Dunkin’s Retreat-and-Return Strategy: Hello, London
Dunkin’ Brands Group (NASDAQ:DNKN) didn’t have the greatest success when it launched in the U.K. back in the 1990s, but now, thanks to significant international progress with some of London’s neighbors, the company is ready to try again with the British.
The Wall Street Journal reported Thursday that the donut company is now returning to the U.K. almost two decades after its departure with plans to develop 50 Dunkin’ Donut restaurants in the greater London area over the next five years, in accordance to franchise agreements signed with Court Group and DDMG Ltd. The company’s goal is to expand that development to 150 new restaurants over the next five years, but consumer demand will dictate whether those plans see fruition.
Dunkin’ Donuts has significantly changed its marketing and business strategy as of late, and that’s why the Canton, Massachusetts-based company believes it can realize success in the U.K. after trying and failing only 20 years ago. Instead of focusing solely on its sugary doughnut fare, the chain now offers a lineup of baked items, specialty beverages, and sandwiches that have managed to help the chain post significantly higher same-store sales successes, and Dunkin’ plans to bring this new program to London.
There, the company hopes to lure in new consumers with the promise of oven-baked goods, coffees, teas, and espresso-baked drinks, and will offer its items on regional menus that will cater to local tastes.
Founded first on the U.S.’s East Coast, according to The Wall Street Journal, Dunkin’ Donuts now has more than 10,500 restaurants in 31 countries, with locations across Europe in Bulgaria, Russia, Germany, and Spain. Though the company’s ice cream chain, Baskin-Robbins, has 100 locations in the U.K., Dunkin’ Donuts no longer has a presence there after failing to stimulate profit in the region 20 years ago and eventually closing up shop.
Back when Dunkin’ was solely a doughnut-driven company, it couldn’t drive consumer demand in a region that wasn’t taking to the baked good. However, now that the U.K’s coffee industry is growing and becoming more lucrative, the company is confident it can find a foothold. In London, it’ll compete with McDonald’s (NYSE:MCD), Starbucks (NASDAQ:SBUX), and Whitbread PLC’s Costa Coffee.
Dunkin’ Donuts’s business revival in the U.K. will mark the second time the company has worked the retreat-and-return strategy. The Wall Street Journal points out that the doughnut giant tried the same plan with Moscow only a few years ago, after departing from Russia in 1999, after three years of losses, only to announce a return in 2010.
Dunkin’ recognizes that countries’ markets contract and expand, and that’s why it is comfortable working its strategies based on how each of its businesses are doing at the time.
The doughnut chain has seen a lot of headline time as of late as it continues to rework its plans and shuttle its business across the world — but for now, we’ll just have to wait and see if London is ready to welcome back Dunkin’.