The primary objective in the fast food industry is, quite clearly, speed. And no-one knows this better than Dunkin’ Brands.
Dunkin’ Brands - which consists of both Dunkin’ Donuts and Baskin Robbins - is expected to post revenues of $857.9 million over the next four quarters - growth of 4.7% year-on-year. Every year, Dunkin’ Donuts sells more than 1.9 billion cups of Hot and Iced Coffee and Espresso-based beverages. It has achieved this in the face of tremendous competition from major corporations like Starbucks, Peet’s Tea and Coffee, and a host of other coffee shops. All this, despite the majority of their outlets being based exclusively in the Northeastern region.
The challenge for Dunkin’ Donuts is getting people to come in either more frequently or at times they might be going elsewhere. In this respect, they’ve been extremely successful. Dunkin’ Donuts has ranked number one in Brand Keys Customer Loyalty Index of top brands for consumer engagement in the out-of-home coffee category for ten consecutive years, and the packaged coffee category in customer loyalty for four.
According to Chris Fuqua, Vice President of Dunkin’ Donuts Brand Marketing & Global Consumer Insights & Product Innovation, ‘Our guests are loyal to Dunkin' Donuts because of the many ways we work to give them an unsurpassed guest experience. We make our entire menu available all day, and offer our guests more than 25,000 different ways to customize their favorite coffee any way they like it. We’ve launched digital technologies like mobile ordering and delivery that make it even more convenient for people to run on Dunkin’, and we continue to grow our DD Perks Rewards program.’
These may sound like common sense innovations, but what sets Dunkin’ Donuts apart is their excellence in using data to achieve these goals. They have used data to understand their customers at a microscopic level that enables precise sales targeting to bring in customers, as well as resource allocation, staff retention and so forth to optimize speed of delivery.
The DD Perks Rewards program has been a particular successful. Dunkin’ launched its first customer loyalty program across the US in January 2014, with one of the key aims being to harvest data on customer habits. The new Dunkin’ Donuts app is essentially a mobile wallet for customers that allows mobile ordering and incorporates various promotions. These promotions are targeted based on the retailer’s data and because it’s based on mobile, they can monitor whether offers are used, the revenue generated by each offer, and if customers return if they don’t receive any offers.
It program now has 4.3 million members, providing a wealth of information about customers that the retailer uses Splunk to analyze. By personalizing offers, they are not only creating more frequent customers, though - the insights garnered about their habits can also be used to improve operational efficiency. Quick delivery is vital to customer retention and good analytics is a major boost to speed of service, helping to better forecast demand and adjust supply accordingly.
Analytics also enables better menu optimization. A broad menu is one of the major factors behind failing restaurants, mistaken in their belief that unlimited choice is a bigger pull than quality. When you cut the waste off a menu, you’re not wasting staff time, inventory space, and you can focus on pushing your big sellers. President of Global Marketing and Innovation at Dunkin’ Brands, John Costello, noted that it was by looking at the data that they discovered that donuts weren’t the core of Dunkin’ Donuts’ business or the basis of future growth, noting that ‘over half of our business is beverages, less than 20% is bakery.’ They were subsequently able to focus on this area - with great success.
In a recent article on Motley Fool, the author wrote that Dunkin’ Donuts had consistently shown an inability to innovate and adapt, citing the concentration of its store base in the Northeast and failure to expand globally. This is a tremendous disservice. Dunkin’ has innovated with data, and the love of its customers it has driven as a result should see it be successful for many years to come.