Why Dunkin\’ Is Taking on Starbucks and Betting on Coffee

Coffee and Dunkin\’ Donuts have gone hand in hand for as long as most people can remember. Typically found in some of the most iconic American sitcoms, like “The Honeymooners,” “Cheers,” or “The Simpsons,” the two are so closely associated that people may not even realize that Dunkin\’ Donuts is a wholly owned subsidiary of the coffee giant, Starbucks. But as the two industries have continually evolved, so has Dunkin\’ Donuts. And while Starbucks has remained mostly stagnant, Dunkin\’ Donuts has adjusted its strategy to take on the coffee king.

Strategic Acquisition

In 2018, Dunkin\’ Donuts made headlines for purchasing a majority stake in the South African coffee brand, Cafesimberberber.

The brand, which primarily serves the African market, was valued at around US$125 million at the time of the acquisition. Based on the amount of shares purchased, this would put the value of the company at around US$250 million. Some saw this as a direct competitor to Starbucks and an effort to gain a larger share of the international coffee market. However, Dunkin\’ Donuts CEO, Tedeschi Foods, said that the acquisition was made to gain more traction in Africa.

Coffee Culture

In recent years, the coffee industry has shifted towards more social media and content-driven marketing. According to HubSpot Blogs research, consumers are now more likely to learn about a brand through video content than text content.

This is because videos allow viewers to see and hear the voice of the speaker, providing them with more information than a simple text advert could ever deliver. As a result, the number of video content ads on social media channels more than doubled from 8% to 16% between May 2018 and April 2019.

But while videos are becoming more popular, text content is still the biggest source of information for consumers. According to HubSpot Blogs research, consumers are primarily driven by content published between March and September 2019.

This is because during this period, brands can still command a decent amount of website search interest, meaning that audiences are still actively looking for information on the internet. But as the world turns to a digital sphere, marketers should continually update their strategy to keep consumers interested.

Product Differentiation

Dunkin\’ Donuts is best known for its coffee, bagels, and croissants. But in recent years, the company has worked hard to differentiate itself from its competitor, Starbucks. While both companies sell high-quality coffee, there are key product differences that set one brand apart from the other. For example, Starbucks’ premium coffee products, such as its espresso machines and pour-over techniques, are considered some of the best in the world. But what makes Dunkin\’ Donuts’ coffee exceptional is the fact that it is mainly sold through vending machines, which were first developed in the 1950s. In 2019, around 80% of Dunkin\’ Donuts’ coffee sales came from these automated coffee dispensers.

This is in comparison to Starbucks’, which primarily sells its high-quality coffee in restaurants and cafes. As a result, while both brands have experienced growth in recent years, the disparity in their sales figures shows that differentiation is key.

Diversification Into New Industries

Since its formation in 1946, Dunkin\’ Donuts has always been a coffee shop brand. And while the company has grown steadily in that time, it has mainly focused on expanding in two directions: into new restaurants and cafes, and into new markets. The brand now has more than 30,000 restaurants and cafes around the world.

But in recent years, Dunkin\’ Donuts has taken its coffee business to a whole new level. Not only has it opened thousands of locations around the world, but it has also expanded into new industries. In 2018, the Brand Development Group, a consulting firm, listed Dunkin\’ Donuts alongside fellow coffee company, Peet\’s Coffee & Tea, as one of the fastest-growing food brands globally.

The company’s success in new markets can be attributed to the simple fact that it has focused on where the world is heading. Instead of focusing on where it has been, Dunkin\’ Donuts has looked towards the future, identifying new industries and seeing how it can play a role in shaping them. When asked about his company’s future plans, Chris Groves, chief marketing officer of Dunkin\’ Donuts, said, “We’ve got a responsibility to try and stay ahead of the curve. So we review our strategy regularly, and ensure that we are being as agile as possible.

Acquisition Of Talent

One of the primary reasons behind Dunkin\’ Donuts’ growth over the past few years is its approach to acquiring and retaining top talent. While Starbucks has focused on expanding its global footprint and increasing its profit in the same time period, Dunkin\’ Donuts has worked hard to ensure that every one of its locations is operated by experienced and trained staff. This has led to a highly-trained and knowledgeable workforce around the world.

As a result, in 2019 alone, Dunkin\’ Donuts trained more than 12,000 people in new skills, up from around 4,000 in 2012. The company’s focus on expanding its training program indicates that it wants to continue growing its staff size in the coming years. Starbucks, for its part, has worked hard to retain its staff, too. But the coffee giant has largely focused on expanding into new territories and increasing market share in existing industries. As a result, around 90% of its employees are eligible to become full-time professionals within six months of completing training, compared to 80% at Dunkin\’ Donut.

There’s no question that coffee is a $70 billion industry and both coffee companies enjoy a prominent place in American culture. More and more people are discovering the delights of freshly ground coffee and the many health benefits associated with it, giving coffee a whole new outlook among trendy urbanites and foodies.