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https://prezi.com/view/nf6wr37dHw8Gqk3uJGFh/Dunkin’ Donuts & Starbucks Zoiya Deol Roxanne Rooks INSIDE THIS ISSUE 1. Executive Summary 2. Focus & Branding 3. Quality 4. Financials 5. Business Strategy 6. References There is no doubt Starbucks and Dunkin' Donuts are considered the two leading eatery brands within the U.S., which focuses on coffee. Although, both the corporations have somewhat similar menus and approaches, there are chief disparities within their business frameworks concerning scale, branding and store ownership. In spite of being established around 20 years after Dunkin' Donuts, Starbucks has grown noticeably and is a considerably more significant corporation. During the year 2017, Starbucks created around $22.3 billion revenue whereas the reported sales of Dunkin’ Brand were reported to be $860.5 million (Starbucks, 2018). Additionally, Starbucks holds a bigger footprint, with around 22,519 outlets to Dunkin' Donuts' around 11,500 U.S.distribution points (Starbucks, 2018). Also, Starbucks has spread beyond the United States more expansively, with stores within 70 distinct nations. Additionally, Dunkin' Brands holds a considerable global presence, although several of its global locations are Baskin Robbins ice cream outlets instead of Dunkin' Donuts outlets (Dunkin Donuts, 2018). Executive Summary Starbucks promotes itself primarily like a beverage company, which provides a distinctive coffeehouse dining experience (Starbucks, 2018). The company’s locations are planned to take into consideration the comfort of the consumers. Free access to the internet and inviting décor provide a highly tempting option for ones searching for someplace for reading or relaxing. This also makes visiting Starbucks stores a prospective social activity, converting the outlets into a destination instead of a standard distribution region. Usually, such buyers have higher disposable incomes and are readier for paying an additional amount for superior quality items. During economic recessions, individuals having lesser disposable incomes are expected to modify their consumption preferences as compared to the individuals having a higher salary. Although Starbucks is positively affected through the macroeconomic atmosphere, it’s determinedly established with a highly robust and low price-sensitive consumer base that helps in dampening the blows brought on through the economic cycles (Starbucks, 2018). For higher end clientele, Starbucks has initiated the Starbucks Reserve Roastery which includes multi coffee bars. Dunkin' Donuts promotes itself chiefly like a coffee brand, which also makes available donuts and food items, an actuality made evident through a coffee cup importantly featured upon the firm’s logo and explicit assertion of the executive management stating Dunkin' Donuts is primarily a beverage brand (Dunkin Donuts, 2018). In spite of developing a sound identity of a coffee seller, food is even now a vital aspect of Dunkin' Donuts' products (Dunkin Donuts, 2018). During latest years, the company has concentrated highly upon non-traditional food choices with the intention of attracting consumers apart from the breakfast hours. The launch of steak to the menu during the year 2014 was an initiative towards integrating heartier food products along with an increasing number of sandwich preferences (Dunkin Donuts, 2018). The interiors of Dunkin' Donuts are planned differently from Starbucks outlets, with the former frequently similar to fast food outlets concerning furnishings as well as décor (Dunkin Donuts, 2018). Focus & Branding Dunkin’ Donuts vs. Starbucks Page 2 Starbucks has developed a highly premium brand as compared to Dunkin' Donuts. Starbucks makes available a wider menu and higher product customization that is strengthened through writing every consumer’s name on the cup (Starbucks, 2018). The corporation makes available quiet and comfortable surroundings with free Internet access, motivating buyers to socialize, work, browse media, study or listen to music while having their Starbucks item. Collectively, all these forces form a more superior experience and call for a greater price point. Dunkin' Donuts involves high competitive pricing, concentrating on the middle class. The Dunkin' Donuts' management has outlined its intention of being the lowest cost brand in the marketplace at the same time maintaining quality over a satisfactory minimum (Dunkin Donuts, 2018). Quality Starbucks partners with select vendors through their Supplier Diversity Program. Financial information help assist management with forecasting budgets. Because Starbucks manages its outlets, it holds tighter margins as compared to Dunkin' Donuts. Profit after the cost of sales that involves product expenditures along with occupancy costs was around 83 percent for Dunkin' Brands during the year 2015. While Starbucks just had approximately 60 percent gross margin at this period. There is an alike, deviation in operating margin with Starbucks posting around 17.5 percent operating margin that is above 26 percent that of Dunkin' Donuts. As stated above, Dunkin' Donuts involves a lesser capital expenditure burden as compared to Starbucks. Further, Dunkin' Donuts holds around 3 billion dollars of long-term debt that is roughly 74 percent of the overall assets. Starbucks' 2.4 billion dollars of debt is just 18 percent of the total assets (Starbucks, 2018). Financials Dunkin’ Donuts vs. Starbucks Page 3 Page 4 Dunkin’ Donuts vs. Starbucks Business Strategy Dunkin’ Donuts Dunkin' Donuts has principally concentrated upon on being a cost leader within the United States coffee as well as snack shop sector that is considered as "providing the same or superior quality services or products at a reasonable price” (Dunkin Donuts, 2018). There are three reasons Dunkin' Donuts is capable of charging lower costs for its offered products in contrast to the rivals. The foremost is that the company produces more that leads to higher asset turnover. Through manufacturing, it is capable of spreading out its fixed costs over a more significant number of units. Dunkin' Donuts makes available several standardized items that restrict the amount of service and product customization the company requires (Dunkin Donuts, 2018). Additionally, through purchasing in bulk amounts, bidding competitively over agreements as well as functioning with the suppliers for keeping inventories low, the company can ensure a sound control over its supply network (Dunkin Donuts, 2018). Holding strong relations with vendors is an essential way of keeping costs low. Even though Dunkin' Donuts holds good presence within Northeastern U.S., the company does not have a sound presence in other regions of the nation. By the year 2020, nevertheless, the company plans to have around 15,000 outlets within the U.S. that would nearly double its presence within the U.S (Dunkin Donuts, 2018). Dunkin' Donuts has been offering its products to consumers around the globe for more than 40 years and presently manages more than 3,100 outlets located within 32 distinct nations (Dunkin Donuts, 2018). The company’s growth has been successful because of their outlet consistency and sound franchises; of around 10,000 outlets globally, 7,000 are franchises. Thus, steadiness amid these outlets is of highly relevant (Dunkin Donuts, 2018). Despite developing a sound identity of a coffee seller, food is even now a vital aspect of Dunkin' Donuts' products (Dunkin Donuts, 2018). During latest years, the company has concentrated highly upon non-traditional food choices with the intention of attracting consumers apart from the breakfast hours. Dunkin’ Donuts vs. Starbucks Page 5 Starbucks In comparison with the low-cost approach of Dunkin' Donuts, Starbucks has executed a strategy of product differentiation for attracting consumers from their rivals (Starbucks, 2018). Its coffeehouses have turned out to be an encouragement for coffee lovers all over. The company is not only passionate purveyors of coffee; it goes along with a complete rewarding experience by providing additional services. The company’s franchises are developed, using ecologically safe materials and modern atmosphere. Another way Starbucks attempts to trim down their ecological footprint besides its building materials is by using 100 percent reusable or recyclable cups and conserves its water usage and energy. Additionally, Starbucks considered a highly ethical approach at the time when making coffee, i.e., it undertakes a holistic approach for morally sourcing the full quality coffee (Starbucks, 2018). This involves responsible buying, offering support to the farmers and encouraging forest conservation. Such forces are significant for several buyers who are attempting to be environmentally mindful (Starbucks, 2018). Apart from an active differentiation approach, Starbucks has also executed a sound global growth approach. It started its first global coffeehouse in Tokyo during the year 1996 and since that time extended to have control over 5,500 coffeehouses located within more than 50 different nations (Starbucks, 2018). The company attributes its achievement to their global associates (Starbucks, 2018). Starbucks put in high efforts for finding partners having similar principles and considers their ethical standards, leadership styles, and strategic practices. Additionally, it strives to respect the cultures of the nations it is trying to expand in. Starbucks very well recognizes that its success isn’t an entitlement and it must continue earning respect and trust of buyers daily. References Dunkin Donuts (2018) About Us [Online] http://www.dunkindonuts.co.uk/ Dunkin Donuts (2018) http://investor.dunkinbrands.com/static-files/797ff4b1-73b5-42ae-8fd1-473b938ad3ed Starbucks (2018) https://s22.q4cdn.com/869488222/files/doc_financials/annual/2017/01/FY17-Starbucks-Form-10-K.pdf Starbucks (2018) About Us [Online] https://www.starbucks.com/