The Breakfast Industry

Transcription

1 The Breakfast Industry Legend has it that coffee was discovered by an Ethiopian goat herder who noticed that when his goats ate the berries of a certain plant, they became so energetic that they refused to sleep at night. The goatherd reported this to the abbot of a local monastery, who made a drink from the berries and discovered that it helped him stay awake throughout his long hours of evening prayer. From these humble beginnings, coffee has become a worldwide staple and Dunkin Brands has been a familiar name to the food and beverage segment for fifty years. Millions of people drink this beverage every morning, the average male drinks 1.9 cups of coffee and the average woman drinks 1.4 cups of coffee per day. The NCA (National Coffee Association) also states that...figures show that those drinkers demand fueled sales of 18.5 million 132-pound bags of roasted coffee beans in the U.S. in 2001, or 2.44 billion pounds of coffee sold for the year. According to a report from Perishables Group Inc., annual breakfast sales (including coffee) are estimated to be $65 billion dollars. Donut sales contributed a significant amount to overall bakery sales that averaged $511 with sales increasing to $651 during lent season. The central region of the U.S. posted the most sales for donuts with $725 a week in 2006 and increased to $832 a week in 2007(AIB Int l).

2 Industry Trends Industry experts say Starbucks and other quick-service chains are waking up and noticing the $40 billion morning food market a category dominated for years by burger giant McDonald's (OC News). Now, not only are these chains serving breakfast but they are keeping it available all day, including Dunkin Donuts. People want breakfast all day, and this is helping businesses keep a competitive edge, also saving the customers a stop at another store. Another trend that has emerged from the past and spread into the present is combo meals and value menus. Breakfast chain servers have all started to cash in on value meals, including Starbucks, Dunkin s and even Taco bell, whose breakfast menu now exists. Also, although coffee is mainly associated as a morning beverage, it is becoming an all day drink that is enjoyed in early afternoon and night hours as well.

3 Economy Trends As of right now, it is obvious our economy is swirling around the drain. On the upside, Dunkin Donuts offers a much lower price on coffee products. Dunkin' Donuts coffee-by-the-pound, retails for $6.99/lb. Further, while Starbucks seems to barely have their nose above water, Dunkin Donuts is running various promotions and investing in new advertising and stores. Dunkin Donuts also introduced a new $2,99 breakfast special that recently ran on called the waffle sandwich. Dunkin' also was aggressive on coffee in the New York Tri-State Area, offering 99-cent lattes all day. According to the article New, Affordable Food Indulgences for 2009 in the Wall Street Journal, another positive note is that since the breakfast/coffee industry does not contain high priced commodities, it is considered an affordable luxury and does not get hit too hard during tough times. The National Association for the Specialty Food Trade anticipates a 4% downturn for the industry this year. But sales in subcategories like specialty beverages, snacks and premium chocolate continue to grow. The reason being is these items can still be a means for consumers to treat themselves when times are challenging, says Ron Tanner, NASFT's vice president of communication and education.

4 Consumer Trends Consumption trends of coffee have rarely gone anywhere but up since 1668 when it replaced beer as New York City's favorite beverage. In 1999 there were 108,000,000 coffee consumers in the United States spending an approximated 9.2 billion dollars in the retail sector and 8.7 billion dollars in the foodservice sector every year (SCAA 1999 Market Report). It is inferred that coffee drinkers spend, on average, $ per year on coffee. The National Coffee Association found, in 2000, that 54% of the adult population of the United States drinks coffee daily. They also reported that 18.12% of the coffee drinkers in the United States drink gourmet coffee beverages daily (NCA). In addition to the 54% who drink coffee everyday, 25% of Americans drink coffee occasionally (NCA). According to a 2007 National Coffee Drinking Trends by the National Coffee Association; young adults are the fastest-growing coffee drinking segment. Older consumers are the greatest coffee drinkers as a whole: 74 percent of those 60 and over said they were coffee drinkers in 2007, up from 73 percent in Consumption attitudes on the other hand have changed tremendously. The most over-used word of 2008 that has leaked into 2009 has to be the word 'green'. Going green is the new black, also the movement toward fair-trade coffee to help coffee sustainability amid troubling times for many coffee farmers. Dunkin Donuts has been the first national brand to sell all espresso beverages made exclusively with fair trade coffee. Also, Dunkin s can claim that they are organic and grow their coffee without

5 herbicides and pesticides and have just opened their first green store in St. Petersburg FL.,which will serve as a prototype for futures stores (organic.com) Another attitude is the healthier lives trend. Now more than ever people are watching their sugars and complex carbohydrates. This has a huge impact in what breakfast and coffee chains including Dunkin Brands should think about offering to the people.

6 Company Overview Dunkin' Brands claim is that "soul" purpose is to lead and build a great brand. For 50 years Dunkin' Brands has been the "Quick Quality" segment of the food and beverage industry. Dunkin' Brands delivers a best-in-class menu and goes beyond what people expect form a traditional quick-service experience. With more than 14,000 points of distribution in 44 counties and approximately 120 years of combined experience Dunkin' Brands is a very well established company. A consortium of private equity companies owns Dunkin Brands: Bain Capital, The Carlyle Group, and Thomas H. Lee Partners. Dunkin' Brands consists of Dunkin' Donuts and Baskin-Robbins, both of which are 100 percent franchised and has total global system wide sales of $6.6 billion dollars. With 13,862 worldwide locations in 44 countries and 8,500 in 47 states in the U.S. it is easy to see why Dunkin' Brands is home to two of the world's most recognized and lovable brands, sharing both the same vision of conveniently delivering high-quality food and beverages in a welcoming environment, quickly and at affordable prices. Dunkin' Donuts is America's favorite everyday, all-day stop for coffee and baked goods. Dunkin' Donuts is the No. 1 retailer of hot and iced regular coffee-by-the-cup in America, and the largest coffee and based goods chain in the world according to the Dunkin Doughnuts website. Being socially conscious, Dunkin' Brands has started up a "Dunkin's Brand Community Foundation" that gives back to communities in a meaningful way. The Dunkin' Brand Community was created in partnership with the franchise owners of Dunkin' Donuts and Baskin- Robbins to support emergency response organization before a crisis occurs. The foundation's goal is to help ensure that those

7 heroes we depend on during a disaster have the training, equipment and resources they need to rise to any occasion. The Foundation is funded by contributions by all stakeholders: Franchiser and franchisees, corporate employees, suppliers and customers. Grants that have been added are Do Something, Feeding America, Homes for our Troops, The National Volunteer Fire Council, The Leary Firefighters Foundation and National Fallen Firefighters Foundation. Dunkin' Brands prides themselves on three values and principle; eat, drink and think. Dunkin' Brands goes beyond fast food to deliver innovative product choices at the right price served fresh, meeting the needs of people who have busy living. Dunkin' Brands offers original fun and fresh food, on-trend best-in-class coffee and succeeds by being smart and strategic with innovative approaches.

8 Company SWOT Strengths Dunkin Donuts most known for brewing high quality coffee for more than fifty years. Along with coffee they serve high quality breakfast items alongside their world famous donuts. Dunkin has an extremely loyal customer base. They are America s largest retailer of coffee-by-the-cup, serving nearly 1 billion cups of brewed coffee each year, which is an average of approximately 2.7 million cups per day. Dunkin Donuts uses 100% Arabica coffee beans and has its own coffee specifications, which are recognized as a superior grade of coffee. This superior grade of coffee beans is available to the public to purchase on Dunkin s website. Dunkin is not only a superior donut and coffee shop, but they have recently released a new low fat food and beverage line. The DDsmart menu consists of many different low fat, great tasting sandwiches, pastries, and low fat coffees. Weaknesses Although Dunkin Donuts has a newly released low fat menu, they continue to carry the persona of having unhealthy food options. Due to minimal advertising about the DDsmart menu consumers aren t thoroughly aware of the low fat food options that Dunkin now offers. Consumers not knowing about these food options is a key factor in losing business to tough competitors such as Starbucks and McDonalds. Opportunities

9 Dunkin Donuts has many opportunities to expand upon the brand. Establishing a more welcoming coffee shop atmosphere could take the Dunkin brand to the next level of superiority in the industry. This atmosphere can be established by offering small but effective amenities such as wireless internet and more comfortable seating. Offering these amenities invites a more relaxing environment for consumers to get fast, quality, food and coffee. Threats Dunkin Donuts main threats are coming from competitors in the industry such as Starbucks, McDonalds, and Krispy Kreme. Dunkin must compete with McDonalds new line of gourmet coffee, Starbucks entry into the breakfast sandwiches, and Krispy Kreme s legendary donuts.

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11 Competition SWOT Strengths Coffee Starbucks, which would be considered as the primary Dunkin' competitor in the coffee industry, have their own coffee farmers and harvesters, their own roasters, and carefully followed recipes that are just their own. They have set up a business model that is all about people worldwide. With that, they have some of the best payment plans and benefits packages available to all of their farmers. They have great payment plans and benefits packages for their local employees, including fantastic benefits for their part time employees. They are the only competitors in the coffee bar market that has a recognized brand image. Donuts Krispy Kreme, is by far Dunkin Donuts main competitor in the donuts industry. Krispy Kreme is most popular in grocery and convenience stores which gives customers easy access to the product. They also make it possible for different organizations throughout the community to use their product as a fundraiser. KKD has a high capacity to make 4,000 to 10,000 donuts daily. (Strauss) Weaknesses The Starbucks organization has a strong presence in the United States of America, with more than three quarters of their cafes located in the home market. The organization is dependent on a main competitive advantage, the retail of coffee. This

12 could make them slow to diversify into other sectors should the need arise. Krispy Kreme is competing against Starbucks coffee and Dunkin Donuts beverages. They also lack a non-interactive website in addition to uncertainty of International markets. All equipment is manufactured t internally in its Manufacturing and Distribution Dept. Opportunities Starbucks has new products and services that can be retailed in their cafes, such as Fair Trade products. The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge. Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential. According to LA Times, Krispy Kreme s growth in revenue will increase snackfood production and consumption. Customers receiving "Hot-Donut" now, is a strength that could be exploited more. Global expansion continues to be either a high-risk, or a high reward market to Krispy Kreme. Krispy Kreme possesses on-premise sales royalties (3%), therefore the higher the sales, the more money the company receives. (Krauss) Threats Starbucks' success has led to the market entry of many competitors and copy cat brands that pose potential threats. National food servers like McDonald s, after test marketing cappuccinos and iced coffee in various markets, is ready to begin rolling out a makeover of all its U.S. restaurants by 2009 to feature specialty beverages such as coffee drinks, smoothies, energy drinks, and other bottled beverages (Strauss). As coffee prices

13 are showing big increases, consumers tend to reduce their consumption commensurately. There are no substitute products for the coffee beans Starbucks must buy. As for Krispy Kreme, a competitor, notably Dunkin Donuts or Starbucks, could offer an imitation of Krispy Kreme and the magical power of the doughnut would be gone. The food industry has been affected by a recent trend toward healthier eating habits. While Krispy Kreme is careful about how the brand is used, some analysts are concerned that the company will not be able to maintain control over the brand while operating through alternative distribution channels such as grocery stores.

14 Dunkin' Donuts current positioning and messaging Dunkin Donuts is selling doughnuts, while its competitors are selling what they are labeling as the experience. Krispy Kreme and Starbucks both focus on the product, not its promotion. This doughnut machine is actually part of Krispy Kreme s domestic growth strategy. Krispy Kreme's machine reheats and glazes doughnuts that were originally cooked somewhere else. These machines preserve the Krispy Kreme brand image while allowing for explosive growth across the country with smaller, cheaper stores all delivering the Krispy Kreme experience. Starbucks conveys the message to the customers of how they treat their employees and the farmers who they get the coffee beans from on purpose. The message of the quality of the coffee beans is elaborated and the experience in each café is marketed in a very efficient and modest way to keep their customer enjoying the Starbucks experience.

15 Survey Questions 1. Do you drink coffee? Yes or No 2. Do you eat breakfast? Yes or No If no to number 2 the above then skip to question If so, which of these would you choose (circle all that apply) a) Eggs b) Cereal c) Bacon/ Sausage d) Pastries e) Fruit 4. How often do you eat out for breakfast? never 1-2 times 3-5 times every day 5. Where do you usually go? (circle all that apply) Convenience store Bojangles Biscuitville McDonalds Dunkin Donuts Starbucks Other (please specify) 6. Of these foods circle all that you would primarily get: Muffin Biscuit Biscotti Scone Bagel Other (please specify) 7. Rate the following in your opinion in order from 1-4 for pricing (one being cheapest, four being the priciest) Starbucks Dunkin Donuts McDonalds Krispy Kreme 8. Did you hear about Dunkin' Donuts coffee being sold in supermarkets? Yes or No 9. Did you know that Dunkin Donuts has a healthy choice menu? Yes or No 10. Do you know that Dunkin Donuts has a Waffle Sandwich? Yes or No 11. Are you: male or female (circle one) 12. Circle the age category you fall under: 17 and under years years yrs 50 yrs+

16 Potential Customers We think that Dunkin Donuts can excel in the breakfast food category. By positioning itself as a breakfast food restaurant, Dunkin Donuts will gain the attention and business of consumers who regularly buy ready-made food to start their day. To determine how valid our assumptions are, we developed a survey with the purpose of finding out people's breakfast habits and preferences, and their awareness of Dunkin Donuts availability of products. 19 males and 25 females, most of which are students between the ages of 18 and 25, completed this survey. We found that among these survey participants, a majority said they eat breakfast and a little over half said they drink coffee. The survey indicates that most people do not go out to eat breakfast, although there are few that eat out 1-2 times a week and even fewer who go out anywhere from everyday to 3-5 times a week. The dominant breakfast place chosen by people were Bojangles, with McDonalds coming in close at second place. Runner-ups include Boone Bagelry, Melanie s and convenience stores. Of the participants, 31 selected bagels as their primary choice, 22 selected biscuits, 10 picked muffins and 7 picked scones. Other favorites include: oatmeal, granola bars smoothies. We learned that over half are aware that Dunkin Donuts coffee is sold in supermarkets and well over half say they aren t aware of the new Dunkin Donuts Waffle Sandwich. Potential customers will stop at Dunkin Donuts either when they re on the go or for a casual sit-down at the restaurant. In the case of the donuts and coffee drinks, some like to take them back home or to the job site, while others like to stay and have a leisurely snack. The bagels and the oven-toasted and deli items are likely purchased

17 while on the run during a busy day; however, they may be consumed on location. Potential customers want the great coffee that Dunkin Donuts is so well known for. They aren't interested in fancy foreign coffee names, but rather for the good taste of an American brand that does not position itself as highbrow or elitist. Dunkin Donuts customers want to visit a coffee shop/restaurant that makes them feel comfortable with a menu of options that are easily read and ordered. Potential customers come from a wide demographic and psychographic background. People of different ages, cultures and educational backgrounds are drawn to Dunkin Donuts because they rely on the taste and quality of what the company has to offer.

18 Marketing communication goals and strategies Our marketing objective is to increase sales by 10% through increased breakfast items, coffee bean sales and the healthy choice menu. This is going to be achieved through an increase in reach and frequency of our advertising and promotional efforts. We want to keep our current customers satisfied while attracting new customers that tend to be more health conscious. Target Audience: year old college undergrads and graduates and young professionals. And the year old middle age working class. A. Sales Opportunity: We would like to see top of mind awareness increase by 10% by the end of the fiscal year, We plan to increase overall sales by 10%, through increased breakfast items, coffee bean sales and healthy choice menu awareness. B. Message Strategy: i. Positioning statement and theme: Not just coffee, Not just donuts, DunkIN and do it all! ii. Communication style and approach: Humorous and approachable. We take slices of life that relate to our audience and find the humor. Display an approachable personal relationship with customers. iii. The big unifying idea: Healthy but delightfully tasting food with a welcoming atmosphere where everyone feels receptive. We feel the

19 attitude and the outlook our audience has on the Dunkin Donuts experience will determine whether or not customer loyalty will be established. iv. The longevity or expected longevity: We intend to run a one year campaign, which should leave an upbeat influence on our consumers when identifying themselves to the Dunkin Donuts Franchise. The duration will be a year, but the after effect of the current campaign is expected to successfully threshold future Dunkin Donuts campaigns ahead of their competitors.

20 Creative Strategy A. Objectives: Our objectives are to differentiate from other power coffee houses and food chains. We want to get a unique selling proposition across of variety, quality, and smart healthy choices with reasonable pricing. We also hope to give awareness to new products, and be a true competitor for top of mind awareness with coffee drinkers nationwide. Basic Creative Idea 1. Tone: Humorous and fun 2. Big Idea: This yearlong campaign will focus on the newly added healthy choices along with our quality coffee and the classic round pastry. The campaign will include TV, radio, and online advertisements. Not just coffee, Not just donuts, DunkIN and do it all! 3. Special Characters or Spokesperson types: Possible popular comedic actor Seth Rogan 4. (Discuss and show some examples): Puns with body parts to promote the healthy choice options. Everyday elements of the average young to middle class working individuals will be portrayed with a satirical twist.

21 Media Strategy Our general approach uses media plans that enhances and best delivers our message strategy. We did this by setting our objectives in terms of exposure such as reach, frequency, and GRP s. This was comprised from a media mix including television, radio, outdoor print ads and internet advertising. With this, we are hoping to reach 90% of our target market. As we stated earlier the target market we are aiming for is young and middle age working class people from years old. Our research has shown the majority of breakfast fans and coffee drinkers fall into this category. To best utilize our budget we will use pulsing going heavy with high frequency in our more profitable months and reducing frequency in our more barren months. The main idea will be to focus on increasing awareness alone with a particular interest in the sale of coffee beans in grocery stores and our newly added DD Smart Menu.

22 Below The Line Plans Promotions: a. We are planning to be more earth friendly this year by reducing our carbon foot print by not having direct mail. Instead we will have printable internet ads on our website redeemable at point of purchase or online. b. Another promotion we will introduce is The Sampler. This will include mini versions of all of our healthy choice items on one plate. c. TGIF promotion will be buy any healthy choice sandwich from DD SmartChoice menu and get a free small coffee. B. Merchandising a. Due to the economy we will not be focusing on increasing our merchandise line at this time. We will be keeping what is already available including all of our various franchised clothing to our coffee merchandise. C. Point of Sales Ideas

23 a. An arrangement of all of our various bagged coffee flavors will be displayed at the register. D. Events a. Boston Marathon: We will be a main sponsor of the Boston marathon. Through sponsoring this event we will be increasing our awareness of our DD Smart Menu. b. Various events will be held at the Dunkin Donuts Center in Rhode Island. Budget The media budget for this campaign will be $30 million dollars allocating: A. Media Expenditures - $18 million is the majority of our budget spending, due to it being the visual aspect of our advertising, which will consists of radio, magazine, and outdoor advertising. We determined to go more on the visual aspect in reference to the print ads and outdoor billboards. Advertising visually has been known to leave a more of an effect on the target audience. Therefore, we used more than half our budget to media expenditures. B. Promotions, Point-Of-Sales- $5 million is what we expect to cover the events in which we will try to bring awareness to the target audience of what is being offered and the various specials we offer throughout the year. In an effort to increase customer loyalty, we will invest this money to bring excitement to our

24 customers through the production of coupons and our involvement in events throughout the year. C. Production and Materials- $5 million are the expenses that will cover the production of Dunkin Donuts merchandise that will be sold at the all Dunkin Donuts locations and also on the Dunkin Donuts website. As it is very inexpensive to produce and sell, we felt this portion of the budget is more likely to bring a satisfactory profit due to the low cost of production. D. Licensing/Rights- $500,000 dollars E. Agency Fees for non-media expenses -$1.5 million dollars The Campaign Post-Test Focusing on the high-quality consistency of roasted Dunkin beans, we hope to attain a superior share of the market and raise overall sales by 10%. Our messages show our patrons, repeat and new, that we are personable; we lose the pretentious and in turn focus on what customers really want. In marketing Dunkin Donuts as a food chain serious about quality and options but nothing else, we are able to reach a broader audience therefore becoming the more popular alternative to our huge threat, Starbucks. We will be running a simple campaign evaluation this will include a before and after survey testing awareness comprehension attitude and image of Dunkin Donuts. Our

25 campaign utilizes a number of strategies and propositions to guarantee a higher level of sales over the next year and propel Dunkin into future endeavors and expansion. Our campaign provides a combination of entertainment and consumer savvy promotions to ensure an increase of sales over the next fiscal year. We will also be evaluating this campaign with the number of coupons redeemed in stores and online. The amount of sales increase from the time the campaign started to the end of the year. By focusing on the DD Smart Menu we will not only reach a vast majority of our current customers but also reach out to new health conscious customers. Closing Summary Our team acknowledges the weaknesses and sees the strengths of Dunkin Donuts restaurants. But mostly, this team sees the great potential of this company and would like to give it the opportunity to make the most of its resources and the most gains of its capabilities. This company sells quality products with efficiency and good customer service. It is because of these reasons that we will proudly take Dunkin Donuts to the next level, by increasing its market share and profit, boosting its likability and creating a campaign message of easily retrievable information and simple referencing will instill a belief that Dunkin has superior value. Once this belief is in place, consumers will act on it and, with our help that action will evolve into a preference and inevitably loyalty. This

26 campaign is tailored to your image, and our team has done the research and campaign work necessary to advertise the message that you want to communicate. Works Cited "Coffee Consumption Research." National Coffee Association. 23 Mar < Donut Statistics and Trends. 20 Mar AIB International. 24 Feb Luna, Nancy. "Fast Food Does Breakfast." OC News Source. 7 July OC Register. 20 Feb < Glover, Katherine. "Starbucks, Dunkin Donuts, McDonald s: Coffee Rivals Fight Breakfast War." Business Network. 6 Feb BNET. 23 Feb. 2009

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