Instead of throwing away this leftover dough Dunkin Donuts turned them into what is known as munchkins. There are thirteen varieties of munchkins, 27 assortments of muffins, fourteen types of bagels and 10 selections of sandwiches. So therefore the customer is not limited to donuts or pastries alone.

Food is not the only service provided by Dunkin Donuts. In today’s business world with the addition of the Internet and email, businesses have the opportunity to be more customized towards their clientele and their needs and that is exactly what Dunkin Donuts has done. Dunkin Donuts has shown their willingness to accept modernization by setting up a website that allows their customers to interact more with the company and its franchises. This website has many interesting features. You can learn about the history of Dunkin Donuts, shop online and find out information on franchising Dunkin Donuts all at the same time. There is also an email address for the customers so that they can air their grievances or comment on the services provided if any. Customers can also keep track of their accounts with Dunkin Donuts. Another interesting thing about this website that I am sure many women would appreciate is that it gives the nutritional facts

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on every food and beverage product sold by Dunkin Donuts. So, we the customers will be able to find out how many damaging calories are present in our favorite treats before we consume them.

Dunkin Donuts has done a very good job in trying to attract and keep their customers with their newly added products and services. Unfortunately the competition has also kept abreast and some competitors have done more to keep up with the game. Krispy Kreme, who is one of the major competitors of Dunkin Donuts, has also developed a website. It does not offer all of the features that are on Dunkin Donuts’ website but it does a good job of informing their customers about the products they sell and it also gives an email address that their customers can use to send comments about their franchises. Besides the website, Krispy Kreme too offers a variety of donuts. The only difference is that they only offer 20 different assortments in comparison to Dunkin Donuts’ 49 flavors. One of the biggest differences between these two competitors is that Krispy Kreme serves their donuts hot whereas Dunkin Donuts serves theirs cold. This difference benefits Krispy Kreme quite a lot because there are many people out there who like their donuts hot or a little warm and it’s Krispy Kreme who is attracting that segment of the baked goods lovers who want their donuts hot and fresh on the spot. To signal when their donuts are at its hottest Krispy Kreme turns on what they call the Hot Light. This light glows whenever the freshly made donuts have just come out of the oven. According to Krispy Kreme it usually comes on from 6 a.m. to 11 a.m. and then it glows again later in the afternoon.

Another difference between these two franchises is that Krispy Kreme has a snack line. Several of their baked goods are sold in supermarkets and convenience stores. These confections include honey buns, Danishes, fruit pies and doughnut holes that are the equivalent of Dunkin Donuts’ munchkins. These treats also come in different varieties. Krispy Kreme has taken a step further in getting their products to customers. By having their snacks sold in stores more people will have the opportunity to buy them.

Many people love donuts. Dunkin Donuts has set out to attract all demographic groups. They want everyone to eat their donuts. It does not matter if you are always on the go or a single mother with kids who loves donuts. Their donuts are cheap and affordable which makes it easy for low-income customers and now with the opportunity to shop online transportation is of no importance when you need or want to buy your favorite treats.

Dunkin' Donuts Essay

William Rosenberg opened his first coffee-and-doughnut shop in Quincy, Massachusetts, in 1950 - Dunkin' Donuts Essay introduction. In 1995 he began licensing the right to imitate his retail operation to independent owner/operators, called franchisees. Business format franchising, as this type of cloning relationship came to be known, was in its infancy in the early 1950s. By the late 1980s, however, business format franchising had become a major force in retailing in the United States. Meanwhile, Dunkin’ Donuts had experienced similar growth.

As of the end of 1987 there were 1,478 Dunkin’ Donuts units in operation in its North American region, of which 1,449 were franchised. Dunkin’ Donuts licensed an additional 191units throughout the rest of the world. By early 1988, however, deteriorating sales to capital ratios, stiffening competition, and uneven expansion threatened not only the level of company profitability but also its relationship with the franchisees. A number of options that related primarily to increased distribution were being explored.

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Any new changes in strategy would require careful examination of its effect on both the franchisees and the company. Competition from convenience stores and supermarket bakeries was becoming increasingly acute. In 1988 there were over 20,000 supermarket bakeries, and the second-largest selling item in those bakeries was doughnuts. Moreover, convenience stores were expanding into food service at an alarming rate and had become a serious threat. By 1987 nearly 80% of all new shops were franchisee-developed.

This was much easier to accomplish in Region I(the eastern United States and Canada) where 75% of all domestic Dunkin’ Dounts shops were located, where the average store sales were significantly higher than in Region II(the western United States), and where existing franchisees were much more active in purchasing real estate and developing stores in order to expand their existing operations. In a nationwide sample of customers who lived within 15 minutes of a Dunkin’ Donuts shop, 86% had purchased doughnuts on their last visit to a Dunkin’ Donuts shop(75% in the Northeast), and 30% had purchased coffee(52% in the Northeast).

Table 1 Doughnut Consumption Locations In Shop 20% 16% In Car 12% 9% 60% At Work 17% 23% 92% At Home 46% 47% 88% %Purchasers %Volume Purchases % Volume Purchases Which were sold in Dozen Competitive Set Other shops, Restaurants, Convenience stores Other shops, Convenience stores Bakeries Other shops, Some Convenience stores Bakeries Supermarket Bakeries Table 2 Degree of Usage Comparison Heavy Users** 66% 30% 45% 38% Light/Medium Users* 44% Planned Visits 19% Purchased for Self Only 34% Weekday Breakfast/AM Snack 18% Consumed at Shop *Light/Medium Users : less than once a month ** Heavy Users : visited a Dunkin’ Donut shop once a week or more

Average store sales were significantly lower in Region II than in Region I, and there were more than twice as many shops in Region II on rent relief. One of the greatest contrasts between the two regions was in the amount of coffee sold. Northeastern Dunkin’ Donuts outlets were primarily coffee shops were customers came to buy one or two doughnuts and a cup of coffee. Everywhere else in the country Dunkin’ Donuts was primarily a doughnut shop where customers purchased doughnuts by the dozen.

Shops in the Northeast averaged about 235 dozen doughnuts and 1,900 cups of coffee a day while elsewhere the shop averaged 260 dozen doughnuts and 850 cups of coffee. The differences had a significant sales and profit impact. Doughnuts averaged $ . 45 a piece, but sold for approximately $3. 00 by the dozen, and coffee was a high-margin item. Franchisees contributed 5% of gross sales to an Advertising and Promotion Fund. Because of the uneven distribution of Dunkin’Dounts shops nationwide, there was no national media purchased, and all television and radio advertising was on a market or regional basis.

Recently, approximately 20% the advertising budget was being spent promoting new products such as sandwiches, which were designed to shift Dunkin’ Donuts away from its dependence on doughnuts and spread demand more evenly throughout the day. Many believed that there was a serious need to attract more sophisticated franchisees or to simplify the marketing programs and the production processes. Dunkin’ Donuts management was convinced that the decreasing sales growth, stiffening competition, and worsening sales-to-capital ratio faced by the company and its franchisees required a new growth strategy.

Three distinct approaches emerged: (1) the development of new and/or previously underdeveloped markets, (2) the sale of branded products through convenience stores, and (3) opening satellite (i. e. , non-producing)retail outlets. Dunkin’ Donuts corporate policy was to test all new strategies thoroughly before asking the franchisees to adopt them. New markets Some managers favored expanding distribution by opening new stores in less saturated markets, either through focused company development of specific markets or through the use of area franchising.

However, it was likely that such a strategy would require Dunkin’Donuts to take an active role in the development of the real estate for the various sites. Branded products Some managers proposed that Dunkin’Donuts contract with convenience store chains to supply branded products to participating outlets. It was expected that a local franchisee could deliver fresh Dunkin’Donuts’ products twice daily to between 10 and 15 convenience stores. It was assumed that the franchisees would lease the delivery vehicles, and there would be no additional franchise fee.

Satellites Dunkin’Donuts management believed that in many operating markets there were “seams” of consumer demand which existed between the full-producing shops but which could not support an additional producing unit. To preempt competition from gaining a toehold in those locations, one option was the use of satellite outlets. Satellites were nonproducing units which were serviced from nearby fullproducing units. They could take the form of a storefront, a stall in a shopping mall, or even a cart in a train station.

Tom Schwarz, president of Dunkin’Donuts, commented on the current situation, “We know we’re not going to get people to eat a lot more doughnuts, but by increasing new opportunities we can get a lot more people to eat our doughnuts. We’ve got some work to do! ” Table 3 Time of Last Purchase Occasion Weekend Breakfast/ Late Night AM Snack Snack Takeout Takeout 25% 7% Breakfast/ AM Snack At Shop Purchasers(%) 11% Weekday Breakfast/ Noon AM Snack Snack Takeout Takeout 39% 7% Late Night Snack Takeout 11%

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