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FDD Talk 2016: The Dunkin’ Donuts Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on May 17, 2016

in Coffee Franchise, Donuts Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings



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Dunkin' Donuts Store Exterior

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Dunkin’ Donuts franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Dunkin’ Donuts franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Dunkin’ Donuts’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • average gross sales by geographic region for continental U.S. freestanding Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Multi-Brand Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 26, 2014 to October 24, 2015
  • average gross sales by geographic region for continental U.S. shopping center/storefront Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Multi-Brand Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 26, 2014 to October 24, 2015
  • average gross sales by region for continental U.S. gas/convenience Dunkin’ Donuts Restaurants that have been open for business to the public for at least one year during a one-year measuring period from October 26, 2014 to October 24, 2015
  • average cost of goods sold and labor costs by region for continental U.S. Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Multi-Brand Restaurants) for the period from November 1, 2014 to October 31, 2015

Section I – Background Information

Everyone knows America Runs on Dunkin’ – the donut chain’s main tagline since 2006 – but this is one donut shop with a long history dating all the way back to the late 1940s in Boston, when Bill Rosenberg started a donut shop called The Open Kettle in Quincy, Massachusetts, then a couple years later changed the name to Dunkin’ Donuts. Franchising started in 1955.

8,431 domestic locations and 3,319 international locations in more than 32 countries add up to a grand total of 11,750 units where customers can get their daily fix of caffeine and a little something to satisfy their sweet tooth as well.

The company behind Dunkin’ Donuts, Dunkin’ Brands, also owns the Baskin-Robbins ice cream chain, and the two are co-branded in some locations.

Despite its overwhelming presence in the Eastern U.S., the chain has yet to gain a solid foothold in the Western part of the country.

Here’s how Dunkin’ Donuts keeps the java jive alive and well for millions of people in the coffee-and-donut market:

DD Goes West (Again)

When the brand finally re-arrived in California, it was with a good deal of hoopla back in 2014 when it opened two stores – one in Modesto and one in Santa Monica. People actually stood in line for more than two hours to get in on the action, and even a week later the wait could still be an hour or more.

Oddly enough, though, there were at least 15 DD locations in California back in the 1990s, but then they all closed. In those days, the California donut scene was totally saturated by Cambodian donut shops! And of course the coffee scene out there is dominated by Starbucks, so DD has its work cut out for it in the West Coast.

Almond Milk

There are lots of people who either don’t like milk or can’t drink milk for different reasons, and Dunkin’ Donuts finally decided to give a nod to that crowd a couple years back by introducing almond milk as a dairy alternative – and it is the most popular milk substitution out there.

DD partnered with the largest almond company in the country, Blue Diamond Almond Growers, to stock its vanilla-flavored Almond Breeze milk at all of its U.S. locations.

It’s About the Beverages

If you’re of a certain age, you’ll remember the TV commercials back in the day for DD featuring Fred the Baker and his catchphrase: Time to make the donuts. But you’ll notice the chain’s tagline mentioned earlier is now America Runs on Dunkin’ and that’s because even though we all think of DD as a donut shop, it’s really about the beverages. Even as far back as 2012, beverages accounted for 58% of sales at the chain.

DD Perks Rewards

People who enroll in the chain’s loyalty program get an immediate free beverage, as well as one on each birthday and each time they accumulate 200 points through store purchases – five points per dollar spent on qualifying purchases made using the Dunkin’ Donuts Card or the Dunkin’ Mobile App.

Members also get special deals and offers throughout the year. There are currently more than 4.3 million members. The mobile app, by the way, was also recently overhauled for touch-friendly design and layout, better imagery, and a faster secure payment process.

Section II – Estimated Costs

  • Please click here for detailed estimates of Dunkin’ Donuts franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis



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