Dunkin' Brands Brainstorms
January 1, 2006
Dunkin’ Brands Brainstorms
By Maria Pilar Clark
Dunkin’ Donuts chains move beyond breakfast with fresh, innovative lunch and snacking options.
Dunkin’ Brands Inc., formerly the quick-service restaurants arm of the UK-based company Allied Domecq Plc, has big plans for this year. With the help of executive chef Stan Frankenthaler, Dunkin’ Donuts and Togo’s chains will reinvigorate their menus and recharge their offerings to appeal to a broader consumer base throughout the day.
Moreover, starting in November, Chicago-area Togo’s/Dunkin’ Donuts combinations changed their name to Dunkin’ Deli. Dunkin’ Brands acquired Togo’s, a well-known sandwich chain based in California, in the late 1990s. However, in some markets, including California, the Togo’s name will stay.
And the Dunkin’ Donuts name is not just about breakfast anymore. Dunkin’ Brands — which franchises Dunkin’ Donuts, Baskin-Robbins and Togo’s Sandwich Shops worldwide — is putting large-scale expansion plans into place, including breaking out of its donuts-and-coffee-only mold with new options, such as grilled panini.
The panini, which are pre-frozen, heated in batches and pressed individually to order, are being test-marketed in southeast Massachusetts and Rhode Island, with Dunkin’ Brands closely gauging consumer response to the new panini and the lunch concept overall.
Dunkin’ Brands, which holds a sizeable piece of market share in the Northeast, hopes to triple its stores to 15,000 nationwide by 2025, even as it faces a buyout. The buyout team of Bain Capital, Carlyle and Thomas H. Lee has been chosen as the preferred bidder for the company. The private equity trio is set to buy Dunkin’ Brands from Pernod Ricard, the French drinks group that acquired the business as part of its $13.3 billion takeover of Allied Domecq earlier this year.
SF&WB had a tête-à-tête with Frankenthaler to get some insight into how he creates, invents and imagines in Dunkin’ Brands’ new R&D kitchen, based in Canton, Mass. We also wanted to learn how he works to make those ideas a reality in more than 6,400 Dunkin’ Donuts franchises in 30 countries, with every process considered — manufacturing, equipment costs, operation and, of course, product popularity.
SF&WB: Why is the idea of “premium” — be it with breakfast sandwiches or new, exciting sandwiches for the lunch hour — becoming so big among chains?
Frankenthaler: “There is a natural evolution toward more ‘craft’ among QSRs [quick-service restaurants]. Customers react more favorably to menu items that show more culinary craft, hot and trendy ingredients, new flavor combinations, exotic flavor profiles and overall uniqueness of the product. We all want to differentiate ourselves from the processed sandwiches at the convenience-store level — and call out the superior quality of our products — while making them accessible for the lunch day-part.”
SF&WB: Why is Dunkin’ Donuts considering developing more exotic sandwiches and/or lunch options?
Frankenthaler: “While our sandwiches and other more savory items are new to our concept, they are not necessarily exotic. They are, however, certainly different from what customers have come to expect at Dunkin’ Donuts. These new items provide us with an opportunity to branch out into new day-parts, specifically the afternoon, and bring customers into our stores for a new menu item that satisfies a craving for something a little more substantial than a donut or muffin.”
SF&WB: What kinds of options is Dunkin’ Donuts thinking of adding to its menu?
Frankenthaler: “Dunkin’ Donuts’ has a long heritage as a bakery. Our history and many of our traditions stem from the bakery aspect of our menu. What customers will see in our afternoon and evening menus are foods that are bakery-based. They include a variety of breads — both savory and sweet — stuffed and made into ‘sandwiches and snacks,’ and new pastries, cakes, and tartes — foods that our customers will enjoy at that time of the day. We think our customers will gravitate toward having a coffee or smoothie with a pastry or savory snack in the afternoon, where they might not have been so eager to have coffee and another morning muffin.”
SF&WB: What are current trends in sandwich making?
Frankenthaler: “The introduction of more diverse ingredients into all the sandwich elements is a very clear trend across the sandwich making industry. We have seen many new variations on bread, interesting condiments and, of course, more ethnic flavors. Where before a sub roll with mayonnaise would suffice, we now see cumin-spiced jalapeño cornbread with wasabi-ginger spread.”
SF&WB: Instead of upgrading or adding lunch options at Dunkin’ Donuts, why not upscale sandwich offerings at Togo’s?
Frankenthaler: “In fact, we have already upgraded a number of our lunch options at both Dunkin’ Donuts and Togo’s. On the East Coast, we have transitioned a number of our Togo’s stores to the ‘Dunkin Deli,’ bringing all the best qualities of Dunkin’ Donuts and Togo’s into one singular entity. The Dunkin’ Deli will include a number of new breads [and] a new sandwich menu, including Chicken Bruschetta, Chipotle Chicken, Pastrami Supreme and our Toasted Italian Sandwich. Additionally, Togo’s now offers a new line of all-natural soups, a new salad menu, a new catering menu, and within the next few months, we will be adding even more to the Togo’s lineup.”
SF&WB: Are you planning to upgrade offerings for sandwiches by including bread such as ciabatta, focaccia and artisan rolls?
Frankenthaler: “We have already upgraded our bread choices for the Dunkin’ Deli and are in the process of upgrading our bread offerings at Togo’s. At the Dunkin’ Deli, we have a Cuban sandwich and a Barbecue Beef sandwich on ciabatta loaves, and a Vegetarian sandwich on a crusty French loaf.”
SF&WB: Do you think premium bread will change Dunkin’ Donuts’ image? In what way?
Frankenthaler: “Good sandwiches are about three things: good bread, good meat or cold cuts and good condiments. If we do these things right, and we think we are, Dunkin’ Donuts will become a destination of choice in the afternoon.”
SF&WB: How have consumer eating patterns expanded or changed?
Frankenthaler: “Consumer eating patterns have changed quite a bit, and in many ways, there is no longer one predictable customer anymore. There are people looking to eat healthier by eating lighter with fewer fats and smaller portions. There are others who are looking for customization and the ability to pick and create their own choices daily. And there is yet another group who are trendy eaters looking for bold, daring or ethnic flavors. So the trick is to be able to create a delicate balance that allows us to reach each of these customers.”
SF&WB: Are you answering a particular consumer demand for expanded menu offerings?
Frankenthaler: “The simple answer is yes. Our customers have told us that they love us; they love our beverages and our breakfast offerings, but they don’t visit us in the afternoons as frequently because we didn’t have the afternoon food menu that would really make them want to come back for lunch. Our afternoon menus answer what our customers have been asking for.”
SF&WB: Is Dunkin’ Donuts’ goal to capture a new segment of market share, to gain higher sales or both?
Frankenthaler: “I think one leads to the other. We would certainly like to share customers in the afternoon with our competitors — increasing our market share for that day-part. By doing so, our franchisees will naturally gain sales that they were not generating in the past. The afternoon day-part represents a great opportunity for Dunkin’ Donuts because our stores are already open during that time of the day, so the more we can create a reason for customers to visit during that time, the happier they will be, the better off we will be, and the more profitable our franchisees will be.”
SF&WB: Please talk about the idea of a typical value-meal versus a premium-meal. Which is stronger? What is driving this change?
Frankenthaler: “They each have their place on menus. One is not necessarily stronger than the other. Value meals remain great options for on-the-go-customers. They not only provide ‘pocketbook’ incentives, but they also provide a comfort because customers know exactly what they are going to get without having to think too much. Premium meals provide the customers much more opportunity to be involved in the decision-making process, thereby allowing for more flexibility and customization. It feels like more and more customers are asking to be part of the latter, premium process. This is because customers today are savvy and know more and more about food and experiment more with flavors than ever before.”
SF&WB: Have you noticed any other foodservice trends that are impacting the industry?
Frankenthaler: “Customers appreciate comfort in their surroundings, regardless of how much time they intend to spend in an establishment. This doesn’t mean that we need to install couches or Wi-Fi, but I think it suggests that stores should be warm and inviting. I feel that we have responded to that trend in a wonderful way with our new prototype stores. They are very warm environments that provide a friendly atmosphere — even if you are in and out in two minutes.” SF&WB