Dunkin' Donuts CMO: We Took Our Coffee Message for Granted

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Dunkin' Donuts hopes a simpler message and menu, along with a jolt of technology and possibly a brand refresh, will help it succeed in an increasingly value-driven industry, executives said Thursday.

Dunkin' Donuts U.S. plans to roll out its simplified menu nationwide by the end of this quarter and open another 1,000 stores by the end of 2020, with more than 90 percent of those outside its Northeastern home base. It's also pushing franchisees to remodel locations. Its newest design includes everything from a tap system that looks like it comes from a bar to a dedicated drive-thru lane for mobile orders.

Dunkin' Donuts is gearing up for a prolonged and broader fight for customers' dollars. It already competes against a wide variety of players, from McDonald's and Starbucks to seemingly every convenience store and diner across the country. But when it comes to coffee, there's a fight, well, brewing. Dunkin' also does most of its business during the morning and, like Starbucks, wants to make more of a push to become an afternoon destination.

At the same time, the intensity of value-driven offers in fast food appears to have increased, Chief Marketing Officer Tony Weisman said Thursday, during Dunkin' Brands Inc.'s investor day at Fenway Park in Boston. "When you're in a value fight, it's not just a price fight," Weisman said.

Dunkin is forecasting 1 percent growth in U.S. same-store sales next year that will accelerate to "upwards of 3 percent" by 2020. It posted just 0.6 percent same-store sales growth in 2017, including 0.8 percent growth in the fourth quarter. Starbucks, meanwhile, posted 3 percent growth in fiscal 2017, which ended Oct. 1, and 2 percent growth in the first quarter of fiscal 2018.

There's not enough awareness of the work that Dunkin' puts into each pot of coffee and why it's worth the trip, said Weisman, who joined Dunkin' Donuts from Digitas LBi last year.

"We took our coffee message for granted," he added.

Dunkin' needs to tell its brewing story more, among other messages, he said. It could also use a bit of a brand refresh, he said.

The chain is conducting a creative agency review that's expected to wrap up this quarter, but Weisman did not specifically discuss it during the meeting. He did, however, introduce a couple of new commercials tied to the Olympics that are set to air starting Friday.

And while the brand refresh was not discussed in much detail, Dunkin' did show some bolder packaging that includes market-specific messages, such as having "NY" on cups for New York. On Wednesday, it announced plans to stop using foam cups, to be replaced by double-walled paper ones.

Anecdotally, Weisman said he's seen more offers and what appears to be more media spending on value messages across the sector. Dunkin's currently trying out some value plays including 2-for-$3, 2-for-$4 and 2-for-$5 value offers on certain breakfast sandwiches.

Dunkin's other plans include emphasizing on-the-go ordering and trying to make its 8 million-member DD Perks loyalty program more convenient and contemporary. The chain could perhaps use the face recognition on the iPhone X to see whether someone looks tired and suggest a coffee delivery if so, Weisman suggested. It is exploring an integration with Outlook that could suggest ordering food and coffee when someone schedules a meeting.

The company's first so-called "NextGen" store with updated displays and technology includes tweaks such as having the doughnuts in cases right in front of the customers, as they often are in bakeries, instead of racks behind the counter as they're traditionally displayed at Dunkin' Donuts.

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