Battle of the Beans: Starbucks vs. Dunkin Donuts

Starbucks and Dunkin Donuts are the two largest food chains in the US that specialize in coffee. Although the companies have similar menus and marketing strategies, their business models differ in key areas relating to scale, branding, and store ownership. As you might have guessed, Starbucks is the more popular and more successful of the two, despite opening 20 years after Dunkin. In 2014 Starbucks earned $16.4 billion in revenue, while Dunkin had just $749 million. These numbers are not just because the coffee is awesome, but because Starbucks has about twice as many stores as Dunkin, due to their aggressive expansion in the early-mid 2000's. 

One key reason attributing to the success of Starbucks is that they expanded more extensively beyond the US. They currently have over 10,000 stores divided between 65 different counties. Dunkin also has some international presence, but most of these locations are Baskin Robbins ice cream stores (a Dunkin' Brand) rather than Dunkin Donut stores. 

Another key factor that differs the brands is how they franchise. Almost all of Dunkin locations are franchises while just 47% of Starbucks are. This simple fact tells us a lot about the coffee industry, which is that customers like consistency with their brand. Franchises can be a great way for companies to grow their business, however that comes at a cost. Consistency is key, and Dunkin's consistency is far from perfect. From my own personal experience, Dunkin employees are not as nice as Starbuck's (probably because of the franchise owner is not wanting to pay extra on pay roll even if their store suffers because of it) and I’ve had the same order, drink and food, come out very different at different locations. To me, this makes me feel as though the franchise owners don’t care about the quality of their products, which leads me to my next key difference between the brands which I will discuss in my next blog: quality.