NANTUCKET, MASS. — Dunkin’ Donuts plans to introduce cold brew coffee later this year as part of broader efforts to build its beverage portfolio while simplifying its food menu, said Paul Carbone, chief financial officer of Dunkin’ Brands Group, Inc., Canton, Mass.
|Paul Carbone, c.f.o. of Dunkin’ Brands
“We’ve become more of a beverage culture,” Mr. Carbone said during a June 21 presentation at the Jefferies Consumer Conference in Nantucket. “Innovation is probably more around beverages than food.”
That’s because, as the company has learned through research, consumers decide where they buy breakfast based on either food or beverage selection.
“So if they are choosing on beverage, and let’s say they choose Starbucks, it doesn’t mean they are not buying food with it; it just means their decision is based on the beverage,” Mr. Carbone said. “Similarly if they decide on food their choice, because they are a big player, tends to be at McDonald’s. Now they buy a beverage but that’s pure attachment.
“So if you look at Starbucks, I think is a great example, you can’t customize any of their breakfast sandwiches and you can customize all their drinks. So that’s a beverage-led company that also sells food. McDonald's is a food-led company that sells beverages.
“So what the consumer, what their need and what the research has told us (is) you need to be one or the other… You’re not walking away from food, but it’s just how do you focus on beverages?”
Mr. Carbone described Dunkin’s increased focus on beverage innovation as “an evolution of the business.”
“Part of it is in the research and part of it is us really dissecting the business and understanding we can’t be great at everything; we can’t be stuck in the middle, and the consumer is telling us how they make their decisions,” he said. “It’s either food or beverage; it’s not both.”
Recent efforts to reduce complexity in the restaurants have included eliminating combo meals and simplifying menu boards, Mr. Carbone said. These changes are accommodating the added complexity of a bigger beverage program.“If you think about it on a scale of 1 to 10, if we’re a 9 today in complexity, can you take 2 points off complexity out of the restaurant from food so you go down to a 7 and you add back 1 point of complexity in beverages so you go back to 8,” Mr. Carbone said. “So now you focused on beverages, you have made the restaurant less complex, order accuracy improves, which is absolutely key, speed improves. So that’s both consumer research and knowing that beverage is where we want to be because of ritual and repeat business.”