Dunkin' Donuts Looks to New Executives to Keep Up Buzz

Seeking Fresh Perspective, C-Suite Changes Aim to Turn Focus to Operations

By Published on . 5

CHICAGO (AdAge.com) -- Dunkin' Donuts is working with a new house blend: It's got a new president, chief marketer and operations manager. Nigel Travis, who has been transitioning into the president-CEO role, has also hired new heads of communication and human resources.

John Costello, Dunkin' Donuts' new marketing chief
John Costello, Dunkin' Donuts' new marketing chief
"It sounds to me like they're looking for some fresh perspective and insights from the marketplace and not the just from the coffee and doughnut space," said Technomic's Darren Tristano. "After awhile, getting a fresh perspective on a pretty old brand can't hurt."

Mr. Travis, who previously ran Papa John's, has brought in Paul Twohig as brand operations officer, and John Costello as chief marketer. Mr. Twohig was previously with Starbucks, and has recently settled a lawsuit resulting from his hire, and Mr. Costello has held top marketing positions at Sears, Home Depot and Yahoo.

"The focus is going to be more on operations and the linkage with marketing," Mr. Travis said in an interview, about the changes to his C-suite. "I want to move this to be more of an operations-oriented company, which means several things. We need to provide our franchisees with all of the tools they need to run their business ... and we can ensure all of our operational standards are met."

Despite the sluggish economy, Mr. Travis said privately-held Dunkin' will open more locations than most competitors to grow sales. It's an impressive feat as Starbucks has continued to struggle, and once-surging Burger King has begun to slide. "Dunkin' has a lot going for them," Mr. Tristano said. "Strong brand loyalty, good marketing and advertising, and a good price point within the quick service [industry]. They're very poised to continue to grow through unit expansion and same-store sales."

Caffeinated brand
But competition has gotten much tougher and coffee consumption has been flat, according to Harry Blazer of the NPD Group. McDonald's launched McCafé in May, and even-lower-priced competitors like 7-Eleven have emerged. In terms of overall buzz, Dunkin remains well ahead of McDonald's and Starbucks, as measured by BrandIndex, with an average buzz rating in the 20s to low 30s, compared with a rating in the teens at McDonald's and the high single digits at Starbucks. And Dunkin' may have suffered less than some competitors as consumers cut back. An Experian Simmons survey of 25,000 adults said visits to Starbucks were down 4.5% for the year ended spring 2009, compared to a 1% drop for Dunkin' over the same period.

"It's the companies [like Dunkin'] who can afford to be proactive rather than reactive that are in a good position," said Mr. Tristano. "To make some shifts or changes to the way they do things, cut costs and increase sales, it may be a luxury they have that other companies don't."

But it hasn't been entirely good news for Dunkin', which suffered several highly-publicized franchisee bankruptcies this year. "You're going to have franchisees that aren't very good at managing restaurants, [and they are] going to fail," Mr. Tristano said. "That's inevitable in a franchise model."

However both Messrs. Travis and Costello said that corporate relations with franchisees are strong, and they have both been devoting time for meetings with key franchisees over what's working in the business -- and what isn't.

Of the changing competitive landscape, Mr. Travis said, "it's sharpened our approach to the business." As CEO of Papa John's between 2005 and 2008, he helped establish the brand as a vibrant, even disruptive, third-place competitor. "I've got the highest respect for Starbucks and McDonald's," Mr. Travis said of the coffee market. "I think they'll continue to do a great job and make us do an even better job."

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