Top 200 Franchise by Entrepreneur – Rank no.13 – Dunkin’ Donuts – US
Products & Services: Coffee, doughnuts, baked goods
Number of Locations: 10,506
Total Investment: $294K – 1.51M
Began Franchising: 1955
About Dunkin’ Donuts
In 1946, Bill Rosenberg founded Industrial Luncheon Services, a company that delivered meals and snacks to workers in the Boston area. The success of Industrial Luncheon Services convinced Rosenberg to start The Open Kettle, a doughnut shop in Quincy, Massachusetts. Two years later, The Open Kettle changed its name to Dunkin’ Donuts.
Today, Dunkin’ Donuts stores can be found in over 32 countries, and they serve 70 varieties of doughnuts, along with hot and cold coffee drinks, bagels, breakfast sandwiches and other baked goods. Dunkin’ Donuts parent company, Dunkin’ Brands Inc., also franchises Baskin-Robbins, and the two concepts are sometimes co-branded.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $40,000 – $90,000
Ongoing Royalty Fee: 5.9%
Term of Franchise Agreement: Term of agreement not renewable
Net Worth: $250,000
Liquid Cash Available: $125,000
How This Franchise Supports Franchisees
Franchise Ranking History
|Type||Wholly owned subsidiary|
|Industry||Food and Beverage|
|Headquarters||130 Royall Street
Canton, Massachusetts, U.S.
|Key people||Nigel Travis, CEO
Neil Moses, CFO
|Revenue||$5.5 billion USD (2008)|
Dunkin’ Donuts is an American global doughnut company and coffeehouse chain based in Canton, Massachusetts. It was founded in 1950 by William Rosenberg in Quincy, Massachusetts. Since its founding, the company has grown to become the largest coffee and baked goods chain in the world, with 15,000 restaurants in 37 different countries. The chain has grown to include over 1,000 items on their menu, including doughnuts, bagels, other baked goods, and a wide variety of hot and iced beverages. The logo is two Ds side by side in orange and hot pink, placed on a coffee cup next to the words “Dunkin’ Donuts" written in orange and hot pink.
In 1948, William Rosenberg and Stephen So opened their first restaurant, Open Kettle, in Quincy, Massachusetts before renaming it Dunkin’ Donuts in 1950. The idea for the chain came about after previous experiences Rosenberg had selling food in factories and construction sites, where doughnuts and coffee were the two most popular items. By 1955, Rosenberg started selling the franchise of Dunkin’ Donuts to others. In 1959, the company began growing, which led Rosenberg to lobby for Dunkin’ Donuts at the International Franchise Association. In 2002, Rosenberg passed away at the age of 86 from bladder cancer in his home in Mashpee, Cape Cod.
In 1963, the chain’s 100th restaurant opened. In 1972, the company released Munchkins, a popular item that resembles what the hole in the center of a doughnut would look like. The chain grew to 1,000 restaurants in 1979, 2,000 in 1990, and 3,000 in 1992. In 1996, bagels were introduced to the Dunkin’ Donuts menu, followed by breakfast sandwiches a year later.
In 2004, the company’s headquarters were relocated to Canton. The following year, four-time James Beard Foundation Award nominee Stan Frankenthaler was appointed the company’s first Executive Chef/Director of Culinary Development. In 2006, Dunkin’ Donuts began using the slogan “America Runs on Dunkin" which continues to be used in many advertisements.
In 2008, Dunkin’ Donuts opened its first “green" store in St. Petersburg, Florida. The restaurant is Leadership in Energy and Environmental Design (LEED) certified and includes programs like worm composting (which “will eat the waste produced by the store, such as coffee grounds and paper products … convert[ing it] into fertilizer for local farms and gardens"), water-efficient plumbing fixtures, and the use of well water rather than potable water for all irrigation. On December 10, 2008, Nigel Travis was appointed Chief Executive Officer of Dunkin’ Brands. He also assumed the role of Dunkin’ Donuts President at the end of 2009.
In 2010, Dunkin’ Donuts’ global system-wide sales were $6 billion. In 2011, Dunkin’ Donuts earned the No. 1 ranking for customer loyalty in the coffee category by Brand Keys for the fifth year in a row.
In April 2012, Dunkin’ Donuts switched its beverage products to The Coca-Cola Company having served PepsiCo products in response to rivals expanding PepsiCo products to theUnited States in 2011. The only exception was PepsiCo’s Gatorade. Locations in Canada were unaffected by the switch, although a location in Montreal‘s Eaton Centre servedNestea along with mostly PepsiCo products.
Dunkin’ Donuts, along with Baskin-Robbins, is owned by Dunkin’ Brands Inc. (known as Allied Domecq Quick Service Restaurants, when it was a part of Allied Domecq). Dunkin’ Brands used to own the Togo’s chain, but sold it in late 2007 to a private equity firm. Dunkin’ Brands was owned by French beverage company Pernod Ricard S.A. after it purchased Allied Domecq. They reached an agreement in December 2005 to sell the brand to a consortium of three private-equity firms, Bain Capital Partners, the Carlyle Group and Thomas H. Lee Partners.
The company’s largest competitors include Krispy Kreme donuts, Starbucks, and small locally owned doughnut shops. In Canada and parts of the northern United States, Tim Hortons is a major competitor. In Colombia, Donut Factory had been its local rival, and Dunkin’ has adapted its doughnut selection to local tastes. Mister Donut had been its largest competitor in the United States before the company was bought by Dunkin’ Donuts’ parent company. The Mister Donut stores were rebranded as Dunkin’ Donuts. Dunkin’ controls the trademark rights to the Mister Donut trademark through various new and amended older trademark registrations with the USPTO.
- Hot beverages
- Iced beverages
- Iced coffee
- Iced latte
- Iced teas
- Frozen beverages
- Frozen coffees
- Oven-toasted sandwiches
- Big N’ Toasted
- Glazed Donut Breakfast Sandwich.
Since October 18, 2007, Dunkin’ Donuts locations in the United States have reduced trans fats from their menu items by switching to a blend of palm, soybean, and cottonseedoils. International locations are expected to adopt the change in the coming years. The DDSmart menu features items that are reduced in calories, fat, saturated fat, sugar, or sodium by no less than 25 percent.
Generally, food items from Dunkin’ Donuts do not have over 600 calories. However, the salt content can be quite high (ranging from 260 mg to 1,310 mg), especially within the breakfast sandwiches, which may be a concern for someone who is trying to watch their sodium.
Dunkin’ Donuts’ DDsmart Menu features “better-for-you" food options. This menu can help customers avoid high-caloric, high-sodium foods and choose somewhat healthier food options .
The Glazed Donut Egg Bacon Breakfast Sandwich, however, contains at least five ingredients which could be harmful: mono and diglycerides, propylene glycol, sodium stearoyl lactylate, smoke flavoring and sodium nitrite.
One early logo that Dunkin’ Donuts registered with the United States Patent and Trademark Office was for a drawing and word logo depicting what can be described as a “doughnut man", a figure with a doughnut for a head holding a coffee cup and wearing an apron with the company name emblazoned on it. According to the Trademark Office TESS data base, the logo was first applied for on June 23, 1958 and was registered on May 23, 1961 and put into use on July 1, 1964.
Before that a script version of its name, Dunkin’ Donuts, was filed on March 31, 1955 and registered on February 2, 1960. It was subsequently cancelled because of Section 8. It was later reinstated, as a trademark upon Section 8 was acceptance on July 3, 2001. The stylized word mark is owned by DD IP Holder LLC.
- Only at Dunkin’ Donuts (1950 – March 31, 1991)
- The Place for Donuts and Coffee (1950–1964, secondary)
- America’s Favorite Donut and Coffee Shop(1964–1967, secondary)
- America’s Favorite Donut Shop (1967–1968, secondary)
- America’s Donut Shop (1968–1973, secondary)
- America’s Dunkin’ (1973–1976, secondary)
- Always Dunkin’ (1976–1979, secondary)
- It’s Worth the Trip (1979–1990, secondary) (1997–1999, primary)
- You Can’t Get Better Tasting Coffee (date uncertain)
- You’re Dunkin’ (1980–1993, secondary)
- You’re Still Dunkin’ (1993–1997, secondary)
- Loosen Up a Little (2000)
- Just the Thing (2000s)
- America Runs on Dunkin’ (since 2007)
- Dunkin’ Donuts’ “It’s Worth the Trip" campaign, starring sleepy-eyed “Fred the Baker" and featuring the catchphrase “Time to make the donuts", won honors from the Television Bureau of Advertising as one of the five best commercials of the 1980s. Fred the Baker was played by actor Michael Vale for over 15 years until his retirement in 1997.
- Since Dunkin’ Donuts changed its slogan in 2006 to “America Runs on Dunkin’," They Might Be Giants songs have been featured in an ongoing series of advertisements of Dunkin’ Donuts new products to boost summer sales. In 2007, a series of Dunkin’ Donuts commercials referred to the fictional language “Fritalian" (sometimes incorrectly spelled “Fretalian") which would be a portmanteau of French and Italian: “Is it French? Or is it Italian?" sings a chorus of customers in an unnamed coffee shop with a long menu of non-English terms. “Perhaps Fritalian?" created by Hill, Holliday, Connors, Cosmopulos with the express intent to “poke fun at pretentious Starbucks-style coffee chains, with patrons attempting to order hard-to-pronounce lattes." The commercial was interpreted as a deliberate mocking of Starbucks. The commercials’ punchline, “Delicious lattes from Dunkin’ Donuts. You order them in English," has been a point of discussion with respect to the fact that lattes, cappuccinos, and espresso are borrowed words from Italian which have no equivalency in English; the commercials, however, refer to the Starbucks ordering language itself, poking fun at words such as grande andventi.“
- Further commercials in 2007 more directly mocked Starbucks, with a customer ordering a “Large" and being chastised to use the term “Dieci", with dieci being Italian for the number 10 while Starbucks’ venti is Italian for the number 20.
- In 2007, John Goodman began doing voice over work for Dunkin’ Donuts commercials.
- Rachael Ray has starred in commercials for Dunkin’ Donuts since 2007. In May 2008, Dunkin’ Donuts removed a commercial from its website featuring Ray wearing a scarf with a black and white paisley floral design, in response to right-wing blogger/columnist Michelle Malkin‘s claims that the scarf resembled the keffiyeh worn by Yasser Arafat and therefore a sign of support for terrorists. Dunkin Donuts pulled that commercial off the air, leading to more criticism of the company’s perceived kowtowing to special interests.
- Since 2005, Joey de Leon started endorsing Dunkin’ Donuts Philippines starring in funny commercials.
- In January 2009, Dunkin’ Donuts launched its “You Kin’ Do It" campaign.
- A radio advertisement in 2010 featured fictional lawyer Bob “The Bulldozer" Phillips in a direct parody of real-life lawyer Jim “The Hammer" Shapiro.
In early 2007, Dunkin’ Donuts b Score! that featured tear-off game pieces on its coffee cups.
Easy Bake Oven, a product of Hasbro, created product recipes based on Dunkin’ Donuts products.
In 2007, Dunkin’ created a promotional campaign centered on a coffee cup named Joe Dunkin. Videos were created for the Yankees andMets in which he tried out for the team, the New York football Giants in which he was the kicker, the Jets in which he played a Joe Namath parody named Off Broadway Joe Dunkin, and the Nets in which he played a potential draft pick who performed rap solos about Dunkin’ products.
In 2008, as a response to Starbucks closing its stores for three hours on February 26, Dunkin’ Donuts locations offered a 99 cent latte, cappuccino, and espresso promotion from 1–10 pm.
In 2009 and 2010, there was a campaign for people to “Create Dunkin’s Next Donut". In 2009, Jeff Hager of Hoover, Alabama was selected for his glazed sour cream cake doughnut, topped with chopped Heath Bar, titled “Toffee For Your Coffee". The 2010 winner was Rachel Davis of Sharon, Massachusetts, selected for “Monkey See Monkey Donut”, a banana-filled doughnut with chocolate icing, topped with Reese’s Peanut Butter Cups shavings. Each won a check for $12,000 and their doughnuts were available in Dunkin’ Donuts locations for a limited time.
In 2010, Dunkin’ Donuts launched a campaign called “Caught Cold" starring NBA All-Star spokesman Ray Allen, which awarded game tickets to Boston Celtics fans caught drinking Dunkin’ Donuts iced coffee.
In July 2012, Dunkin’ Donuts produced a new doughnut and a new Coolatta to celebrate the 100th year anniversary of the Oreo cookie. It has added an Oreo cream filled doughnut and a vanilla and coffee coolatta with Oreo in it as part of the promotion.
In August 2013, Long Island Dunkin’ Donuts restaurants launched t-shirts to help rebuild the community from Hurricane Sandy that occurred in October 2012. The shirts contain the phrase “REBUILDD Long Island," and portions of the proceeds are donated to Long Island Cares Inc. The campaign was important to Long Island locations and regional food banks. These locations have shown their support by helping the Long Island community days after the storm and has continued their efforts through the “REBUILDD Long Island" t-shirts.
Dunkin’ Donuts has been featured in many films and has a close relationship with major sports teams, such as the Boston Red Sox and the New England Patriots, making commercials at the start of each team’s season for promotions. Dunkin’ Donuts also sponsors many other professional sports teams, including the Dallas Cowboys, New York Yankees, New York Mets, Tampa Bay Rays and others.
Dunkin’ Donuts’s slogan is “America Runs On Dunkin'", even though most of its stores are concentrated on the east coast, with only two west-coast locations — (Portland, Oregon), and a location on the Marine Corps base at Camp Pendleton (opened May 2012), with limited public accessibility. In March 2009, the company unveiled an alternate slogan, “You ‘Kin Do It!", and launched a more than $100 million ad campaign to promote it. The campaign, which was to run through 2009, included radio, print and outdoor advertising, in addition to in-store point-of-purchase, special events, and sports marketing.
The original Dunkin’ Donuts slogan was Sounds Good, Tastes Even Better.
Controversy and criticism
In 1997, Dunkindonuts.org was founded by a customer, for disgruntled consumers and employees to lodge complaints about the company. The site appeared before the company’s own website in many search engines, and received national media coverage before being purchased by Dunkin’ Donuts in 1999.
Dunkin’ Donuts has been criticized by some of its franchisees for allegedly coercing them out of business at large financial losses. Dunkin’ Donuts has sued franchise owners 154 times since 2006. Over the same stretch of time, McDonald’s was involved in five lawsuits. Subway, a company that has four times the number of locations as Dunkin’ Donuts, sued its franchisees 12 times. However, these figures do not include arbitrations, which Subway, McDonald’s and Dunkin’ Donuts use in bringing legal claims against their franchisees. Franchisees allege that the company’s larger business strategy requires multi-unit franchisees who have ample capital and can open numerous stores rapidly to compete with Starbucks.
In 2009, the company temporarily stopped the sale of two of its products, the Dunkaccino and hot chocolate, after concern of a possible salmonella poisoning at a supplier’s facilities. Dunkin’ Donuts claims that none of the beverages were contaminated, but the recall was out of safety for the consumer.
In 2009, the Kainos Partners Holding Co., which owned and operated 56 Dunkin’ Donuts, filed for bankruptcy. The company claimed to owe an amount between $10 and $50 million. Bart Thorne said that one of the primary causes for bankruptcy was the economic recession that was occurring at the time.
In May 2010, Dunkin’ Donuts was criticized for advertising “Free Iced Coffee Day" on its national Facebook page, which only took place in 13 cities. Because of the limited scope of the promotion, many customers became dissatisfied with the lack of free iced coffee and vented their anger on the Dunkin’ Donuts Facebook page.
In 2013, the Dunkin’ Donuts chain in Thailand used an advertisement that contained a photograph of a woman in black face-paint, in order to promote its new chocolate flavored donuts. The company was criticized for the advertisement, with the Human Rights Watch calling the advertisement “bizarre and racist”. The headquarters in the United States apologized for the advertisement.
Dunkin’ Donuts is a subsidiary of Dunkin’ Brands, a franchiser of quick service restaurants serving hot and cold coffee and baked goods. Dunkin’ Donuts headquarters is located at 130 Royall St, Canton, Massachusetts, which is also the headquarters for Baskin-Robbins. On December 29, 2012, there were 10,479 Dunkin’ Donuts locations where products were distributed: 7,306 were in the United States and 3,173 were in other countries. Dunkin’ Donuts is continuing to grow by adding more locations around the U.S. In July 2013, Dunkin’ Donuts opened its 500th restaurant in New York City. This location is combined with a Baskin-Robbins restaurant. Dunkin’ Donuts expanded to the west coast of the United States. The company has agreed to open 18 restaurants in Orange County, Californiain 2015. There will also be eight restaurants developed in North Inland Empire, California, with the first location opening 2015. This figure compares with the 17,009 stores of coffee chain Starbucks. Nearly all of Dunkin’ Donuts locations are franchisee owned and operated. In the U.S., there are only 78 franchisees west of the Mississippi River, mostly in Iowa, Arizona, Nevada, New Mexico, and Texas.
In the past decade, Dunkin’ Donuts has opened many shops in both the Phoenix and Las Vegas metropolitan areas. As of 2013, there was one store in California, where the company is expecting to open upwards of 1,000 stores starting in 2015. The most recent large city in which Dunkin’ Donuts has opened is Salt Lake City, whose first shop had their grand opening on June 25, 2013. Within its Northeast home base, however, Dunkin’ Donuts is very popular, and particularly dominant within New England. In addition to its stand-alone shops, Dunkin’ Donuts shops can be found in many gas stations, supermarkets, mall and airport food courts, and Walmart stores.
In the United States, Dunkin’ Donuts is sometimes paired with Baskin-Robbins ice cream shops. While such locations usually have two counters set up for each chain (much like the Wendy’s/Tim Hortons co-branded locations in Canada), depending on business that day, both products can be bought at the same counter (usually the Dunkin’ counter), much like the Yum! Brands stores.
In Brazil, Dunkin’ Donuts opened its first building in 1980. Most ended up closing the network through the points for the company Café Donuts. In 2013, it plans to open 25 franchises in the country.
In Canada Dunkin’ Donuts has lost a substantial percent of its market share. In recent years[when?] the chain has disappeared from all regions of Canada, except the province ofQuebec. Its decline is most apparent in Quebec, where the chain once had 210 stores but had only five stores left as of early 2013, the last franchisees in the country. One of the main reasons for the decline was competition with Tim Hortons. A group of franchisees won a C$16.4 million civil court judgement against the parent company for failing to adequately promote the brand in Canada.
Dunkin’ Donuts began business in Japan in 1970 as the first Asian country to open its stores. The Japanese chain was owned by a joint venture between the Saison Group,Yoshinoya, and the Japanese subsidiary of the Compass Group named Seiyo Food Systems. After 28 years of operating in Japan, Dunkin’ Donuts ceased business there in 1998 due to declining sales and poor performance. All of the non-military base locations were either closed or converted to Mister Donut locations. Dunkin’ Donuts still has locations in United States military bases, which are open only to military personnel.
U.S. West Coast expansion
On January 16, 2013, Nigel Travis, Dunkin’ Donuts’ CEO, announced that the Dunkin’ Donuts franchises will be available in California beginning in 2015.
- Cayman Islands
- South Korea
- Japan (US military bases only)
- New Zealand
- Puerto Rico
- Saudi Arabia
- United Arab Emirates
- United States
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- Dunkin’ Donuts plans to expand its number of American locations to 15,000 by 2020.
- The company announced plans to open 100 stores in Taiwan over the next ten years.
- Dunkin’ Donuts is expected to re-enter the Australian market in 2013. There were stores in Australia since the 1980s, however all of them were closed by the late 2000s.
- The company expects to open up in Ukraine.
- Dunkin’ Donuts plans to open ten additional stores in New Delhi, India by March 31, 2013, and 80-100 stores nationwide by 2017.
- Dunkin’ Donuts is expected to open its first three stores in Costa Rica by the second quarter of 2012.
- The company plans to re-enter the UK market, as announced in August 2012.
- Dunkin’ Donuts announces plans to develop restaurants in Turkey – October 2013.