Dunkin' Donuts
A market leader in the coffee and bakery categories, Dunkin’ Donuts has more than 9,700 restaurants in 31 countries and global sales of $6 billion.
Dunkin’ Donuts, the largest coffee and baked goods chain in the world and a regional favorite in its New England home market, wondered what it could do with its existing store concept to increase sales and profitability. With national expansion plans on the horizon as well, it also wanted to know whether its current concept would work as it opened new locations across the U.S.
The company had no shortage of ideas about possible changes to stores: serve sandwiches, offer catering and delivery, provide cozier seating, have a more sophisticated look, etc. Management at the firm, however, wanted to find the most profitable concept, and brought Copernicus in to help it build the “Dunkin’ of the future.”
Insight
After identifying “On the Go” consumers as the financially-optimal target, we used our Concept EngineeringSM tool, a modified form of multiple trade-off analysis, to test more than two billion different configurations of product, service, and price.
Analysis identified the impact of each item on visits, spending, and sales for different segments of customers. All the possible restaurant and menu combinations were reassembled to forecast visits and sales. The costs associated with different items were subtracted from estimated sales to provide a profitability assessment.
Strategy
Dunkin’ Donuts introduced incremental innovations to its existing stores and simultaneously built prototypes for new stores based on the concepts with the highest profit potential.
Growth
Prototype stores quickly exceeded objectives for customer satisfaction and sales. While competitors Krispy Kreme and Starbucks shuttered locations, Dunkin’ pushed forward with national expansion plans. Meanwhile, the recharged configuration of its current stores gave the firm a superior defensive position against the newest 800-pound gorilla in the coffee shop category, McDonald’s.