Debating Bake Off/Bake On
Today, only
36 of roughly 2,100 Dunkin’ Donuts in the Northeast make doughnuts from
scratch in stores.
The owners
of one store in Weymouth, Mass. bake their doughnuts on the premises
and believe it provides them with a competitive edge by giving them greater
control over production costs and enabling them to offer a wider selection
(35 items) than stores supplied by commissaries (20 items).
Sisters Lynne
McLaughlin and Sharon Holdcraft who run the store told The Boston
Globe that
customers bypass other Dunkin’ Donuts and drive to their shop even though
it is farther away.
“I wouldn’t
go to any of the others. They have the best jelly doughnut out there,’
said Mary Crowley, one of those customers who puts more miles on her
car to buy the sisters’ doughnuts.
While most
Dunkin’ Donuts franchisees choose to go the commissary route, Stuart
Morris, president of QSR Consulting Group, understands the attraction
of goods baked in stores.
“Doughnuts
are an indulgent and ‘sinful’ purchase that we all love,” Mr. Morris
told the Globe. “Having
them made fresh is a statement of quality to the product and a reward
to the consumer. It is no wonder that this Dunkin’ Donuts is among the
busiest in the country.”
Despite the
Weymouth store’s success, the simple fact is that having doughnuts baked
elsewhere and shipped in is less expensive than the do it yourself variety.
Discussion
Questions: Are stores being short-sighted by focusing on the savings
of bake-off operations rather than the marketing and customer experience
value of baking in stores? Do you see any scenario moving forward where
baking will be done more on-premises than off?
You mean it really wasn’t time to make the donuts?! 🙂
Two words: “Krispy Kreme.” Yes, the experience can be a powerful visual; but it can only do so much. KK’s face to the consumer was fresh but those stores were only profitable if the big machines were working all the time; hence the KK brand showing up at every bake sale, Circle K and Kroger around.
We’re still talking donuts here, not fresh roasted coffee out of the roaster with all of its warm, good smells. Other than the anecdotal story, not sure in a taste test if anyone would drive out of their way past another of the same franchise.
It’s economics versus taste…and taste is hardly sustainable. The answer to the question is simple. Taste a Krispy Kreme right out of the oil and then taste one that’s been sitting on a gas station shelf–even for a few hours. Bakery products’ taste profile degrades quickly. But, will that stop the average shopper looking for a sugar fix? I don’t think so.
So…if I’m right, the right answer for the majority of the market is to keep quality as high as possible while reducing production costs as much as possible.
“It’s time to make the doughnuts” was a line in a series of Dunkin’ Donuts commercials. In them it showed a baker getting up in the middle of the night to go to his store to make product for the next day. The ad was designed to show that their product was made fresh each day. It also showed why it was hard to sell a franchise. 1) You needed someone qualified to be a baker and 2) that person (normally the franchisee) had to be willing to get up very early every day to make the doughnuts.
Yes, I am sure that having their product made at the store and the additional 15 items does help the sister’s store to stand out. That being said, from the franchisee’s perspective, having to make a lower investment in building and equipment, not having to get up in the middle of the night or being constantly worried that the baker will quit and there goes your business, I can easily see the appeal of the commissary model. From Dunkin’s point of view, it makes it far easier to find and qualify new franchisees, which has allowed them to expand their footprint.
The art of doughnut making is fading faster than ancient tribal languages. As a Canadian, I used to join in the national boast of a Tim Horton’s doughnut on literally every corner. But no more. They are small, tasteless globs apparently made in undisclosed locations on an unknown date. Seeing them made doesn’t always help, as we know from the KK track record. I hope Lynne and Sharon’s Dunkin’ Donuts lives forever.
There’s also a small town in Mexico with a doughnut place called “Drunkin Donuts” and they make donuts on the premises and they are huge and amazing. I’d tell you where but they’d probably get a ‘cease and desist’ order and that would be plain wrong. Hail to the doughnut!
The commissary model makes sense from many perspectives. From the consumer perspective, the quality of the product in the stores must stay at a certain level before sales fall off. This is an empirical question and can be tested. The consumers will let Dunkin’ Donuts know when the model stops working.
Strategically, Dunkin’ Brands has identified themselves as a “beverage” destination. That core has to have an operational focus of “invest and grow.” the doughnut needs an operational focus of “protect.”
The group is doing the right thing to keep the operations simple, as they continue to expand products and hours. You cannot overload one of these boxes.
Having the donuts made offsite assures consistency, quality, and ability to control costs, and thus price for the consumer. Throughout the day, this operational challenge of keeping doughnuts in play at the standard needed, is taken out of play for the operating team.
Result–cleaner store, focused crew, faster service, better quality. That spells faster growth for the chain, greater sales, and improved profits.
If the Morris sisters can deliver those results–and as entrepreneurs, they may very well be able to in a limited number of restaurants–have at it. Dunkin’ Brands is taking the right approach for their chain and their customers by preparing doughnuts offsite.
I am a DD brand loyalist and I, like many others, taste a big difference between the frozen products shipped in and those made in stores or in regional bakeries. Their chocolate donut suffers the worst–when I lived in MA, I ate one just about every day. Now that I go to stores using frozen goods, I don’t buy them anymore.
While other shops might be able to replicate their products in a more centralized manner, DD has not been able to. In order to maintain quality, they should not ramp up use of frozen products. While it is a cheaper way to enter markets, you only get one shot at a first impression–you don’t want a consumer’s first chocolate donut to be sub-par.
Perhaps some of you remember when “dime” stores made donuts in front of the store and cooked them in boiling lard fat right before the customers’ eyes and noses. As Archie Bunker might have said, “Those were the days.”
Krispy Kreme tried to resuscitate that freshness process but not successfully. The “dime” stores are long gone with the wind and today’s donut lovers aren’t demanding the fresh smell of donut grease as a prerequisite to buying donuts.
Wait, what’s all this talk of baking? I thought donuts were fried!
Interestingly, there was a related story in the San Francisco Chronicle last week talking about the proliferation of artisan donuts in the Bay Area. Obviously, all of those were made onsite, so the debate was whether they should be cooked to order or pre-made. Sort of the same debate–quality vs efficiency–just one notch up the foodie ladder!
Personally, I prefer the made-on-site donut over off-site donuts; the taste is better, less “sticky” feel and less oily taste. Sadly, many of our “Mom and Pop”-owned donut shops closed after Krispy Kreme moved into the neighborhood right next to Starbucks on the main thoroughfare. Then this past month KK closed their only location in our town (population = about 100,000). Now the closest donut shop to where I live and work is Dunkin’ Donuts in another town. Not my favorite.
On the plus side, maybe I will stop eating donuts 2-3 times a month.
We are in an age of selling experience in order to create competitive advantage. When I walk into a coffee-house, I expect to ‘experience’ the aroma as well as the product. Likewise, I walk into a doughnut shop, I expect the pleasurable sensory ‘experience’. If this uniqueness – this experience – is removed, you simply have the case of another product on a shelf.
A bakery with no baking is just another nondescript food dispenser.
Follow the money. Just hearing the stat makes me cringe, but I don’t think I will be taking any extended trips to pick up fresh donuts. I may complain about it to friends, but I don’t think it effects my buying habits. Net net, I think Dunkin’s strategy is sound.
My donut-appreciating gut tells me that bake off works just fine for Dunkin’ and their customers. Sisters Lynne McLaughlin and Sharon Holdcraft seem to be treating their franchise like an independent, and more power to them.
If that’s what they have to do to differentiate themselves from the traditional competition AND the other Dunkin’ stores in the trade area, then they are just smart business people.
I was at a wedding last weekend at which the cake was substituted with hundreds of handmade pumpkin spice donuts from a small bakery an hour away.
Consumers have lots of reasons to buy and convenience is one big one.
I love donuts and I live in NYC. When I moved to NYC many years ago, I could not find a good donut. Oh, how I wished Dunkin’ Donuts would come to the city.
Then come they did. There are more Dunkin’ Donut locations in Manhattan than any other retailer. Yes, multiple times more than Starbucks. I should be happy, but am not. The donuts are awful.
Several weeks ago, I was in Jersey and stopped at a DD for a cup of coffee. The aroma in the store was enticing. And, it wasn’t the aroma from the coffee…it was the aroma from the fresh donuts. I bought three and truly enjoyed them.
It seems we all agree that the onsite-made donuts taste better. But we excuse DD for the commissary alternative because it is less expensive, more efficient and therefore better business.
Well, the three donuts I bought in New Jersey were three more than I bought in any of the hundreds of DD stores in NYC, including the one I see out my window, across the street. I haven’t bought one DD in NYC in YEARS. How many would I buy if they tasted as good as the ones I found in Jersey? How many would other people buy if they really tasted good?
Gene, your comment versus the consensus on the thread generally echoes a discussion I read the other night on the 37 Signals blog: “Why do Americans have such terrible taste?” 37 Signals is a software company that makes online project-management tools like Basecamp and Backpack. They also, I discovered, make Ruby on Rails, an important web-development tool.
The blog commentators were discussing product design–principally cars, but the thread inevitably came around to Apple and the design of its products, and the look of the typical American house.
It sounds as if American manufacturers make the assumption–or have the fear–that Americans won’t pay for exceptional quality–or that if that quality costs the same at retail, Americans won’t go out of their way for it.
Yet in Europe, those same quality levels are the price of entry into any market.
Several years ago, when we took our kids to Paris, we knew we weren’t going to waste good money feeding them in expensive restaurants. So we ate in the cafes and lived mostly on mac ‘n cheese and chocolate crepes, and I am here to tell you that even the most touristy corner cafes in Paris had better-quality ingredients than I can find in many good restaurants in St. Louis.
What I discovered in the discussion the other night was that Europeans think much as you and I do, Gene, that if it’s worth eating or buying something, it’s worth eating or buying a good one.
Americans, on the other hand, according to one explanation, feel that craving quality above a certain level is somehow snobbish or elitist–and I must say I’ve seen this attitude in my mother when she’s justified buying what in my view are bad desserts: the good ones are delicious, but too expensive; the ones at a lower price point are good enough, and if I, her daughter, will no longer eat the cheaper ones, I’m implying that I’m now too good for her.
So, Gene, for you I hope two things: One, that DD keeps its franchisee flexibility, so that there can always be some, like the store in Jersey, that will make their own donuts the way you like them. And, two, that some savvy NYC franchisee, preferably one near your part of the city, will decide there have to be more donut lovers like you and switch to on-site just to capture the niche. Let’s see…even if it’s one percent of all the DD customers in a 40-block radius of you…as incremental sales…do the math….