Placeholder Image

Subtitles section Play video

  • (alarm rings) - Time to make the donuts.

  • - [Narrator] "Dunkin'" has long said,

  • "It's on time to make donuts."

  • - Who else goes to that trouble?

  • - But it's not just pastries.

  • Over its 70 plus years

  • "Dunkin'" has repeatedly spotted and adapted

  • to new trends even when that meant focusing less

  • on donuts.

  • - Donuts literally used to be part

  • of their name and now it is not.

  • And it definitely reflects how their sales

  • have really changed and how beverages

  • become so much more important

  • than just selling donuts.

  • - [Narrator] From 2009 to 2019,

  • a time when Dunkin' introduced many drink options

  • and rebranded, it grew from around 6,000

  • to over 9,000 locations.

  • The shift away from donuts and towards drinks is

  • just one change that has helped the company evolve

  • from a New England diner to a worldwide chain

  • worth around $9 billion.

  • This is the economics of "Dunkin'".

  • In 1948 restaurateur, William Rosenberg

  • opened a diner called "Open Kettle"

  • in Quincy, Massachusetts selling coffee

  • for 10 cents and donuts for five.

  • Two years later, he changed the name

  • to "Dunkin' Donuts" inspired

  • by seeing others dunk donuts into their coffee.

  • It was one of the first trends the company capitalized on.

  • - Donuts were actually served

  • to troops during the wars.

  • - [Commentator] Behind the American lines

  • in Italy, a brief interlude

  • and good old fashioned donuts.

  • - And when troops came home, it was 1950s

  • and people were going back to offices

  • and donuts were a really great way to quickly

  • have breakfast on the go.

  • And "Dunkin' Donuts" really capitalize on that.

  • - Dunkin' the magic munchkin.

  • - [Narrator] The company took donuts a step further

  • in the early 1970s when they introduced the munchkin

  • as a way to use the leftover dough

  • from the center of donuts.

  • - This is what a munchkin looks like.

  • They have them down at "Dunkin' Donuts"

  • in quite a few flavors.

  • - [Narrator] Donuts continued

  • to be Dunkin's focus through the nineties

  • when trends began to shift.

  • In the 1990s, 2000s, America was generally becoming

  • more health conscious.

  • And donuts for all their tasty goodness

  • is not really known

  • as a very healthy breakfast alternative.

  • So companies like "Dunkin' Donuts" need to think

  • about what else could they serve.

  • Meanwhile, "Starbucks" really was starting

  • to take on the US at that time

  • and was expanding a lot.

  • And what they were doing was inventing new kinds

  • of drinks.

  • - [Narrator] Customers were looking

  • for caffeine and a lot of it.

  • The number of US coffee houses doubled

  • between 1996 and 2001.

  • So after decades of focusing on donuts,

  • in 2006, "Dunkin'" made one

  • of its first moves away

  • from the pastries when it introduced the slogan,

  • "America runs on Dunkin'".

  • Coffee and beverage sales were popular

  • for quick service restaurants

  • since they have better profit margins

  • than most offerings, like food.

  • - When you think of a breakfast sandwich

  • or a baked good that involves labor,

  • it often involves many different types

  • of ingredients.

  • It might involve some kind of packaging,

  • whereas coffee at its simplest is just coffee

  • in a cup.

  • The labor tends to be less

  • and that does make it more profitable generally

  • for these drinks.

  • - [Narrator] By 2011, "Dunkin'" was selling

  • more hot and iced coffee

  • than any other fast food chain in the US,

  • including "Starbucks".

  • In New England and New York,

  • it hit 57% of the fast food coffee market.

  • At the time, "Dunkin'" had 6,800 locations,

  • around half the amount it has now

  • and bigger changes lay ahead.

  • In 2018, Dunkin's rebrand and name change to go

  • by just "Dunkin'" was a big step.

  • That year, beverages made up 60%

  • of Dunkin's sales.

  • - I think one of the important things

  • to recognize is caffeine is addictive

  • and everyone likes their morning coffee

  • and that is a ritual.

  • So people often go to get coffee every morning

  • where they might not necessarily

  • get a donut every morning or some kind of food.

  • - [Narrator] To give customers more options

  • for their caffeine fix, "Dunkin'" continued

  • to expand their drink menu releasing espressos,

  • cappuccinos, lattes and Americanos.

  • - [Artist] Take a sip of "You've got this,"

  • with Dunkin' Espresso drinks.

  • - [Narrator] And in doing so,

  • it went toe to toe with "Starbucks".

  • - "Dunkin'" is really trying to

  • in some ways get into Starbucks's lane.

  • They've offered a lot

  • of different new kinds of beverages.

  • They invested in machines to offer espresso.

  • They offer cold drinks, they offer blended drinks

  • and they really are trying to,

  • I would say, compete more with "Starbucks",

  • whereas "Starbucks" probably still thinks

  • of itself as singular.

  • - [Narrator] After the push for more drink sales,

  • in 2019, "Dunkin'" was one

  • of the top coffee sellers

  • of quick service restaurants selling

  • around 1.6 billion hot and iced coffees.

  • In 2021, "Dunkin'" sold over 4.4 billion cups.

  • While caffeine is a big seller,

  • Dunkin's drink focus isn't just on drip.

  • The company said that highly visual beverages

  • are a focal point of its menu.

  • They've also launched more specialty drinks

  • like Matcha and Chai.

  • Between all the flavors and coffee blends,

  • they've added nearly 50 new menu items

  • in the last four years.

  • But on the food side of the menu,

  • the brand struggled during the pandemic

  • when the breakfast category was hit hard

  • by commuting changes caused by lockdowns.

  • Dunkin's decline in sales would've

  • been nearly 5% points larger

  • if temporarily closed stores were included

  • in those numbers.

  • But once again, hot and cold drinks

  • with their high profit margins continued

  • to be top sellers on the menu.

  • - Earlier in the pandemic,

  • these cold drinks actually

  • were a real saving grace for a lot of coffee chains,

  • in part because people would order them

  • in the afternoon.

  • It's really created a new day part

  • for them where they didn't have it before.

  • And so that's been really helpful for them

  • when breakfast really took a hit early

  • in the pandemic.

  • Around that time,

  • "Dunkin'" was releasing new drinks.

  • For example, in 2020

  • "Dunkin'" announced the new--

  • - [Actor] Dunkin' Refresher.

  • - [Narrator] And this summer they came out

  • with three iced pumpkin drinks

  • and a new flavor of refresher.

  • - Cold drinks really have exploded in popularity

  • including during the pandemic, and a lot

  • of it has to do with social media, with TikTok.

  • 70% of sales for a lot of these chains now

  • is these cold beverages

  • which is a huge amount of growth

  • in a very short amount of time.

  • - [Narrator] As beverages continue

  • to grow more popular,

  • Dunkin's experience in developing buzzy drinks