Dunkin Donuts

Time to make the donuts. Duncan has long said it's on time to make donuts. Who else goes to that trouble? But it's not just pastries. Over its 70 plus years, Duncan has repeatedly spotted and adapted to new trends, even when that meant focusing less on donuts. Donuts literally used to be part of their name, and now it is not, and it definitely reflects how their sales have really changed and how beverages become so much more important than just selling donuts. From 2009 to 2019, a time when Duncan introduced many drink options and rebranded, it grew from around 6,000 to over 9,000 locations. The shift away from donuts and towards drinks is just one change that has helped the company evolve from a New England diner to a worldwide chain worth around $9 billion. This is the economics of Duncan. In 1948, restaurateur William Rosenberg opened a diner called Open Kettle in Quincy, Massachusetts, selling coffee for 10 cents and donuts for five. Two years later, he changed the name to Duncan Donuts, inspired by seeing others dunk donuts into their coffee. It was one of the first trends the company capitalized on. Donuts were actually served to troops during the wars. Behind the American lines in Italy, a brief interlude and good old fashioned donuts. And when troops came home, it was the 1950s and people were going back to offices and donuts were a really great way to quickly have breakfast on the go and Duncan Donuts really capitalized on that. Duncan, the magic munchkin. The company took donuts a step further in the early 1970s when they introduced the munchkin as a way to use the leftover dough from the center of donuts. This is what a munchkin looks They helped them get a Duncan Donuts in quite a few flavors. Donuts continued to be Duncan's focus through the 90s when trends began to shift. In the 1990s, 2000s, America was generally becoming more health conscious and donuts for all their tasty goodness is not really known as a very healthy breakfast alternative. So companies Meanwhile, Starbucks really was starting to take on the US at that time and was expanding a lot and what they were doing was inventing new kinds of drinks. Customers were looking for caffeine and a lot of it. The n So after decades of focusing on donuts, in 2006, Duncan made one of its first moves away from the pastries. When it introduced the slogan, America runs on Duncan. Coffee and beverage sales were popular for quick service restaurants since they have better profit margins than most offerings When you think of a breakfast sandwich or a baked good, that involves labor. It often involves many different types of ingredients might involve some kind of packaging. Whereas coffee at its simplest is just coffee in a cup. The labor tends to be less and that does make it more profitable generally for these drinks. By 2011, Duncan was selling more hot and iced coffee than any other fast food chain in the US, including Starbucks. In New England and New York, it had 57% of the fast food coffee market. At the time, Duncan had 6,800 locations, around half the amount it has now. And bigger changes lay ahead. In 2018, Duncan's rebrand and name change to go by just Duncan was a big step. That year, beverages made up 60% of Duncan'sales. I think one of the important things to recognize is caffeine is addictive and everyone So people often go to get coffee every morning where they might not necessarily get a donut every morning or some kind of food. To give customers more options for their caffeine fix, Duncan continued to expand their drink menu, releasing espressos, cappuccinos, lattes and Americanos. Take a sip of you got this with Duncan Espresso drinks. And in doing so, it went toe toe with Starbucks. Duncan is really trying to, in some ways, get into Starbucks's lane. They've offered a lot of different new kinds of beverages. They invested in machines to offer espresso. They offer cold drinks. They offer blended drinks. And they really are trying to, I would say, compete more with Starbucks, whereas Starbucks probably still thinks of itself as singular. After the push for more drink sales, in 2019, Duncan was one of the top coffee sellers of quick service restaurants, selling around 1. 6 billion hot and iced coffees. In 2021, Duncan sold over 4. 4 billion cups. While caffeine is a big seller, Duncan's drink focus isn't just on drip. The company said that highly visual beverages are a focal point of its menu. They've also launched more specialty drinks, Between all the flavors and coffee blends, they've added nearly 50 new menu items in the last four years. But on the food side of the menu, the brand struggled during the pandemic, when the breakfast category was hit hard by commuting changes caused by lockdowns. Duncan's decline in sales would have been nearly 5 percentage points larger if temporarily closed stores were included in those n But once again, hot and cold drinks with their high profit margins continued to be top sellers on the menu. Earlier in the pandemic, these cold drinks actually were a real saving grace for a lot of coffee chains, in part because people would order them in the afternoon. And it's really created a new day part for them where they didn't have it before. And so that's been really helpful for them when breakfast really took a hit early in the pandemic. Around that time, Duncan was releasing new drinks. For example, in 2020, Duncan announced the new Duncan Refresher. And this s Cold drinks really have exploded in popularity, including during the pandemic. And a lot of it has to do with social media, with TikTok. 70% of sales for a lot of these chains now is these cold beverages, which is a huge amount of growth in a very short amount of time. As beverages continue to grow more popular, Duncan's experience in developing buzzy drinks may help it create more in the future. Duncan certainly has changed from the 1950s when it was just known as a coffee and donut company. They've expanded their drinks, they've expanded their food, and thanks to franchising, they've expanded their locations. So I do think they've evolved a lot from their roots in Massachusetts. As obstacles caused by the pandemic continue to challenge companies across the board, it remains to be seen if Duncan's history of evolution will continue.