Once known for its donuts, Dunkin’ has rebranded itself after becoming one of the biggest players in the coffee market.
An Overview of Dunkin’
Founded in 1950, Dunkin’ ran for 70 years under the title of Dunkin’ Donuts before shortening its name. This change came in part from the shifting focus of the brand, as 60% of its revenues came from coffee by 2016. The importance of the takeaway coffee market both economically and culturally was also a factor, as the brand aligned itself with something that had become a mainstay of American life.
Dunkin’ is one of the biggest coffee chains in America, competing with Starbucks for domination of the market in caffeinated beverages. Dunkin’ has tried to position itself as the better value for money option, generally pricing more cheaply than its rival. It’s a strategy that fits with their contrasting brand identities, Dunkin’s bright colors and quirky name aligning better with a cheap and cheerful approach.
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Colin started as a team member at 21 and now owns 6 locations in Tampa Bay. Lisa came from marketing and built 21 in San Diego. The most successful multi-unit owners move early and secure markets with room to grow. Use our free tool to search multiple ZIP codes and find franchises where you can still stack locations, before someone else does.Part of Dunkin’s success comes from its ubiquity. As well as free-standing shops, there are Dunkin’ locations in shopping malls, gas stations, and premises shared with other food brands such as Baskin Robins. This helps to draw in a wide range of consumers, and to spread awareness of the brand. It’s also a factor for franchisees to consider – what sort of Dunkin’ do you want?
Dunkin’ in Context – the State of the Industry
Not all franchises fit neatly into a single category, and Dunkin’ is a classic example of this. Sitting at the intersection of coffee culture and donut chains, it’s worth looking at both those industries to understand the brand.
There are over 200 million donut consumers in the United States, eating an average of 31 donuts per year. Donuts have become such an important breakfast and snack food that they represented over 20% of total pastry sales in 2015. Donut stores in the US were worth $8.9 billion in 2023, following a decade of nearly constant growth.
Franchises hold a lot of power within the donut industry, as consumers instinctively head for stores whose names they recognize. 87% of donut consumers buy them at national chains, including franchises.
While Dunkin’ is strongly associated with donuts, its main business is now coffee, and there are nearly 38,400 coffee houses in the United States, more than before the Covid pandemic. The number of shops is almost doubled, to nearly 73,000, once you factor in the wider figures for coffee and snack shops, a category that very much fits Dunkin’. Coffee businesses have grown faster than most parts of the food service sector. High disposable incomes let people spend more money on coffee and treats, while in tough times they turn to these outlets as an inexpensive way to get a meal or snack.
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When I owned a UPS Store, I learned firsthand how much your ZIP code shapes your outcome. I sold my store at a premium because my territory was in a high-value area. The best areas go first, and once they're gone, they're gone. Enter your ZIP code to see which franchises are still available near you, saving you months of wasted research.🔴Free Webinar: 6 Under-the-Radar Franchise Concepts That Serious Buyers Should Know
Every month we feature 6 standout franchises that could be the opportunity you've been looking for, each evaluated on disclosed financials and matched to the type of buyer most likely to succeed with it. Can't attend live on October 27 at 6PM EST? Register now and we'll send you the full recording the next day. Reserve your spot here.High global demand, together with the disruptive impact of climate change, has created volatility in coffee supply chains and so in coffee prices. While demand remains high, consumers are resistant to rising prices, and so coffee shops may have to soak up some of these costs, especially if, like Dunkin’, their brand is built around value for money. Understanding that volatility is important in evaluating the future of coffee shops.
The Finances of a Dunkin’ Franchise
Dunkin’ estimates that the initial costs to set up one of its freestanding locations are $526,900 to $1,832,500. This includes a $40,000 to $90,000 initial franchise fee. Aside from this, the largest outlay is on building costs, which can be anywhere between $180,000 and $600,000.
Costs are lower for a shopping center, storefront, or gas station location.
The main ongoing fees are:
- Continuing Franchise Fee: 5.9% of gross sales
- Continuing Advertising Fee: 5% of gross sales
The median sales for a free-standing Dunkin’ store with a drive thru, based on data from 2,976 locations, was $1,494,457 in 2023. For the smaller number of stores without a drive thru, the median was $1,174,970.
🎯Find Best-Fit Franchises Still Available in Your Target Area (Free Tool)
When I owned a UPS Store, I learned firsthand how much your ZIP code shapes your outcome. I sold my store at a premium because my territory was in a high-value area. The best areas go first, and once they're gone, they're gone. Enter your ZIP code to see which franchises are still available near you, saving you months of wasted research.📈Dreaming of Multi‑Unit Success? Lock In Prime Territories Before They're Gone.
Colin started as a team member at 21 and now owns 6 locations in Tampa Bay. Lisa came from marketing and built 21 in San Diego. The most successful multi-unit owners move early and secure markets with room to grow. Use our free tool to search multiple ZIP codes and find franchises where you can still stack locations, before someone else does.Recent Developments at Dunkin’
Dunkin’ has been through a lot of changes in recent years. The rebranding to position itself more as a coffee outlet was followed by a takeover by Inspire Brands, a management company that specializes in running franchised food companies. The greater resources and reach of Inspire, together with the opportunity to collaborate with its other brands, seem to have helped Dunkin’ in its attempt to challenge the behemoth that is Starbucks. That rivalry hasn’t done Dunkin’ any harm – if anything, it’s helped to raise its profile, as commentators discuss the coffee wars.
Like many big brands, Dunkin’ has embraced modern methods to increase its market share, such as a delivery collaboration with Grubhub. But it’s also fallen foul of cyberattacks on customers via its app, and got into trouble for how it handled this. If you’re looking for a big brand, they don’t get much bigger than Dunkin’. If you’re looking for signs of whether it’s the right choice, consider how well it’s performing under Inspire, and whether recent changes are taking it in a direction that suits you.
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