(alarm rings)
- Time to make the donuts. - [Narrator] "Dunkin'" has long said, "It's on time to make donuts." - Who else goes to that trouble? - But it's not just pastries. Over its 70 plus years "Dunkin'" has repeatedly
spotted and adapted to new trends even when
that meant focusing less on donuts. - Donuts literally used to be part of their name and now it is not. And it definitely reflects how their sales have really changed and how beverages become so much more important than just selling donuts. - [Narrator] From 2009 to 2019, a time when Dunkin'
introduced many drink options and rebranded, it grew from around 6,000 to over 9,000 locations. The shift away from donuts
and towards drinks is just one change that has
helped the company evolve from a New England diner
to a worldwide chain worth around $9 billion. This is the economics of "Dunkin'". In 1948 restaurateur, William Rosenberg opened a diner called "Open Kettle" in Quincy, Massachusetts selling coffee for 10 cents and donuts for five. Two years later, he changed the name to "Dunkin' Donuts" inspired by seeing others dunk
donuts into their coffee. It was one of the first trends
the company capitalized on. - Donuts were actually served to troops during the wars. - [Commentator] Behind the American lines in Italy, a brief interlude and good old fashioned donuts. - And when troops came home, it was 1950s and people were going back to offices and donuts were a really
great way to quickly have breakfast on the go. And "Dunkin' Donuts"
really capitalize on that. - Dunkin' the magic munchkin. - [Narrator] The company
took donuts a step further in the early 1970s when
they introduced the munchkin as a way to use the leftover dough from the center of donuts. - This is what a munchkin looks like. They have them down at "Dunkin' Donuts" in quite a few flavors. - [Narrator] Donuts continued to be Dunkin's focus through the nineties when trends began to shift. In the 1990s, 2000s, America
was generally becoming more health conscious. And donuts for all their tasty goodness is not really known as a very healthy breakfast alternative. So companies like "Dunkin'
Donuts" need to think about what else could they serve. Meanwhile, "Starbucks" really was starting to take on the US at that time and was expanding a lot. And what they were doing
was inventing new kinds of drinks. - [Narrator] Customers were looking for caffeine and a lot of it. The number of US coffee houses doubled between 1996 and 2001. So after decades of focusing on donuts, in 2006, "Dunkin'" made one of its first moves away from the pastries when
it introduced the slogan, "America runs on Dunkin'". Coffee and beverage sales were popular for quick service restaurants since they have better profit margins than most offerings, like food. - When you think of a breakfast sandwich or a baked good that involves labor, it often involves many different types of ingredients. It might involve some kind of packaging, whereas coffee at its
simplest is just coffee in a cup. The labor tends to be less and that does make it
more profitable generally for these drinks. - [Narrator] By 2011,
"Dunkin'" was selling more hot and iced coffee than any other fast food chain in the US, including "Starbucks". In New England and New York, it hit 57% of the fast food coffee market. At the time, "Dunkin'"
had 6,800 locations, around half the amount it has now and bigger changes lay ahead. In 2018, Dunkin's rebrand
and name change to go by just "Dunkin'" was a big step. That year, beverages made up 60% of Dunkin's sales. - I think one of the important things to recognize is caffeine is addictive and everyone likes their morning coffee and that is a ritual. So people often go to
get coffee every morning where they might not necessarily get a donut every morning
or some kind of food. - [Narrator] To give
customers more options for their caffeine fix,
"Dunkin'" continued to expand their drink
menu releasing espressos, cappuccinos, lattes and Americanos. - [Artist] Take a sip
of "You've got this," with Dunkin' Espresso drinks. - [Narrator] And in doing so, it went toe to toe with "Starbucks". - "Dunkin'" is really trying to in some ways get into Starbucks's lane. They've offered a lot of different new kinds of beverages. They invested in machines
to offer espresso. They offer cold drinks,
they offer blended drinks and they really are trying to, I would say, compete
more with "Starbucks", whereas "Starbucks" probably still thinks of itself as singular. - [Narrator] After the
push for more drink sales, in 2019, "Dunkin'" was one of the top coffee sellers of quick service restaurants selling around 1.6 billion hot and iced coffees. In 2021, "Dunkin'" sold
over 4.4 billion cups. While caffeine is a big seller, Dunkin's drink focus isn't just on drip. The company said that
highly visual beverages are a focal point of its menu. They've also launched
more specialty drinks like Matcha and Chai. Between all the flavors and coffee blends, they've added nearly 50 new menu items in the last four years. But on the food side of the menu, the brand struggled during the pandemic when the breakfast category was hit hard by commuting changes caused by lockdowns. Dunkin's decline in sales would've been nearly 5% points larger if temporarily closed stores were included in those numbers. But once again, hot and cold drinks with their high profit margins continued to be top sellers on the menu. - Earlier in the pandemic, these cold drinks actually were a real saving grace
for a lot of coffee chains, in part because people would order them in the afternoon. It's really created a new day part for them where they didn't have it before. And so that's been really helpful for them when breakfast really took a hit early in the pandemic. Around that time, "Dunkin'" was releasing new drinks. For example, in 2020 "Dunkin'" announced the new-- - [Actor] Dunkin' Refresher. - [Narrator] And this summer they came out with three iced pumpkin drinks and a new flavor of refresher. - Cold drinks really have
exploded in popularity including during the pandemic, and a lot of it has to do with
social media, with TikTok. 70% of sales for a lot of these chains now is these cold beverages which is a huge amount of growth in a very short amount of time. - [Narrator] As beverages continue to grow more popular, Dunkin's experience in
developing buzzy drinks may help it create more in the future. - "Dunkin'" certainly has
changed from the 1950s when it was just known as a coffee and donut company. They've expanded their drinks, they've expanded their food and thanks to franchising, they've expanded their locations. So I do think they've evolved a lot from their roots in Massachusetts. - [Narrator] As obstacles caused by the pandemic continue to challenge companies across the board, it remains to be seen if Dunkin's history of evolution will continue. (upbeat music)
