New CEO focused on keeping the Dunkin’ brand relevant

Discussion
Photo: Dunkin' Donuts
Jul 12, 2018
George Anderson

David Hoffmann, the newly named CEO of Dunkin’ Brands, knows what it takes to keep the brand relevant in the minds of consumers — and it isn’t doughnuts.

“Relevance is at the heart of what we are trying to do. Brands that stay narrow in their lane do their best,” Mr. Hoffmann told CNBC.On the Dunkin’ side, that is great coffee, fast. It’s our sweet spot.”

Mr. Hoffmann joined Dunkin’ Brands as the company’s president in 2016 after 22 years at McDonald’s. He has been responsible for implementing the chain’s multi-year plan to transform Dunkin’ Donuts into a “beverage-led, on-the-go brand.”

His duties included leading all aspects of the company’s business in the U.S., including the creation of the next generation concept store under the Dunkin’ banner. The concept, which omits “Donuts” from its name, first debuted in Quincy, MA earlier this year. It features dedicated space for mobile order pickups, digital ordering kiosks and a drive-thru for customers who order in advance using the DD Perks app. The chain plans to open around 30 such stores this year.

Dunkin’ Donuts has also simplified its menu under Mr. Hoffmann’s leadership. Earlier this year, the chain removed 10 slower moving breakfast and lunch menu items to focus on more popular choices. The chain made the move with the expectation that it would help improve customer service and the experience within its stores.

Mr. Hoffmann replaces Nigel Travis, who led Dunkin’ Brand Group’s successful initial public offering in 2011. Mr. Travis, who has been with the company for nearly 10 years, will continue with the company as executive chairman of the board.

“When we recruited Dave to Dunkin’ Brands 18 months ago with the intent that he would succeed me as CEO, we knew that we were getting a world-class leader with extensive restaurant industry expertise, and he has exceeded all of our expectations,” said Mr. Travis in a statement.From his development and implementation of the Dunkin’ Donuts U.S. Blueprint for Growth, to the relationships he has forged with our franchisees and the talent management skills he has exhibited, Dave has demonstrated he is exactly the person to lead the next phase of our global growth.

Dunkin’ Donuts, which posted a 0.5 percent gain in same-store sales during the company’s first quarter, is expected to report its second quarter results on July 26.

DISCUSSION QUESTIONS: Do you think Dunkin’ Donuts is headed in the right direction under David Hoffman? Where do you see the greatest opportunities for the chain to gain market share and grow its sales and profits?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The company is on a roll and the flavor of its coffee is in VERY sharp contrast to the coffee at Starbucks or Peet's."
"The greatest opportunity for Dunkin’ is to stay on-brand and not become Starbucks."
"Hoffmann realized that shifting the focus from donuts to coffee would improve consumer perception and position the brand for growth."

Join the Discussion!

15 Comments on "New CEO focused on keeping the Dunkin’ brand relevant"


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Paula Rosenblum
BrainTrust

I’m surprised no one mentioned the brand’s rather stunning expansion. This strategy seems to be working well. When I lived in Boston, there was a Dunkin’ on almost every major corner. That’s starting to happen in Miami now too. And you can get the coffee anywhere, including at grocery stores in St. Croix (?!) and anywhere else I’ve visited in continental U.S.

Food is food, but Dunkin’s coffee is the driver of the brand. So at least in my mind the acquisition of new franchisees, the growth into grocery stores, etc. is a bigger story than comparable sales. The company is on a roll and, also unmentioned, the flavor of its coffee is in VERY sharp contrast to the coffee at Starbucks or Peet’s. Mild vs. french roast.

Dunkin’ has its place. Personally, I think it’s doing well.

Dr. Stephen Needel
BrainTrust

Dropping the “Donuts” from DD is minor compared to IHOB. DD has always been about coffee “and …” The “and … ” has morphed over the years, but slowly and without destroying the equity they had built. I’d expect them to keep this up. Keep selling good coffee for a lot less than Starbucks.

Anne Howe
BrainTrust

Dunkin’ concept stores seem to be a good direction for the brand’s beverage-driven future. The doughnut can clearly take a back seat role. But I do hope they continue to develop additional healthier food options for on-the-go patrons. Maybe they could form a partnership with Kind?

Art Suriano
BrainTrust

Every business has to keep up with the times, and David Hoffmann realizes that. The Dunkin’ Donuts of yesteryear is no longer serving the same customer today as many of us have become health conscious; pickier with our coffee likes and dislikes and expectations when it comes to getting what we want as quickly as possible.

Dunkin’ Donuts has tremendous potential to grow into a company that can please many customers. Some of the issues not addressed in the article are the in-store atmosphere which needs a facelift, possibly installing some booths instead of just tables, and the need to improve the mandates on their franchises because there is tremendous inconsistency from one location to another with things like cleanliness and service.

That aside, Mr. Hoffmann comes from a chain who knows how to turnaround and change quickly and knows how to make the brand consistent regardless of who owns the location. So give him time, but I see many good things to come for Dunkin’ Donuts under Mr. Hoffmann’s leadership.

Max Goldberg
Staff

Hoffmann realized that shifting the focus from donuts to coffee would improve consumer perception and position the brand for growth. Focusing on coffee and convenience, while eliminating slower performing products, should help speed up the lines. Dunkin’ seems to be benefiting from Mr. Hoffmann’s willingness to take the chain in new directions.

David Weinand
BrainTrust

My problem with Dunkin’ is its lack of consistency. I’ve found Dunkin’ in Boston is really good. Elsewhere it is extremely hit or miss — especially their trademark iced coffee. In most places outside of Boston, it is just brown water — which I can only assume is due to franchisees trying to save a buck. Coffee is their brand now, not doughnuts — so the new CEO must work on delivering a more consistent product.

David Naumann
BrainTrust

There is no question about consumers’ passion for Dunkin’s coffee and it’s what creates brand enthusiasts. As Dunkin’ reduces the emphasis on doughnuts, they can experiment with other food options — just don’t mess with the coffee. Remember what happened when Coke changed its formula and introduced New Coke in 1985? It was a disaster!

In addition introducing new menu items, there is still some room for expansion, especially on the West Coast.

Gene Detroyer
BrainTrust

Whenever discussion comes up about Dunkin’ Donuts, I think back 60 years or so to when I was quite regularly going to the local Dunkin’ Donuts. Walking in and smelling the aroma of the fresh doughnuts just being made. Ordering a Dunkin’ Donut, with the handle, and enjoying the crispiness of the outside. Or the softness of the raised glaze.

Of course, today that is all gone and Dunkin’ moves forward. In New York City it is the largest chain with over 600 locations. Unfortunately, it offers less-than-adequate food and a service-level and attitude by employees that could be the worst a customer has experienced ever, anyplace.

That being said, they are doing something right and I have to admire their strategy and working with what they have to work with. They’ve done a good job of re-imagining this business and understanding their customer. Sadly though, as I walk past the many Dunkin’ locations in my neighborhood and around the city, I just keep going.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Coffee shop franchisees are a demanding lot, so keeping the brand expansion and innovation engines revving is a key CEO deliverable. Through this, product quality and service standards can be high and enough credibility capital chips will be available to cash in when changes to menu, decor and customer experience are recommended.

Shelley E. Kohan
BrainTrust

The brand has more than 12,000 distribution points and a significant amount of revenue is generated through franchise and royalty fees. The consistency issue across stores needs to be addressed and David Hoffmann is the man to get this done based on his background. Other positive factors attributed to Dunkin’ include the addition of more than 2 million customers to the loyalty program driving significant repeat traffic, the expansion of 440 new stores and the increase of Dunkin’-branded CPG by 30 percent.

The next-gen concept stores is a win for today’s customers (convenience, time and value) and creating additional touch points with branded products fuels the loyalty connection. While sales were better than the retail industry trend, more impressive is the increase of operating income vs. LY of more than 7 percent. David Hoffmann has Dunkin’ headed in the right direction. The greatest opportunity for Dunkin’ is to stay on-brand and not become Starbucks.

Cathy Hotka
BrainTrust

I love the energy here. Dunkin’ recently opened a phone booth-sized outlet in Washington National Airport and it’s a huge hit. Mr. Hoffmann is wise to stay on top of changing customer preferences and keep a lesser focus on what works and what doesn’t. Competitors will have to do the same to keep up.

Roy White
BrainTrust

You can’t argue with success. In the most recent fiscal year, revenues (with the biggest share being franchise fees and royalties) rose 4 percent and income before taxes increased 8 percent. However, the coffee-based marketing may not be the perfect solution. During fiscal 2017, sales growth at Dunkin’ Donuts U.S. was driven by breakfast sandwiches. Beverage sales were flat. Iced coffee, helped by cold brew, grew, but there was a decline in hot coffee. First quarter sales and profits continued to rise although modestly, with one of the big growth drivers being the breakfast sandwiches.

Neil Saunders
BrainTrust

Dunkin’ is certainly moving in the right direction. However, there is a lot of work to be done. While the company has an enormous number of stores, the variation between them in terms of service, atmosphere and quality is considerable.

The focus on coffee is sensible, and Dunkin’ has always done well in the “grab-n-go” market. However, it needs to perform better in the more premium segment of the market where Starbucks plays more strongly.

John McIndoe
BrainTrust

Hoffmann’s strategy to focus on a very specific value proposition for Dunkin’ Donuts is the right approach. Several well established trends, such as the popularity of high-end coffee and the trend toward eating more healthy foods; i.e., not doughnuts, had the potential to stifle Dunkin’s growth. There are many hurdles remaining, not the least of which are to shift consumers’ understanding of the Dunkin brand and fierce competition in the high-end beverage and healthy foods retail categories. However, this new approach, combined with factors such as Dunkin’s enormous footprint around parts of the country, give Hoffmann at least a fighting chance.

gordon arnold
Guest

With 22 years at McDonald’s Mr. Hoffmann’s “keep it simple and stay focused” approach will put order where it is sorely needed. The first and highest priority is to identify and create a specific market penetration and development plan. I am wondering if this is within his practiced skill set.

wpDiscuz
Braintrust
"The company is on a roll and the flavor of its coffee is in VERY sharp contrast to the coffee at Starbucks or Peet's."
"The greatest opportunity for Dunkin’ is to stay on-brand and not become Starbucks."
"Hoffmann realized that shifting the focus from donuts to coffee would improve consumer perception and position the brand for growth."

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