SWOT Analysis of Dunkin Donuts 2020


Name Dunkin’ Brands
Industry Food & Beverages
Founded 1950
HeadquartersCanton, Massachusetts, United States
CEO David Hoffmann  
Revenues US$1.37 Billion 2019
ProfitUS$487.8 Million 2019
Competitors Krispy Kreme, Mad over Donuts, McDonalds, Starbucks



Dunkin Brands was founded in 1950 and is now led by CEO David Hoffman. Headquartered in Canton, Massachusetts, Dunkin is a franchisor of QSR (Quick Service Restaurants) for its several brands, including Baskin Robbins and Dunkin Donuts. The first one offers ice cream products, while Dunkin Donuts specializes in different types of coffee and baked goods. The major portion of revenues comes as royalty earned from their lease income, franchisees, licensing fees, and sale of products. Dunkin Brands covers more than 60 countries. 




Dunkin Donuts Strengths 2020:


  • Positioning.

    In almost all countries, Dunkin is associated with breakfast. This is due to its perfect positioning strategy that reflects the to-go breakfast product range. The strategy also helped the company to stand out from its competitors. 

  • Global coverage.

    Dunkin does not only sell its products in more than 60 countries but also has an excellent performance when it comes to its expansion into new markets. This resulted in a diversified stream of revenues and efficient hedging against economic cycle risks.

     
  • Franchise strategy.

    The company’s franchise strategy is one of the best in terms of being able to cushion the negative impacts of the current pandemic, enabling them to have a better performance than its competitors. The franchise business model is an important advantage since the CAPEX (capital expenditures) are already much lower compared to a company that manages all of its retailers directly. 

  • Austerity measures.

    The company implemented other expense-cutting measures that resulted in $45 million savings, suspended its 401(k) investments, and even stopped paying dividends, which resulted in another $33 million saved in the second quarter of 2020 (Hunt, 2020). 

  • Giving back to the community.

    Dunkin remains one of the most socially involved companies. Recently, they announced that they will hire 25,000 new employees in order to help the community. This is one of their measures aimed to “keep America running”, according to Financialbuzz (2020). Community help is always appreciated by customers.

  • Supply chain management.

    Dunkin does not only have an effective supply chain management that ensures timely delivery of fresh coffee and baked goods but also joined the Sustainable Coffee Challenge in collaboration with governments, companies, research companies, and NGOs, among others. They aim to turn the coffee sector into a fully sustainable one.

     
  • Sustainable practices.

    Nowadays, consumers favor companies that adopt environmentally-friendly policies. Dunkin aims to reduce its carbon footprint by changing all the polystyrene cups to paper ones that use certified paperboard, as described by Holbrook (2020). 




Dunkin Donuts Weaknesses 2020:


  • Lacking revenue diversification.

    Nearly half of the revenues came from the United States segment in 2019. This means that the company is exposed to severe impacts in case of economic hardship in the US economy (Team, 2019). 

  • The targeting strategy could be improved.

    Dunkin currently struggles to efficiently target the key consumers in different countries, particularly India and other emerging economies. This is associated with their inability to understand foreign cultures, leading to poor decisions (Sigalos, 2018). 

  • Low product variety.

    As briefly mentioned above, Dunkin mainly focuses on coffee and baked goods. This limits their presence to a very small portion of the food sector, thus limiting the number of possible customers.

     
  • Slow expansion.

    Compared to its main competitors, Burger King (click here for Burger King SWOT Analysis) and McDonald’s, (click here for McDonald’s SWOT Analysis) Dunkin has a very limited expansion strategy. This is a weakness because the company will tap into new markets only after its competitors established themselves (Goldman, 2017). 

  • Poor financial performance.

    Expansion abilities are severely strained by low finances. Dunkin requires a larger pool of funding in order to aim for more extensive expansion plans and, thus, compete for market share. This is even more relevant in 2020, considering that the global economy is subject to a downturn. 


Dunkin Donuts Opportunities 2020:


  • New customers through online channels.

    Dunkin could take advantage of the current pandemic crisis and expand its operations. For instance, many other companies adopted delivery services. Dunkin (2020) states that they currently teamed up with Uber Eats, Door Dash, and GrubHub in order to deliver goods to consumers’ door. 

  • Offer more variety.

    The company could diversify its menu to introduce lunch and dinner, too, on its menu. The variety will generate more customers and revenues, allowing them to capture a larger market share. 

  • Introduce more healthy options.

    Some of its competitors are McDonald’s and Burger King, already known for their unhealthy foods. According to Sarkar (2019), they already introduced plant-based options on their menus. Dunkin can also take advantage of the demand for healthy meals. 


Dunkin Donuts Threats 2020:

  • Global recession.

    The pandemic is a serious threat to Dunkin’s survival in the future. This is because the fast-food sector does not remain untouched either, so the stability of their revenue stream is under threat. 

  • More stringent regulations.

    Fast-food joints, such as Dunkin Donuts, can be easily threatened by new health movements. Governments might adopt rigorous rules in order to decrease the risk of hypertension, cardiovascular diseases, and obesity that have been rising due to increased consumption of junk food. 

  • Changing consumer trends.

    More and more consumers become health-oriented and attempt to clean their lifestyles of junk foods. This is a major threat for a fast-food joint that currently has little to no coverage of healthy foods and is another reason why the company must diversify its product lines. 



SWOT Analysis of Dunkin Donuts Conclusion:

  • All in all, Dunkin Donuts has numerous strengths, but one could conclude that they should change their approach due to the current dynamics. The pandemic, high chance of an economic downturn, and changing consumer trends can easily make a traditional fast-food joint lose its market share rapidly.
  • This is even more important considering the fact that its competitors, such as Starbucks, McDonald’s, and Burger King, do not only have a larger pool of finances but also already started to respond to the different demands of the consumers. Coupled with increased governmental pressure for healthier practices, Dunkin could learn from the failures in India and adopt a more flexible attitude. 



References

Financialbuzz (2020). Dunkin’ Donuts Prepares to Hire 25,000 New Employees as Lockdowns Ease. financialbuzz.com.

Goldman, D. (2017). Dunkin’ Donuts drastically scales back expansion plans. CNNMoney.

Holbrook, E. (2020). Dunkin’ Donuts’ Restaurants Replaces Foam With Paper Cups. Environment + Energy Leader.

Hunt, R. (2020). Why Dunkin’ Brands’ Franchise Strategy Is a Strength During COVID-19. The Motley Fool.

Qsrmagazine (2018). Dunkin’ Joins Sustainable Coffee Challenge. QSR magazine.

Sarkar, A. (2019). Burger King owner dishes up profit beat as new products boost traffic. Reuters.

Sigalos, M. (2018). Where Dunkin’ went wrong in India. CNBC.

Team, T. (2019). Dunkin’ Donuts US To Push Revenue Growth For Dunkin’ Brands. Forbes.

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