Industry analysts generally applaud Dunkin’s overall game plan.
“By co-branding with Baskin-Robbins ice cream and Togo’s sandwiches in a number of locations, Dunkin’ had already begun to expand consumer perceptions and expectations of the brand beyond its core bakery and beverage products,” says Darren Tristano, managing director of information services at Technomic, Inc. “With a strong, long-term reputation for quality already established, it shouldn’t be much of a stretch to convince customers who already routinely come in for their morning coffee and doughnuts to return at other parts of the day for other snacking opportunities.”
Dennis Lombardi, executive vice president of foodservice strategies at WD Partners also believes that “building on the company’s bakery and beverage heritage” is the way to go in terms of increasing sales within existing stores and establishing brand presence in new markets.
“This is a super-regional brand and as people from the Northeast have moved to other parts of the country, many have taken a recognition of and affinity for Dunkin’ along with them,” Lombardi says.
With so many fast-food chains focusing on upgrading their coffee offerings, coffee-centric chains like Dunkin’ and Starbucks need to expand their food offerings, says Bob Sandelman, president of Sandelman Associates market research firm. He describes Dunkin’s smoothie strategy as “a great way to build on the equity of the brand name and even out business throughout the day when the stores are going to be open anyway.”
Like Tristano, Lombardi is confident that Dunkin’s “strong perception of quality and history of customer satisfaction and loyalty” should be able to translate to a broader selection of snack-oriented items.
“The thinking is that if the coffee is that good and the doughnuts are fresh, then the smoothies, sandwiches, and other items are probably good, too,” he says. “The challenge for Dunkin’ is to make sure that every new product meets those expected quality standards.”
A strong advocate of focused marketing, Laura Ries, president of Ries & Ries consulting company, cautions that there are definite pitfalls inherent in expanding a brand.
“Brands are powerful because they stand for something specific in consumers’ minds,” she says. “But it doesn’t take much to confuse the message.”
She believes that Dunkin’ should carry out its geographical expansion plans before tackling major menu additions. She cited Starbucks as a good example of a company that established its brand and core products on a national level quickly and effectively.
“With too many things going on at once, it’s easy to take your eye off the basics and miss critical operational and quality-of-consumer-experience problems,” Ries says. “That has happened to many of the industry’s best-known names and continues to happen time and time again.”
Dunkin’ Donuts has established itself as the “anti-Starbucks,” an all-American spot with a non-elitist attitude and a reputation for really good and affordable coffee fast, she says. She cautions that smoothies, a more labor-intensive beverage, and sandwiches, which have to be baked, can slow the line and water down the speed advantage.
“People who know Dunkin’ Donuts or hear the name expect to encounter a powerful smell of sugar and coffee when they walk in the door,” Ries says. “When you start adding the smells of savory foods such as sandwiches and pizzas to the mix, it just doesn’t have the same effect.”
“In the $2-billion smoothie category, Dunkin’ ’has become the No. 1 smoothie retailer in the U.S. in markets where we have a presence.’”