#165 Dunkin’ Donuts’ arduous (early) global journey

Today, coffee and donut chain Dunkin’ Donuts (DD), part of Inspire Brands that also owns Baskin Robbins, Arby’s, Sonic and others, has more than 3,200 restaurants in approximately 40 countries. It took a long time to develop such an impressive global presence, and success didn’t come easy. DD’s internationalization began 1964. Shortly after he had taken over from his father, Robert Rosenberg, CEO of 35 years of DD, heard that their major competitor in the United States, Mister Donut, was going on a trade mission to England and Germany to stake their claim to these markets. Rosenberg moved fast and quickly opened its first foreign location in London, England, in 1966, one year after he had visited the city for the first time. However, a second location and two years later, DD pulled out of the market again, deciding that culture and consumer behavior were too different for them to change – not to adapt to, but to change! Soon thereafter, DD sold their first master franchise in Japan to retail group Seibu, mainly driven by a strategic move of their U.S. competitor Mister Donut, which had sold a master franchise to a Japanese company called Duskin. By 1978, Mister Donut – then part of a different company, International Multifoods – had around two hundred shops in Japan. DD, on the other hand, could not gain traction and had a difficult time managing the transformation from a wholly owned domestic coffee and donut company into an international franchising operation. Then, in the 1980s, DD put their internationalization into high gear, licensing entire countries to large companies and successful entrepreneurs from Colombia, the Philippines, England, Hong Kong, and Thailand – without much of an intentional plan and to whoever knocked at their door. Spoiled by high growth rates in the domestic market, DD had unrealistic growth expectations. It took a while for the company to realize that internationalization was not a “get-rich-quick” scheme. Even the hefty up-front fees to licensees barely covered the cost of negotiating deals, legal fees, sourcing costs, shop-opening crews, training, etc. Plus, each country’s unique consumption patterns required adaptions to the menu that the company was hesitant to make. For instance, in the Philippines, the importance of local relationships practically forced DD into opening small kiosks in movie theatres and gas stations, operated by the spouses of their business partners. For many years, DD had modest success and its fair share of failures – from Canada to India to Israel and South Africa. But even in those markets where DD had a legal right to withdraw the license or master franchise from their business partners, doing so proved difficult because of substantial investments in time and resources that had been made. Ultimately, internationalization picked up in the 2000s, and Dunkin’ Donuts grew into the global powerhouse it is today.

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Rosenberg, R. (2020). Around the Corner. Around the World. A Dozen Lessons I Learned Running Dunkin’ Donuts. Harper Collins Leadership.

Sigalos, M. & Turner, A. (2018). Where Dunkin’ went wrong in India, retrieved from https://www.cnbc.com/2018/10/26/dunkin-india-coffee-donuts-restaurants-krispy-kreme-mad-over-donuts.html on March 4, 2021.

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