In this FDD Talk 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 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Dunkin’ Donuts franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Dunkin’ Donuts outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Dunkin’ Donuts’ financial performance representations, based on Item 19 of the company’s 2018 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 Combo Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 30, 2016 to October 28, 2017
- average gross sales by geographic region for continental U.S. shopping center/storefront Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Combo Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 30, 2016 to October 28, 2017
- average gross sales by geographic 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 30, 2016 to October 28, 2017
- average gross sales by geographic region for continental U.S. drive-thru only 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 30, 2016 to October 28, 2017
- average cost of goods sold and labor costs by geographic region for continental U.S. Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Combo Restaurants) for the period from November 1, 2016 to October 31, 2017
Section I – Background Information
13 Things You Need to Know About the Dunkin’ Donuts Franchise
Integrates On-the-Go Mobile Ordering with Google Assistant
1. In March 2018, Dunkin’ Donuts announced that on-the-go mobile ordering was now available through the Google Assistant, on iPhones and Android phones. Through this new integration, DD Perks Rewards members can use the Google Assistant, Google’s voice assistant technology, on their iPhones and Android phones to place a mobile order for Dunkin’ Donuts coffee, beverages, baked goods, and breakfast sandwiches, and then speed past the line in store for pick-up. The new integration is powered by Conversable, a leading AI-powered conversational intelligence platform.
2. According to Sherrill Kaplan, vice president of digital innovation at Dunkin’ Donuts, “We are focused on leveraging the most innovative, relevant technologies to make accessing our mobile ordering platform as easy as possible. Our new integration with the Google Assistant is yet another exciting example of our commitment to enhancing speed, convenience and our overall brand experience for our loyal guests.”
3. Customers who have a DD Perks account and a Google account can link both through the Dunkin’ Donuts mobile platform; ordering and payments will also occur through the mobile platform. When a customer places an order through the Google Assistant, the distance and estimated time to reach the Dunkin’ Donuts restaurant will be identified by Google Maps, and the order will be sent to the restaurant to be ready at that time. Additionally, customers can order from saved favorites and items previously ordered via the Dunkin’ mobile app.
Launches New National Value Menu
4. In April 2018, Dunkin’ Donuts launched Dunkin’ Go2s, the brand’s new national value menu. The Dunkin’ Go2s menu, available at participating Dunkin’ Donuts restaurants nationwide, allows customers to choose from among three of the brand’s most popular breakfast sandwiches, and purchase two of their go-to favorites at $2, $3, or $5 price points.
5. Some of the breakfast sandwich combinations, which are available all day long, include: two Egg & Cheese Wake-up Wraps for only $2; two Egg & Cheese Breakfast Sandwiches served on english muffins for only $3; and two Egg, Cheese & Bacon Breakfast Sandwiches served on croissants for only $5.
6. According to Tony Weisman, chief marketing officer for Dunkin’ Donuts U.S., “Dunkin’ Donuts is committed to offering our guests quality products at compelling prices, and we are excited to introduce a new national value menu. Dunkin’ Go2s is focused on delivering more choices and great value for our most popular go-to breakfast sandwiches. Now guests can enjoy not one but two of their favorite breakfast sandwiches priced at $2, $3, or $5.”
7. To celebrate the launch of Dunkin’ Go2s, the brand hosted the “Go-getters Go2 Dunkin’” contest, which gave Dunkin’ Donuts fans the chance to win by sharing how they work hard to succeed each day. The contest ran from April 9 until April 30.
8. Each week fans were asked to nominate themselves as the ultimate go-getter – such as the office go-getter, go-getter with a side hustle, go-getter in the community, etc. – on Instagram using the hashtags #GoGetter and #contest. Dunkin’ Donuts selected three go-getters to receive a customized trophy in honor of his or her drive and ambition to succeed, along with a gift card.
9. Dunkin’ Donuts started out as a doughnut shop called The Open Kettle, which was founded in 1950 by William Rosenberg in Quincy, Massachusetts. Prior to starting The Open Kettle, Rosenberg owned and operated Industrial Luncheon Services, a company that delivered meals and snacks to workers in the Boston area. The success of Industrial Luncheon Services led Rosenberg to start The Open Kettle, which changed its name to Dunkin’ Donuts in 1952.
10. Following the success of Dunkin’ Donuts in the Quincy area, Rosenberg started franchising the concept in 1955 and began expanding outside of Massachusetts. In the early 1960s, Rosenberg’s son, Robert, became CEO of Dunkin’ Donuts at the age of 25.
11. In 1963, Dunkin’ Donuts opened its 100th location and at the time, the company was a subsidiary of Universal Food Systems, a conglomerate of 10 small food-service businesses. Over the next few years, Universal Food Systems sold or closed its other franchises and eventually focused solely on Dunkin’ Donuts and renamed itself after the doughnut franchise. Around this time, the Dunkin’ Donuts shop format was standardized and various new menu items were introduced.
12. In 1990, Dunkin’ Donuts was purchased by Allied Lyons, which owned Baskin-Robbins. After
the acquisition, Dunkin’ Donuts and Baskin-Robbins merged operations (the holding company for both franchises is now called Dunkin’ Brands). By the end of the 1990s, Dunkin’ Donuts had grown to over 2,500 worldwide with $2 billion in annual sales. Since then, Dunkin’ Donuts has continued to grow exponentially and today it is the largest doughnut chain in the world.
Entrepreneur’s Franchise 500
13. Dunkin’ Donuts ranked No. 3 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Dunkin’ Donuts franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Dunkin’ Donuts’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 6,844
- Outlets at the End of the Year: 7,161
- Net Change: +317
- Outlets at the Start of the Year: 7,161
- Outlets at the End of the Year: 7,563
- Net Change: +402
- Outlets at the Start of the Year: 7,563
- Outlets at the End of the Year: 7,839
- Net Change: +276
- Outlets at the Start of the Year: 29
- Outlets at the End of the Year: 29
- Net Change: 0
- Outlets at the Start of the Year: 29
- Outlets at the End of the Year: 0
- Net Change: -29
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- Tables 1 through 4 and notes provide financial performance representations that are historical, and that are based on information from existing Dunkin’ Donuts Restaurants (exclusive of Dunkin’ Donuts/Baskin-Robbins Combo and Alternative Point of Distribution Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 30, 2016 to October 28, 2017.
- The site types listed in the following tables are defined as follows:
- Freestanding: A Restaurant, either newly constructed or an existing structure (to be retrofit), that does not share any common walls with any third party.
- Shopping Center/Storefront: A Restaurant that shares a common wall (or walls) with third parties. The Restaurant could be an anchor (endcap) or inline tenant space in a strip center, or it could be a location in a high density, multiple level construction (typically urban/downtown office building setting), sharing common wall and ceiling/floor construction with any third party.
- Gas/Convenience Restaurants: A Restaurant that is a sub- or shared tenancy with a Gas/Convenience host environment.
- Drive-Thru Only: A Restaurant that does not have any indoor seating, but allows for customers to drive up to the structure to place orders. In some cases, there may be a walk up window or front counter. Restaurants may be Freestanding, Shopping Center/Storefront, or Gas/Convenience but are typically smaller than their counterparts with indoor seating.
- Tables 6 and 7 and notes provide financial performance representations that are historical, and that are based on information from existing Dunkin’ Donuts/Baskin-Robbins Combo Restaurants that have been open for business to the public for at least one year during a one-year measuring period from October 30, 2016 to October 28, 2017.
Part 1 – Sales Data (Tables 1, 2, 3, 4, 6, and 7)
- The sales figures are compiled by using historical sales that are reported to Dunkin’ Donuts by franchisees. Dunkin’ Donuts has not audited or verified the reports.
- This sales data does not include sales tax.
- Sales in regions with a higher concentration of Restaurants that have been in operation for a substantial period of time tend to have higher sales than regions with a lower concentration of Restaurants that have been in operation for a lesser time period.
- Many of the Restaurants included in this data have been open and operating for several years. These franchisees have achieved their level of sales after spending many years building customer goodwill at a particular location.
- Your sales will be affected by your own operational ability, which may include your experience with managing a business, your capital and financing (including working capital), continual training of you and your staff, customer service orientation, product quality, your business plan, and the use of experts (for example, an accountant) to assist in your business plan.
- Your sales may be affected by Restaurant location and site criteria, including traffic count and which side of the street your Restaurant is located, local household income, residential and/or daytime populations, ease of ingress and egress, seating, parking, the physical condition of your Restaurant, the size of your site, and the visibility of your exterior sign(s).
- Additionally, many of the Restaurants included in the sales figures are freestanding Restaurants or located at the end of a strip center, and if your Restaurant is not, your sales could be substantially lower than the figures in the chart.
- Individual locations may have layouts and seating capacities that vary from the typical location.
- Other factors that could have an effect upon your sales may include consumer preferences, competition (national and local), inflation, local construction and its impact on traffic patterns, and reports on the health effects of consuming food similar to that served in the Restaurants, as well as the impact of federal, state, and local government regulations.
- Your sales may be affected by consumer preferences for certain menu items over others, changes in the menu, and regional differences in products or product demand, including whether there are products not available to you or your region but sold in other regions. Menus are continually being revised, both adding and discontinuing products and product line extensions.
- Sales may be affected by fluctuations due to seasonality (particularly in colder climates), weather, and periodic marketing and advertising programs. Inclement weather may cause temporary Restaurant closings in some areas.
- The data below reflects historical sales. There is no assurance future sales will correspond to historical sales.
- If you own a Combo Restaurant, the following may be applicable to you: many Baskin-Robbins franchisees actively pursue cake sales opportunities. If you do not, your sales may be negatively affected. Additionally, seasonality and weather may significantly affect sales of ice cream and related products.
- Some individual Restaurants’ sales may include wholesale accounts and other distribution outlets, which may not be available to you. Not all of these opportunities have been successful for all participating franchisees.
Table 1 – Continental U.S. Dunkin’ Donuts Single Branded Restaurants, Average Restaurant Sales (for the Period October 30, 2016 to October 28, 2017) – Freestanding Site Type
Northeast – Drive-Thru Restaurants