A Slam Dunkin’? | Franchise Law Blog

A Slam Dunkin’?


They say in the Northeast there is a bar or church on every corner. While that sentiment might have held true through the late 1970s and early ‘80s, today you’re more likely to find the blaze orange and earthy brown tones of a Dunkin’ Donuts sign hanging from your grandfather’s former watering hole. Founded in the 1950s, by William Rosenberg of Quincy, Massachusetts, the iconic brand has grown to international stature, with over 11,000 locations worldwide. For those of us living at the epicenter of the phenomenon it is something we see, or visit, everyday on the way to work. Or as the slogan goes – “America Runs On Dunkin.’”

Yet despite the snappy catchphrase, mild brew and quality pastry offerings, Dunkin’ has remained, primarily, a Northeast staple. Venture too far in any one direction and you’ll lose the heady aroma of their signature blend fairly quickly. Alternative sources of coffee and donuts, along with fellow monster brands such as Starbucks and Krispy-Kreme, have kept Dunkin’ in its regional place for some time.

Until recently, that is.

Over the past year Dunkin’ Donuts Brands Group, Inc. has begun to set its sights firmly on the Golden State. Despite a botched franchising attempt in the early to late 1990s, with a dozen stores around California eventually shuttering, Dunkin’ is moving full steam ahead, well aware of the challenge it faces.

Just this year, four new franchises were opened in Santa Monica, Modesto, San Diego, and Downey, with two more slated for Long Beach and Whittier in the months to come. All told, Dunkin’ has 250 new locations currently in development throughout California, with roughly 1,000 individual stores planned over the next decade. That would bring the total number of Dunkin’ franchises in the United States to approximately 17,000.

But will Dunkin’ be able to punch a hole in Starbuck’s strangle hold on the west coast? Consider the numbers: Starbucks, Corp. currently owns and operates over 2,500 stores in California alone. Those are staggering numbers. And despite Dunkin’ running a solid second behind the Seattle-based coffee giant with over $6.7 billion in sales, it is a distant second. Starbucks is still the lead coffee distributor in the U.S., and most likely the world, with over $11 billion in sales last year, capturing 53 percent of the market share. That is a lot of coffee-ground to make up.

But Chief Executive of Dunkin’ Brands, Nigel Travis believes California is the place to be: “We’ve learned a lot about operating out West,” said Nigel Travis, chief executive of Dunkin’ Donuts Brands Group, Inc. Travis admits that Dunkin’ was far less picky about their franchisee partners during their initial expansion attempt in the 1990s and failed to train them correctly. With that experience, they went back to the drawing board and sought out the proper resources for their current attempt. Now, with a distribution center in Phoenix, a warehouse being built in California and existing franchisees training the new recruits, Travis believes Dunkin’ is on the right track.

“We’ve been incredibly impressed with the quality of the franchisees.”

We’ll be interested to see how this current expansion plays out and who will take advantage of the franchise potential being offered by this powerhouse of a company. If you have any questions about franchise opportunities in your area or are considering a franchise for your own business, contact The Internicola Law Firm, P.C. at (800) 976-4904.

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