Dunkin' Donuts reveals recipe for expansion

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BRISTOL, R.I. -- The coffee chain once considered emblematic of New England is spreading across the nation these days, reaching into every corner of the country for people who share its "blue-collar" soul, according to its chairman.Research showed the executives at Dunkin' Brands, the owner of the Dunkin' Donuts chain, that when it came to coffee, some Americans split into two "tribes" -- those who wanted an upscale, laid-back status drink and those who had the soul of the New Englanders who swore by their Dunkin' Donuts brew.The ones who prefer Dunkin' Donuts coffee to that of Starbucks, the chain that swept east across the country from Seattle, Wash., in the last decade, are down-to-earth, workaday types who consider themselves "regular" people put off by frilly nonessentials, said Jon Luther, Dunkin's top executive.But a whole bunch of people didn't favor any particular brand of coffee."We found 43 percent of people were on the fence and 75 percent of those people had Dunkin' (personality) attributes," said Luther, chairman and chief executive officer of Dunkin' Brands in Canton, Mass. "They were Dunkin' people but just didn't know it."Armed with that research, and flush with cash from a private-equity partnership that bought the chain about two years ago, Dunkin' Brands set out to reinvigorate both Dunkin' Donuts and Baskin Robbins, the company's chain of ice-cream shops. The company sold off a poorly performing chain of sandwich shops."We were a coffee leader disguised as a doughnut chain," Luther told a recent gathering of business students at Roger Williams University in Bristol, R.I.The company signed distribution deals with supermarkets, an international food maker and even an airline to help spread the word about Dunkin' Donuts and show that it would be a national coffee brand in short order."We had to create a number of strategic alliances, all designed as we march across the country (so) our brand is known before we get there," he said.The company launched a successful ad campaign with the tag line "America Runs on Dunkin'." And it began offering a slew of new products, including one -- espresso -- aimed squarely at Starbucks. Since then, Dunkin' Donut shops have been popping up across the country, as the company creates hubs to anchor growth in various regions. Nashville, Las Vegas and Dallas are just three of those hubs. There are now nearly 6,200 Dunkin' Donut shops in the United States and another 1,800 outside the country. About 2,500 of those were opened in the last five years. The company aims to have 15,000 stores within the next nine years.Luther said that even with a waffling national economy, he doesn't see the company slowing down its expansion plans. "That coffee (drinking) ritual, we don't see it falling off as much as casual restaurants," are being hurt, he said.Anyway, a weak economy provides good possibilities for a strongly capitalized company such as Dunkin' Brands, Luther said."As we go west, the economy is creating some opportunities," he said, "The price of real estate is coming down."E-mail Paul Grimaldi at pgrimald(at)projo.com(Distributed by Scripps Howard News Service, www.scrippsnews.com.)