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  • Dunkin' is synonymous with breakfast pretty much everywhere you go. There are

  • more than 12,600 restaurants in 46 countries from Kuwait to Aruba.

  • But there is one market where the company is failed to capture national

  • attention, India. As of 2018, it closed more than half of its stores in just

  • over two years, citing a lack of profitability and operational efficiency.

  • So what went so wrong for Dunkin' in India? To answer that let's go back to 2012,

  • when Dunkin' launched its first location. Dunkin' granted exclusive

  • franchising rights to Jubilant FoodWorks, the same franchisee that brought

  • Domino's Pizza to India, one of the top restaurant brands in the country. Dunkin'

  • entered with its typical breakfast first strategy and it braced for heavy traffic

  • at the start of the day. But it didn't take long to figure out that Indians

  • weren't all that interested in the American morning routine. The majority of

  • Indian consumers don't prefer to grab-and-go their breakfast.

  • They'd rather have a sit-down meal. Yeah basically when you look at doughnuts.

  • So basically when Dunkin' Donuts came to India it's it's regarded as a breakfast

  • for all the Western countries or wherever the Dunkin' Donuts have their

  • outlets. But in India, it's the consumer preferences are totally different. So

  • here, people you know they generally prefer their local cuisine for their

  • breakfast. And it wasn't just the timing of the offering, it appeared to be the

  • menu itself. To be fair, Dunkin' tried to localize its offerings. It had custom

  • doughnuts catered to Indian tastebuds, like the mango doughnut. It had Lychee

  • coladas. And for a brand that rarely ventures outside its core product, Dunkin'

  • even rolled out a spicy sandwich lineup. In an effort to localize its menu, this

  • coffee loving brand even downplayed its beverage branch of business, which

  • accounts for about 60% of Dunkin sales. Instead, it marketed its food to a nation

  • that's not exactly crazy about coffee. But it wasn't enough to help Dunkin'

  • shake its doughnut first reputation. Dunkin' was seen as more of a pastry shop

  • and Indians didn't want to start their day with sweet baked goods.

  • Doughnut is basically considered as a desert right and a desert which is a lot of other

  • assortment added onto it so it's a high calorie

  • assortment. And therefore, it's more like a luxury. It's more like impulse kind of a

  • purchase. Which you make if you are celebrating or is there a special

  • occasion or you know once in a while Indians having a switch tooth would like

  • to indulge in that kind of a purchase. So Dunkin' pivoted. It pushed it's

  • operating hours later, it rolled out its Diwali doughnut, which touted savory

  • flavorings like chickpeas, saffron and chilly. But key Dunkin's tweaked image,

  • was actually to downplay the doughnut. So it tried something it hadn't done before,

  • burgers. With burgers, Dunkin' was able to get more foot traffic in and the non

  • beef lineup was designed to appeal to the country's vegetarians. But making

  • burgers the anchor product of the brand, just appeared to dilute Dunkin's image

  • rather than help it. Decided advertising on burgers rather than doughnuts.

  • I'm gonna need to go global brand wind doughnut in your name. You cannot say that

  • we are not doughnuts than here's something else, right? So that's really against the

  • basic rule of marketing, which is focus. In a statement to CNBC, Dunkin' Brands

  • said that it finds it important to include core Dunkin' products alongside

  • more regional menu items to cater to local tastes. But Dunkin' didn't comment

  • on its store closures in India. Another potential misstep had nothing to do with

  • the menu. Dunkin' expanded too fast, its locations were too big and those huge

  • retail spaces translated into higher operational costs. So when Jubilant

  • FoodWorks announced plans to pare back more Dunkin' shops in 2018, it came as

  • little surprised that its new plan was to focus on small stores and kiosks. But

  • keep in mind, Dunkin' isn't alone in its struggle with the doughnut.

  • Dunkin's main doughnut rivals, Krispy Kreme and Mad Over Donuts, entered

  • the market within a few years of one another and at first things were pretty

  • great. Doughnuts were initially a hit when they were first introduced into the

  • Indian market. The young population which was more acceptable to American tastes

  • and culture. And so for them it was the issue of novelty and therefore, doughnut

  • market saw a surge in the in in the Indian, you know, subcontinent and

  • we had Dunkin Donuts, which entered the market at that point of time and we all

  • know the drive, right? From 22 stores, they reached up to 77 stores in 2017. Which

  • was the peak of Dunkin Donuts in India. But Aggarwal said that the donuts

  • popularity has started to stagnate and now the doughnut chains of India are

  • feeling the pressure. The doughnut is struggling. It's not just Dunkin' and

  • Krispy Kreme. There have been declining sales across doughnuts for quite some

  • time. Not just in India but if doughnuts were working they would be Dunkin'

  • Donuts doughnuts but they're now just Dunkin'. And so that's if it's not working

  • here, it's it's certainly not working in India. That precipitous fall in the

  • popularity of the doughnut is partly to do with the more health-conscious India.

  • India's becoming a very health conscious market, right? So people are moving away

  • from sugar and salty food and looking for more healthier options. So that's one

  • of the reasons why I feel that the sales have kind of stagnated.

  • But even though Indian consumers are looking for healthier foods, some desert

  • chains in the country aren't struggling like Dunkin'. In fact, one of Dunkin' Brands

  • other businesses, Baskin-Robbins, is killing it in India. Baskin-Robbins which

  • is franchised in India by Graviss Group, has more than 725 stores in the country

  • and claims to be the largest ice cream chain in India. So if Baskin-Robbins

  • and Dunkin' are two fruits from the same tree, then why is one doing so much better

  • than the other in India. Euromonitor says it's because Baskin-Robbins focused on

  • its signature product, ice cream. And according to a Mintel report, the ice

  • cream industry is heating up in India. Mintel estimates that in 2021 657.2

  • million litres of ice cream will be purchased in India. But doughnuts well

  • they're just not a favorite for the adult Indian consumer. So Dunkin's big

  • problem in India seems to have more to do with the fact that it's failing to

  • give Indian consumers what they're looking for and less to do with any

  • mistake made by either Dunkin brands or Jubilant FoodWorks. Take Dunkin' Brands,

  • the company in the United States is by no means failing. The company has seen a

  • steady grow than revenues over recent years.

  • The Indie market isn't biased against international companies, more

  • specifically, Dunkin' Brands because Baskin-Robbins has seen such success in

  • India. And Jubilant FoodWorks, which franchises Dunkin' in India, also

  • franchises Domino's Pizza, one of the most popular brands in the country. It's

  • also not the first time an international Dunkin franchise agreement has flopped

  • either. Dunkin' has tried and failed to enter China twice. And in 2015 it decided

  • to step back in a third time with a better understanding of what Chinese

  • consumers want and an ambitious goal to open 1,400 restaurants. So will Dunkin' in

  • India have the same story as Dunkin in China? or will it be able to turn things

  • around? Experts say it's certainly worth trying. With the population size second

  • only to China, India is thought of as the last great battleground for

  • international fast food rivals. Only about three percent of all food service

  • establishments there are chained. In Western markets, it's over 50 percent. So

  • if you're looking to capture market share in the U.S., you have to take it away

  • from somebody else. But if you enter India in the right way, with the right

  • formula, there's tremendous potential upside. And reducing store sizes is part

  • of that formula. For the U.S. store, they have been reducing their sizes, store

  • sizes, which which is the same strategy which was being followed by Mad Over

  • Donuts or Krispy Kreme. The brand slashed unprofitable stores and instead

  • started focusing on small kiosks to sell their products. And remember how they

  • basically ignored their beverage unit when first entering the country, that's

  • not happening anymore. They're planning to introduce more teas to their menu to

  • cater to Indian. Tastes they're probably better off on the hot beverage focused

  • side of it than trying to localize the menu to get away from it being

  • donuts. So yeah, Dunkin' in India has had to overcome

  • a lot upon entering the market and it still does. But by adding tea based

  • beverages to their menu and offloading unprofitable stores for kiosks, Dunkin'

  • may be able to save itself in India after all.

Dunkin' is synonymous with breakfast pretty much everywhere you go. There are

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Why Dunkin' Donuts Is Failing in India

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    joey joey posted on 2021/04/20
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