Dunkin Donuts Company Overview:
Dunkin’ Donuts is the world’s leading baked goods and coffee chain, serving more than 3 million customers each and every day. The company has over 9,000 restaurants in 32 countries worldwide with the goal of reaching the 10,000 mark by 2021. Dunkin’ Donuts was founded in 1950 when William Rosenberg opened his first donut shop in Quincy, Massachusetts. The first two items on the menu were hot donuts and coffee. Today we are going over Dunkin Donuts Porter’s Five Forces Model.
Dunkin’ Donuts Competitive Rivalry:
In 2015, Dunkin’ Donuts managed over 360 new locations across the United States alone. Their competition included Starbucks and Krispy Kreme Doughnuts which followed very similar business models and offered very similar products.
Dunkin’ Donuts Bargaining Power of Suppliers:
Suppliers to the company would include suppliers of baked goods, including doughnuts and other desserts as well as coffee beans and tea leaves. These companies can apply pressure on Dunkin’ Donuts by lowering costs since Dunkin’ Donuts is a very large purchaser of these ingredients.
Dunkin’ Donuts Bargaining Power of Buyers:
In 2015, Dunkin’ Donuts had 3 million active members as part of their rewards program, which allows frequent customers to earn free products and discounts on future purchases through reward points. In addition to the rewards program, Dunkin’ Donuts has a very large customer base mostly due to its popularity as an American brand.
Dunkin’ Donuts Threat of New Entrants:
The sheer size and buying power of Dunkin’ Donuts make it difficult for other companies to enter the market without significant research and development investment.
Dunkin’ Donuts Threat of Substitutes:
Products that could be substituted for Dunkin’ Donuts products and services include bakeries and other cafes as well as home-baked goods. People may choose to substitute away from Dunkin’ Donuts if the company increases prices or does not meet customer expectations.
Porter’s 5 Forces Conclusion:
Dunkin’ Donuts has a very large market share and as such, would have a difficult time entering the market without significant opposition from Dunkin’ Donuts itself. The company’s power over suppliers allows them to keep prices low which gives them an advantage over other companies that may enter the market as well as substitute products and services. Finally, due to the size of the company, Dunkin’ Donuts may lose customers if they are unable to meet customer expectations or do not increase prices to compensate for other costs that arise over time. All in all, Dunkin’ Donuts has a very strong position within its industry with limited competition which will allow them to maintain that position for the foreseeable future.