It's the East Coast versus the West Coast in a coffee showdown. With similar menu options and strategies to reach consumers, the true top dog appears hazy. Despite the fact that Dunkin' Donuts was founded 20 years prior and sells donuts, the company has few if any substantial advantages over its utmost prevalent competition, Starbucks. Combined, the two coffeehouse giants command nearly 60 percent of the industry in the United States. The debate may continue over who has better pastries, coffee and specialty drinks; but Starbucks dominates Dunkin' Donuts on the business front. Some key facts to consider:
Company Size:
Dunkin' Donuts owns "more than 11,300" locations according to their website (so basically 11,302). On the other hand, Starbucks has a whopping 23,768 stores; double that of its competition. Even more, Starbucks has a much larger footprint on the global scale, priding itself on a presence in 62 countries worldwide (not including the United States). Dunkin' Donuts once again comes up with half, serving customers in just 30 countries outside the U.S. The sheer size of their footprint allows Starbucks to reach a wider customer base; a dominating factor in the business word.
Company Owned vs Franchise:
Dunkin' Donuts grew to its current size as it opened up to franchising, the first being licensed in 1955. Only a handful of operation stores consumers visit today are company owned. The success of Dunkin' Donuts is credited equally to its franchisees and the company's business model. The business model is due credit, but the corporation as a whole would not be the size or have the financial success it does today without franchisees. Starbucks on the other hand primarily maintains and funds its own stores, a major business feat. In a short span of 45 years (the company was founded in 1971), Starbucks grew its own corporate success. Without franchising, Starbucks as a corporation would continue to thrive, but would Dunkin' Donuts be a recognizable name?
Yearly Profit:
With both companies trading on the public market, access to annual reports gives us deeper insight on the companies financial success. The net income for Starbucks during the 2015 fiscal year are twice that of its competition, Dunkin' Donuts. Franchises eat up a large amount of the Dunkin' net profit, while Starbucks holds reign on its finances. No surprise here, once you process the supremacy Starbucks has on the size front that they control the financial front as well.
I believe Starbucks' success is devoted to the phenomenon of branding. Dunkin' Donuts is branded primarily as a coffee store who sells donuts, while Starbucks has branded itself as a coffee specialty store. Let's be honest, the atmosphere at Dunkin' Donuts sucks, but visiting a Starbucks is an experience. Cozy and well-designed seating areas allow Starbucks customers to linger for meetings and study dates, not grab a coffee and run for the hills. The "specialty" factor entices consumers and ultimately landed Starbucks the position of top dog. Key facts above the display that the debate may not be as questionable as originally thought, as the consumer preference is distinguishable. Dunkin' Donuts simply can't and will not achieve the success Starbucks has.
