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November 22, 2005

Lowest Common Coffee Denominator

Dunkin_1

Last year, I had some thoughts about the Fast Company web-exclusive article on Dunkin’ Donuts (DD) be faster and be cheaper business strategy to siphon customers away from Starbucks. And recently I shared some more thoughts with Stephen Rodrick, writer from NEW YORK MAGAZINE, on DD’s push into New York City.

In his “Average Joe” article, Stephen writes about DD's lowest common coffee denominator approach …


“At Starbucks, your coffee is lovingly prepared by that eager, bright-eyed barista, cup by custom-made cup. At the second Dunkin’ stop, a pencil-thin store at 43rd and Second, the Dunkin’ Eight watched approvingly as a nameless staffer took three orders in a minute, hitting a red button for two sugars and a green one for a dash of milk. Customers came and went as if on an invisible conveyor belt. “See how quickly we move them through?” said one of the Dunkin’ ocho. “In and out, in and out.”

What I was witnessing, of course, is the McDonaldization of coffee. Following the model of the Golden Arches, Dunkin’ prizes speed and sameness above all else (Dunkin’ is owned by Pernod Ricard, a French conglomerate, but its stores are all franchised). In addition to its state-of-the-art push-button standard-coffee machines, each Dunkin’ store has an $8,000 espresso-and-latte machine. The goal is simply for every cup to taste identical, whether you’re in midtown or Park Slope. It may not be the best cup of coffee you’ve ever had, but you can rely on its predictability. And, again copying the McDonald’s model, it will be there instantly.”


SOURCE: New York Magazine | “Average Joe” | Stephen Rodrick

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Comments

A very interesting analysis covering the product/service offering positional differences. This, of course, also ties in directly to audience segmentation which is hopefully been a prerequisite step in the strategic planning process for Dunkin Donuts' expansion.

There are those individuals that want the "Starbucks Experience." Then there are those people who just want a cup of decent cup of coffee at a decent price (read: value) and want/need their experience to be somewhere else outside of an 900 square foot coffee shop.

Expanding on the premise that there is money to be made primarily targeting many non-Starbucks customers and a smidget of Starbucks customers may just make sense, regardless of the product is packaged to meet this strategic targeting approach. There is a ton of competiton from street vendors, but competition in many cases like this is a good thing.

Strangely enough, I read a few months back of a coffee taste test where Dunkin' Donuts coffee tested better than Starbucks. Personally, I don't get it. But it was interesting.

I wonder if they tested the DD coffee with or without the kruller crumbs.

Darrin

Coffee is just not one of the things I'm particularly snobbish about even though I drink about 6-8 cups a morning. I don't want to pay the premium for the Starbucks experience because I'm not going to sit at Starbucks to drink my coffee. And no I don't want to pay the premium to at least make waiting in line more enjoyable. I'd rather not be waiting in line behind a crowd of people who's order for a cup of coffee is longer than this comment.

On the rare occasion I do go to a Starbucks my order is always the same. Quick and efficient: Venti. Black. And
I'm out the door.

Perhaps that's why for my european taste Starbucks makes great espresso while Dunkin's stinks.

But its obvious there's a market for each type. Starbucks is like a 21st century "european oldfashioned cafe". Dunkin is something like McBreakfast.

Nice move then targeting the non-starbucks segment of caffeine adicts.

And all this time I thought Dunkin was in the Donut business.

Seems to me that Coffee was "McDonaldized" in this country long before it was "Starbucked"; 7-11, Dunkin, Krispy, Tim Hortons, and every other convenience store, gas station, truckstop, etc., were already there, selling you fast/cheap coffee, as you bought something else, (like donuts)on the run. Starbucks got some of that market, for sure, but I don't think the grab-a-cup-while-you-get-donuts-or-gas coffee market ever goes away. (I was on the road for 7 hours yesterday, made many stops, got several coffees, but not once did I go look for a coffee shop.) Dunkin, and the others have probably just re-realized, smartly, that having decent, cheap, fast coffee helps you sell more donuts, newspapers, milk or gas.

Starbucks is plenty fast. Personally, I don't see the point of delivering coffee even faster. That said, Alvaro makes a good point: Being European myself, I like my coffee strong and rich. Many Americans like their coffee on the lighter side. What you have here are two completely different markets, and both companies serve each one very well.

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