Dunkin Donuts' Overview
Dunkin Donuts is a US-based Quick Service Restaurant chain that sells different varieties of coffee donuts, bagels, croissants, muffins, sandwiches, and many other dishes. The company was founded in 1950 and has a network of more than 11300 restaurants in 36 countries including the US, Canada, India, Japan, the UK, Russia, New Zealand, etc. (Dunkin Donuts, 2021). Dunkin Donuts is owned by Inspire, a company that also owns other popular food brands such as Arby’s, Baskin Robbins, Buffalo Wild Wings, Rusty Taco, and SONIC among others. Dunkin Donuts earned a revenue of $972.1 million in 2020.
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This article would effectively highlight the strengths, weaknesses, and available opportunities for Dunkin Donuts along with the factors that can pose a threat to its operations. An elaborate SWOT Analysis of the company will delve deep into the internal capabilities of the company. Moreover, if you want to learn more about the SWOT Analysis Model, you can go through our extensive guide on SWOT Analysis. For now, let us get started with the SWOT Analysis of Dunkin Donuts.
A Substantial SWOT analysis of Dunkin Donuts
Dunkin Donuts' strengths
- Strong multi-national presence- Dunkin Donuts has a strong presence in 36 major countries with over 11000 restaurants. It occupies over 16% share in the US retail coffee market and also has a strong presence across other top countries in the world.
- Strong company association- The brand Dunkin Donuts is associated with a renowned company Inspire which is an expert in the hospitality sector and has multiple other companies in its portfolio including famous burger chain Arby's, ice cream chain Baskin Robbins and much more.
- Wide range of products- Dunkin Donuts serves many products in its restaurants that include a special breakfast menu consisting of eggs and sausage. Further, it serves hot and cold beverages and bakery items that include croissants, and donuts along with other items. The vast menu ensures that customers get all their preferred dishes under one roof, thereby leading to an increase in the customer base for the company. Given its diverse product portfolio, the company has done well in terms of market penetration.
- Sustainable Practices- Dunkin Donuts is involved in many sustainable efforts that include making cups and their lid from recyclable and environment-friendly materials. Further, the company is investing in initiatives that relate to the eco-friendly cultivation of coffee beans by tying up with various agencies such as World Coffee Research. Moreover, the company ranks high in diversity and inclusion and its corporate policies and practices grant equal rights to the employees of the LGBTI community. It has also been ranked top at the corporate equality index in 2019 for adhering to employee sustainable practices (Dunkin Donuts, 2021).
- Brand loyalty- Dunkin Donuts has a loyal customer base because of its excellent taste of food and drinks. It has been awarded as a top brand for the last 12 years for consumer loyalty in the out-of-home coffee category by Brand Keys Customer Loyalty Engagement Index. In order to retain its customers, Dunkin Donuts has a loyalty program wherein the members earn five points for every dollar they spend at the store using Dunkin Donuts Card or its mobile app. This has led to an increase in its digital operations and the company’s app has been downloaded by 10 million customers.
Dunkin Donuts' weaknesses
- Low financial capabilities- Dunkin donuts has an enormous $3.4 billion of debt and a debt ratio of 1.79 which is more than the standard limit.
- Over-reliance on the US market- 45% of the company’s revenues are generated just from the US. This can cause financial and operational troubles to the company if the US market slows down. To overcome this weakness, the company needs to undertake effective strategic planning to frame strategies for penetrating new markets.
- Franchisee model- Dunkin Donuts operates through a franchisee model wherein the restaurants are operated by different franchises. This results in a lack of full control over the operations and the wrongdoings by franchisees can result in a negative image of the brand.
Dunkin Donuts' opportunities
- Expansion in emerging markets- Dunkin Donuts can aggressively expand in emerging markets like Bangladesh where the per capita income is rising significantly. It reached $2227 in FY2021, an increase of around $200 from the last year (Hossian, 2021). Further, there is a significant opportunity as the consumption of coffee has risen from 0.3 knots in 2000 to more than 3 knots in 2019. The company will need strategic change management to strengthen its presence in emerging markets.
- Healthier product variety- Dunkin Donuts can add healthy options to its menus like salads and various keto foods to attract diet-conscious customers. The consumption of the keto diet is on the rise and the market is worth more than $9.5 billion and it is expected to double by 2026. Venturing into this market can lead to a huge increase in profitability for the company.
Dunkin Donuts' threats
- Rivalry- Dunkin Donuts faces stiff competition from brands like Starbucks, Caribou Coffee, Peet’s coffee, etc. Starbucks has a huge 40% market share in the US retail coffee market. Peet’s Coffee has 340 coffee shops in the US and occupies 10% of the US coffee market.
- Transition in customer preferences- Due to COVID and government assistance, there is an increase in awareness among the people for healthy meals such as boiled food, salads, and plant-based meat which can cause a threat to the sales of its products. The global health & wellness food market is growing at a rampant pace.
To encapsulate, Dunkin Donuts has a large number of quick-service restaurants, 11000 in total. It has a competitive edge because of its huge brand loyalty and has remained one of the top preferred brands in the out-of-home coffee category for the last 12 years. The company is involved in various sustainable practices like offering the coffee in the cups made of recycled plastic and it is also concerned about the coffee farmers. This can be advantageous as it can lead to an enhanced brand image in the community. But the company has a tremendous amount of debt compared to the available equity. This can be a barrier to long-term sustainability. Dunkin Donuts is present in limited countries and it should enhance in the emerging markets that can increase the chances of profitability. Also, Dunkin Donuts needs to reduce the use of beef and pork in its dishes and rather focus more on plant-based meat as the customer taste is shifting more toward the vegan diet. Besides, you can also read our Dunkin Donuts PESTLE Analysis to understand how external factors in the macro environment influence the food and beverages industry and hence, Dunkin Donuts.
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Afrah, A. (2021). Coffee habits: What type Bangladesh people consume and why?. Retrieved 11 April 2022, from https://thefinancialexpress.com.bd/views/views/coffee-habits-what-type-bangladesh-people-consume-and-why-1626495212
Hossain, S. (2021). Per capita income rise in Bangladesh benefits few rich: experts. Retrieved 11 April 2022, from https://www.newagebd.net/article/145661/per-capita-income-rise-in-bangladesh-benefits-few-rich-experts