In light of Dunkin Donuts’ decision to be publicly traded, I’ve decided to look at how the relatively new catch-phrase, “America runs on Dunkin” changed the perception of being an unhealthy donuts shop to becoming a socially acceptable coffee shop. For more information on the Dunkin Donuts IPO, you can check out the Wall Street Journal article on “Everything You Need to Know” regarding the recent decision.
Dunkin Donuts isn’t the only company that offers coffee with its junk food, but its slogan shifted the focus of its advertising from the donuts to the coffee and it is paying off. According to the quoted Wall Street Journal article on Dunkin Donuts, 60 percent of U.S. sales come from coffee and other beverages. DD only had to learn from the McDonald’s controversy where the fast food giant faced several lawsuits for selling unhealthy food in order to figure out that focusing a marketing strategy around donuts would not be wise. Whether or not you feel that the lawsuits against McDonald’s were justified, you can’t argue the amount of negative publicity the company suffered because of these lawsuits. Although McD’s now sells healthy food, the company is too closely tied to Big Macs and the phrase, “super size me,” to successfully reposition itself.
In other words, be associated as unhealthy and your brand will be damned.
Dunkin Donuts figured out that idea quickly and repositioned itself so well, that it is arguably Starbucks’ biggest competitor. It’s easy to look at the current debt DD is facing (part of the reason it went public in the first place) and say the company isn’t successful. However, it’s coffee and breakfast menu have successfully left Krispy Kreme in the dust. DD struggles to take customers away from Starbucks because it’s atmosphere isn’t anywhere near as customer friendly, but it exchanges this setback with much more reasonably priced coffee.
On Friday, Dunkin Donuts extended from a breakfast and late night stop to a possible lunch option with the introduction of a tuna melt, tuna salad and chicken salad sandwich. DD clearly is trying to capitalize on the recent popularity that came with the IPO.
It’s not easy to have an unhealthy food such as donuts be part of the company brand and still have the marketing success that Dunkin has.
There’s no guarantee that Dunkin’s new menu or their decision to go public will get the company out of its revenue woes. Now that all of the company’s financial information is public, the chain that is popular mainly in the Northeast could find itself in trouble if news doesn’t turn good quick. In some cases, spending more money creates a higher ROI, something that Dunkin Donuts hopes hold true as it expands its menu and opens new stores throughout the country.
The next few months will dictate whether or not DD becomes more of a national brand like Starbucks with its coffee or withers away like Krispy Kreme. My guess is that it becomes more of the former. While I wouldn’t consider the idea of bringing my lap top to my local Dunkin Donuts and sitting all day while sipping on a Dunkaccino the same way I would at Starbucks with their Vanilla Latte, I’d much rather drive through a Dunkin to grab a quick drink when I know I have a 30 minute drive early in the morning to look forward to because it’s cheaper and tastes better.
DD appeals to a completely different market segment than Starbucks, which is why I have hope that their repositioning strategy of going from the place to go when you have a sweet tooth to being pretty close of an absolute essential in a morning commute is going to be a successful one. There is a sizable number of coffee drinkers who simply need a caffeine fix instead of a meeting place. If Dunkin can now use its strategy that made people tune out the fact that most of the food products it sells are unhealthy, there’s no reason why it can’t win customers over in getting them to come for a lunch break as a healthy place to stop by for a sandwich.