Case 7 Dunkin' Donuts-Growth Feeds a Sweet Tooth The java giant is opening hundreds of stores and entering new markets appealing to a new generation of customers. But can Dunkin' Donuts sitay on course with its rapid growth? Donuts with Passports Dunkin' Donuts's present global travels are a long step from its first coffee shops opened in the Boston, Massachuset area in 1950. Now it's an international brand with a reputation for quality that has earned the trust of many loyal customers. Company executives are hoping that careful strategic planning will keep consu hers worldwide "Runnin' on Dunkin' * Part of Dunkin' Donuts's strategic plan of action udes focusing on its core products-coffee and donuts. With 500 billion cups com med every year, coffee is the most popular global beverage, and estimates are that Americans drink 400 million cups a day. Dunkin' Donuts serves close to 3 million of them. That equates to about 30 cups per second and 65% of the compa Target on Emerging Markets Most Americans have exper ced the Dunkin' Don most 11,000 outlets. The Dunkin' brand has carved out an international niche, not only in exper arkets such as Canada and Brazil, but also in some unexpected ones such as India, Brazil, Catar, S The company is betting big on emer use they are growing very quickly, they've a fast growing gout more], and they love Ame ican brands," says CEO Nigel Travis. The company's growth plans include ope e country's total number of Dunkin' Donuts stores to 500 within a 15-year perio number of the 350-450 outlets that it plans to open outside the U.S. this ye re are now more than 10,850 Dunkin' Donuts retail locations, including in excess of 7,650 in the United States alone, and they are operating in more than 3,150 locations in other count uary 2017, all Dunkin' Donuts locations were owned and operated by franchisees. New Products For most of its existence, Dunkin' Donuts' main product focus has been donuts and coffee for dunking them. Since Stan Frankenthaler became executive chef and vice president, Dunkin' has launched about 25 new products annually as part of a new product innovation initiative. It has stepped up by offering a variety of espresso based drinks and sugar-free flavorings, including caramel, vanilla, and mocha swin Dunkin's strategy now includes breakfast sand ions of eggs, cheese, ham, and sausage on Texas toast, as well as English muffins, croissants, bagel san and burritos. If plans prove successful, more customers than ever may flock to the shops. However, it may take a while to ce them that Dunkin' Donuts is the place to go to for a big breakfast. Sometimes called the "anti-Starbucks," Dunkin' Donuts has a rich history of offering simple and straightforward morning snacks-earnest and without pretense everyday working class. The company appeals to modest, cost-conscious customers. Not content to be merely an eco noice for customers, the donut icon is also moving toward a more environmentally friendly and health-cons bach. Dunkin' Donuts recently announced that it would eliminate synthetic colors from its food and beverage offerings by the e d of 2018. Dunkin' Brands Chairman and CEO Nigel Travis says, "we are committed to meet the evolving needs of our custom ding their preference for more nutritional transparency and simpler ingredients, while maintaining the great taste and the fun, vibrant colors expected from Dunkin' Donuts and Baskin Robbins products." Selective Partnerships Dunkin' Donuts is banking on strategic partnerships to help fuel growth. But "selectivity" rules the partnership decisions. Although it often partners with grocery retailers to create a store-within-a-store concept, the ompany is very choosy about where it sets up shop. "We want to be situated in s rkets that provide a superior overall customer experience," says a Dunkin' bus reloper. "Of course, we also want to ensure that the supermarket is large enough to allow us to provide the full e ssion of our brand . . . which includes hot and iced coffee, our line of high- quality espresso beverages, donuts, bagels, muff ven our breakfast sandwiches." Furthermore, the outlet's location within the supermarket is critical for a successful relationship. "We want to be accessible and visible to customers, because we feel that gives us the best chance to increase incr emental traffic and help the supermarket to enhance their overall performance." Finding the Sweet Spot If Dunkin' Donuts can find the "sweet spot" by being within most consumers' reach without creating the feel of a mass retail-like presence, the company's growth strategy may be successful. But this strategy has risks. Offering too many original products in too many locati ential brand appeal and alienate longtime customers who respect its history of simplicity. Potential new ' Donuts as an uncool "yesterday's brand." Then, too, some older franchise long overdue for a pecially when compared to the trendy Italian feel of a nea ectly at a core Starbucks market, Dunkin' Brands recently reported that it is partnering Coca-cola to launch a complete billed coffee beverages in its U.S. markets in 2017. Starbucks currently has an 80% sha re of this lucrative category, and the move into the $1.5-billion, ready-to-drink coffee market is Dunkin' Donuts's attempt to crack this space. The donut company's iced coffees will be distributed in grocery stores by Coca-cola. Case Analysis Questions 1. DISCUSSION What does Porter's Five Forces analysis suggest about the attractiveness of competing in the same industry as Starbucks? What are the strategic implications for Dunkin' Donuts? 2. PROBLEM SOLVING Complete an up-to-date SWOT analysis for Dunkin' Donuts. If you were the CEO of the firm, what would you consider to be the strategic management implications of this SWOT analysis, and why? 3. FURTHER RESEARCH Research the latest moves by Starbucks and other Dunkin' Donuts's competitors. What is each doing that seems similar to and different from the approach of the other? Can you say that Dunkin' is on the right track? Is it carving out new market share? Or is it going to be more of a copycat player in the industry