CASE STUDY: DUNKIN DONUTS 1
CaseStudy: Dunkin Donuts
Duringthe 1940s, Dunkin Donuts begun as a donut shop in Quincy,Massachusetts, owned by Bill Rosenberg. Bill Rosenberg officiallychanged its name to Dunkin Donut from The Open Kettle two years afterit begun its operation. Currently, Dunkin Donuts has over 8000 storesin more than 50 countries. The company also franchises BaskinRobbins, which are frequently co-branded with the Dunkin Donutsfranchise. However, Dunkin donut lacks company owned stores andsolely focuses on franchising stores instead of company-owned stores.With increasing competition from the Starbucks and McDonalds, thisreports investigates how Dunkin Donuts survives in such competitiveenvironment.
In the recent years, the sales force has been the primary instrumentfor presenting organization’s product and services. Sustaining andestablishing an efficient and effective bond between the sales teamand the buying customers is significant in meeting financial andother goals of the company. Initially, little effort was devoted tothe development of managing a sales force (Belt, 2009). Thecharacteristics of entry were weak even though the requirement thatone sell were clear. The retail sales framework has significantlytransitioned over the past years due to innovation, economicdevelopment, better-trained sales force, and the complex level neededto sell products. These factors have altered the system of the retailsales and continue to cause it to transition so as fit in the currentsetting. In this context, it is virtually possible to recognizeDunkin’ Donuts standardized experience to that of Starbuck andMcDonalds. Each of Dunkin’ Donuts Company-owned retail storesshares almost the exact same layout or at least all the significantstandardized components and merchandised coupled with friendlycustomer oriented services. The stores are neither “Do It Yourself”oriented nor more contractor oriented (Belt, 2009). However, the lookand feel of the stores remains more or less the same in terms of lookand feels like standard product service offering. Identifying thesimilarities found between the company-owned stores of the Dunkin’Donuts has led to interest into how the food and beverage manage andconduct retail. The main focus of this report is how Dunkin’ Donutsand other top companies in the food and beverage industry balancebetween selling through company-owned stores or franchise retailoutlets. The report will also examine the value of service offeredand provided by Dunkin’ Donuts and its significant competitors.These competitors include the McDonalds and the Starbucks. Dunkin’Donuts sells a unique and different set of products from theStarbucks and the McDonalds. However, in North America, these threecompanies compete in the big leagues of availing hot beverages tomillions of coffee thirsting Americans.
Dunkin’ Donutsstarted in the 1940s as a company called Industrial Luncheon service.The company has currently m, ore than 800 stores in more than 50nations. The table below provides an overview expansion of DunkinDonuts global franchise units.
The table suggeststhat Dunkin’ Donuts does not own stores and solely focus onfranchising stores than company owned retailed stores. The companyavails experts that provide best practice field support to allbusiness connected operations including franchising, development,marketing, and constructions. The service provided by the expertextends to franchising opportunities, site selection, and producttraining through the process of development. Dunkin’ Donuts alsoavails franchise equipment and information through the company’straining and support teams at a service level expected from a largeglobal organization. Dunkin’ Donuts investment in its franchisesenables it to operate more cost effective and efficiently.
Some of the benefitsof the franchise includes brand recognition, competitive brand, andthe online university. This permits potential for uncontrolledprofits, the opportunity to be part of a company that avails diverselearning programs, courses and resources throughout the year. some ofthe risks encompass candidate profile in terms of the initialfranchise demands including a high level of both skills and resourcesthus restoring many investors. Also, this approach has exposedDunkin’ Donuts to up 10-15 times more lawsuits than an averagefranchise (Dunkin donuts).
Regardless of this,Dunkin Donuts still has managed to maintain a disciplined, steadystrategic growth by opening in all North American core markets. Thecompany currently boasts with more than 8,000 restaurants in 50states including the District of Columbia becoming a part of thedaily lives of millions of American. Foucing on franchising strategy,Dunkin Donuts maintains a significant brand recognition in the Unitedstates as well as globally with the opportunity to expand the numberof restaurants even more by doubling the amount of restaurants to20,000 stores only in the United States over the coming years.Besides, Dunkin’ Donut has more than 3, 000 locations in over 40international countries across the world.
The trend currentlyin the midst of a globalized economy is the growth and expansion of acompany’s business within the emergent markets (Belt, 2009).Starbucks’ approach to its market positioning is somehow differentto that of Dunkin Donuts being closer to the higher-quality end ofcoffee offerings instead of the average American middle-class targetmarket. Starbucks has always applied the standard company ownedretail store methodology with the majority of its annual net revenuebeing generated mainly through this company owned retailer locationsmainly centralized within highly populated areas with high volumefoot traffic. This strategy significantly favors domesticapplication. Starbucks is approaching the migration into these marketby losing t requirements for its licensing agreement. This hasallowed a hybrid Starbucks tailored franchise model that has enableda fast penetration and growth into the developing market. Thisstrategy has enabled retailed locations in many nations consisting ofthe BRIC nations. This strategy resulted in Starbucks generation of23 percent of its revenues for 2013 financial year, outside of theU.S with one of its main direct competitors, Dunkin Donuts’ 3percent. Although Dunkin Donuts manages to maintain higher marginsthrough its franchise model, Starbucks do gain greater sales volumesthrough its larger global presence and increasingly control thecompany has in its daily operations by means of its retail model.
Most of McDonald’srestaurant are either operated by the holding company, franchisees orMcDonald affiliates. McDonald’s business model is a three-leggedstool of its owners, suppliers, and employees of which all threefrom the company’s foundation. Establishing a balance between thevarious interests of the three parties is the essence of success forMcDonald. The level at which McDonalds align these three componentwith itself as a company has been the key to success, enabling aglobal business model that delivers a locally relevant restaurantexperience shaping a significant part in the located community. Thecompany also can identify, implement and measure innovative ideologyaccording to the changing needs and preferences of customers.
McDonald generatesrevenue from conventional franchisees in the form of rent androyalties as well as through the agreement with the franchisee interms of minimum rental payments and initial fees received when a newrestaurant is opened or a new franchise term is set in place.Agreements with the conventional franchise normally last twenty yearsof which the practice because of that is the same globally.Conventional franchise agreements make up for seventy percent of allMcDonald’s franchise restaurants. For developmental licenseagreements, the company merely receive revenue in the form ofroyalties and initiating fees as the licensee. A developmentallicense arrangement in America and the Caribbean is one of thebiggest of such arrangements covering more than 20 nations with morethan 20,000 stores. McDonald also shares an equity investment in alimited range of foreign markets known as affiliates of which thelargest is Japan with more than 3, 300 restaurants.
In comparison,Dunkin Donuts, McDonald, and Starbucks share their unique retailsales models. Starbucks sell solely through their historicallyrenowned retailed stores whereas Dunkin Donuts is in contrast solelysells through independent franchisors. However, McDonald applies ablend of three retail channels either operated by the holdingcompany, through franchises or retailed by McDonald affiliates. Theretail outlet of these three companies is standard from store tostore in terms of each company’s standard product service offersand store look and feel. However, it is evident that it is not due tothe store being company owned or franchised or a blend of models thatenable control of the offered product service. It is because of thecompany’s corporate that standardizes and enforces the offeredproduct service as well as store look and fell in the sales retailoutlet.
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Dunkin’ Donuts Press Kit. Retrieved from,http://news.dunkindonuts.com/imagelibrary/downloadmedia.ashx?MediaDetailsID=325.
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