Dunkin’ Donuts Is Losing the “Donuts.” Are They Nuts?
Executives at Dunkin’ Donuts still believe they’re competing with Starbucks. They’re wrong.
PHOTO CREDIT: Getty Images
A couple of decades ago, I was co-host of a weekend call-in program on WRKO, Boston's biggest talk radio station. On the show, we discussed the pressing issues of the day, like "Whose heads are literally too big for their bodies?" (E.g. Calista Flockhart, Newt Gingrich).
Anyway, one of our most popular topics (in terms of the number of callers) was "Yuppie or Not Yuppie?" Here are some of examples that came up:
- Pasta=Yuppie; Spaghetti=Not Yuppie
- Hunter Green=Yuppie; Hunter Orange=Not Yuppie
- Starbucks=Yuppie, Dunkin' Donuts=Not Yuppie
After the show, the station manager chewed us out for comparing Dunkin' Donuts to Starbucks. It turned out that Dunkin' Donuts was a sponsor for the station and they were known to be particularly sensitive about Starbucks.
I bring up this bit of personal trivia because it illustrates that even twenty years ago Dunkin' Donuts had a huge inferiority complex vis-a-vis Starbucks.
Back then (as today) Starbucks had a hipper-than-thou vibe (hence "Yuppie") while Dunkin' Donuts, with its bright colors and garish signage, came off as a little dclass (hence "Not Yuppie"). Not that there's anything wrong with that.
I suspect the fact that Starbucks is cool and Dunkin' Donuts isn't bothers Dunkin' Donuts executives in the same way that, say, Dolly Parton might resent, say, the relative hipness of Madonna. (Note the 1990s theme?)
In the early 2000s, in an obvious move to compete with Starbucks, Dunkin' Donuts added "premium coffee drinks" to their menu. This me-too strategy, however, didn't work all that well, if you buy the idea that Starbucks and Dunkin' Donuts are direct competitors.
Despite being trounced (or perhaps because of it) Dunkin' Donuts remains focused on beating Starbucks, so much so that they define themselves as "a beverage-led brand and coffee leader."
In keeping with that market positioning, Dunkin' Donuts is trying to become even more like Starbucks by 1) dropping the "Donuts" from the brand name and 2) dropping some of its donuts from the menu.
To me, the rebranding and menu changes seem crazy. Dunkin' Donuts has always been where people go when you want a cup of coffee and a DONUT.
By contrast, Starbucks has always been where people go when they want a cup of froth with some coffee in it.
If I were sitting in the conference room with the marketers at Dunkin' Donuts, I'd have them take a good look at middle America. Based on the general rotundity of the population, there are plenty of people who want a DONUT and wouldn't be caught dead in a Starbucks.
Dunkin' Donuts would keep more customers and and grow faster if they stopped trying to imitate Starbucks and instead embrace and celebrate the fact that their outlets--and the vast bulk (heh!) of their customer base--are spectacularly "Not Yuppie."
For entrepreneurs, this branding-debacle-in-the-making has three lessons:
First, it's a mistake to define yourself in contrast to your competition. It's always better to make your case and let the competition define itself in contrast to you.
Second, if you've got a brand name with which people have a strong emotional connect, don't monkey with it. When it comes to branding, if it ain't broke, don't fix it.
Finally, to paraphrase H.L. Mencken, "nobody ever went broke underestimating the voracity of the American public."