Dunkin' Donuts Galway, Ireland "The Coffee You Want, With The 'Craic .

2. PARENT COMPANY OVERVIEW Dunkin‘ Donuts is a privately held entity that is a subsidiary of Dunkin‘ Brands. It has been around for 27 years and operates thousands of Dunkin‘ Donuts stores worldwide. Dunkin‘ Donuts was first opened by Bill Rosenberg in 1950. The first shop was located in Quincy, Massachusetts. When it first opened, it was called ―The Open Kettle.‖ However, Rosenberg changed it to Dunkin‘ Donuts two years later. Since then, they have expanded, and by the end of 2010, according to the company website: ―there were 9,760 Dunkin‘ Donuts stores worldwide, including 6,772 franchised restaurants in 35 United States and 2, 988 international shops in 30 countries.‖ Dunkin‘ Brands, Inc. prides itself in ―leading the ‗Quick Quality‘ segment of the food and beverage industry. They are home to the two brands: Dunkin‘ Donuts and Baskin-Robbins, an ice cream specialty store. It is owned by private equity companies including: Bain Capital, The Carlyle Group, and Thomas H. Lee Partners. Dunkin‘ Donuts did not always start as an international franchise powerhouse. After opening in 1950, by 1963, Rosenberg has 100 stores‖ (Boyle 3) and later sold the chain in 1990. Most of Dunkin‘ Donuts United States expansion was pushed forward by past CEO Jon Luther beginning in 2003. It was also Luther who decided to amp the coffee focus more so than donuts, since they are more profitable. He once admitted that he ―considered removing ‗Donuts‘ from its name since sugary confections represent a mere 15% or so of its sales‖ (Boyle 2). This was stated in 2006, however it is ―even more striking that Dunkin‘s transformed from a musty doughnut house that sells coffee into a blue-collar-chic coffee retailer that happens to sell doughnuts‖ (Boyle 2). Locations: The Dunkin‘ Donuts chains are located in over 30 countries around the world. These countries include: Aruba, Bahamas, Bulgaria, Canada, Chile, China, Colombia, Ecuador, Germany, Grand Cayman, Honduras, Indonesia, Japan, Korea, Kuwait, Lebanon, Malaysia, New Zealand, Oman, Panama, Pakistan, Peru, Philippines, Puerto Rico, Qatar, Russia, Saudi Arabia, Singapore, Shanghai, Spain, Thailand, Taiwan, United Arab Emirates, and of course, the United States of America. Products: Dunkin‘ Donuts prides itself on the guarantee of fresh coffee and baked goods. According to the Dunkin‘ Donuts company website, they offer over ―52 varieties of donuts and more than a dozen coffee beverages as well as an array of bagels, breakfast sandwiches and other baked goods.‖ Dunkin‘ Donuts is very well known for its specialty items such as munchkins, donut hole treats as well as classics such as muffins and bagels. Other major products include breakfast sandwiches, cookies, flatbread sandwiches, flavored coffee, frozen cappuccino, iced tea, latte lite, hot chocolate and white hot chocolate. They offer customers freshly brewed hot coffee in up to nine flavors. Also offered are iced coffees and coolatta beverages, exclusively available at Dunkin‘ Donuts locations. They have many of the same products worldwide. However, there are specialties of the cultures that can be found exclusively at certain locations. For example, Dunkin‘ Donuts in Korea offers a Grapefruit Coolatta while Dunkin‘ Donuts in Thailand offers a Choco Nut Donut. Top Leadership: The Chief Executive Officer of Dunkin‘ Brands is Nigel Travis. Travis is also the President of Dunkin‘ Donuts. Paul Twohig is the Chief Operating Officer in the United States while Tony Pavese is the Chief Operating Officer internationally. In the United States, there is a vice president for each of the areas of the country. William Bode is the Vice President of the

Northeast, Bob Wiggins is the Vice President of the Central Atlantic, Weldon Spangler is the Vice President of the South Central and Jean Grossman is the Vice President of the Mid-West. Revenues: Full year 2010 financial highlights included: ( in millions except in PODs) Fiscal Year 2010 2009 Increase (Decrease) % System Wide Sales 7,656.5 Consolidated US Comparable Store Sales DD US Comparable Store Sales BR US Comparable Store Sales DD Global Points of Distribution (POD) 9,760 BR Global Points of Distribution 6,433 7,178.0 478.5 9,186 6,207 574 226 6.7% 1.6% 2.3% -5.2% 6.2% 3.6% Revenues Operating Income Net Income Adjusted EBITDA* 538.1 170.2 35.0 279.2 39.0 5.5 (8.1) 2.8 7.2% 3.2% -23.1% 1.0% 577.1 175.7 26.9 282.0 Dunkin‘ Brands saw a 7% rise in revenues last year, 2010. During a public earnings call on March 23, 2011, Dunkin‘ Brands reported 577 million in revenues for 2010. The company reported that domestic sales of Baskin Robbins struggled. However, ―the domestic Dunkin‘ Donuts operation is not surprisingly the largest source of sales, accounting for 71 percent of the company‘s revenues‖ (Chesto). The Dunkin Brands Fiscal Year 2010 Report explained the ―improvement was due to product and marketing innovation, increased operational focus on the guest experience and an improved economic environment.‖ Meanwhile, both Baskin Robbins and Dunkin‘ Donuts saw successful sale rates internationally. Gatehouse News Services reported that ―Dunkin‘ Donuts international business enjoyed sales growth of 15 percent, primarily due to successes in south Korea and Southeast Asia‖ (Chesto). They also explained that ―the company generates the bulk of its revenue from fees paid by its Dunkin‘ Donuts and Baskin-Robbins franchisees‖ (Chesto). Also important to note is the decrease in net income from 2009. It dropped from 35 million in 2009 to 26.9 million in 2010. Strategic Plan and Goals: After such a successful 2010 financial year, Dunkin‘ Brands is aiming to continue its success by utilizing a similar strategy. In the Dunkin‘ Brands Fiscal Year 2010 Report, CEO Nigel Travis explained: ―our strategy has been to drive comparable store sales growth in our core U.S. markets, expand contiguously in the U.S. with a replicable business model, and drive accelerated international growth across both brands. This strategy will continue to guide us for the next several years.‖ Dunkin‘ Donuts also has long term goals in mind concerning expansion

efforts: ―aggressive expansion is the name of Dunkin‘ Donuts game. Its goal is to open between 5,000 and 15,000 new stores by 2050‖ (Manning-Schaffel). In regards in Dunkin‘ Donuts competition, they launched a rebranding marketing campaign in 2008. The predominant competition of Dunkin‘ Donuts is Starbucks, with McDonald‘s Corporation, Caribou Coffee Company, and Saxbys Coffee Worldwide closely behind. However, most of their rebranding has been focused on countering Starbucks. One major aspect of the rebranding process was the efforts ―to make the product experience more of a ritual than a treat, focused on coffee instead of donuts‖ (Manning-Schaffel). It was also around this time that the tagline ―America Runs on Dunkins‖ was established. While comparing Starbucks and Dunkin‘ Donuts, Frances Allen, brand marketing officer of Dunkin‘ Donuts, explained: ―what makes our tribe, our tribe, is they are unpretentious, hardworking busy people, living busy lives. They don‘t have an over-inflated sense of self and don‘t need their coffee to have Italian names. They like their coffee called ‗small,‘ ‗medium,‘ and ‗large‘‖ (ManningSchaffel). This ―average Joe‖ customer mentality is, and will continue to be, a driving force in the Dunkin‘ Donuts future marketing strategy. Dunkin‘ Donuts executives also have faith in the constant demand their franchisees target. Lynette McKee, Vice President of Franchising for Dunkin‘ Brands Inc., ―says that the ultimate goal of Dunkin‘ Donuts is to provide the most high quality food and beverages when and where the customers want them‖ (Anderson). While this goal hints at the company‘s expansion goals, she also explains: ―we look at the needs of the customer base-very busy people on the go, up early in the morning, needing an afternoon lift or a snack at the end of the day We are fulfilling a growing demand in the marketplace: great coffee and delicious food and beverages that you can enjoy any time of day—fresh, fast, and affordably‖ (Anderson). 3. STRUCTURE OF PARENT COMPANY OPERATIONS (See Appendix A for Parent Company Organizational Chart) After expanding Dunkin‘ Donuts into Ireland there are some things that must be kept similar to ensure brand image continuity. It is important to look towards the parent company structure for guidelines on how the business should be run. Dunkin‘ Donuts is part of an even bigger corporation known as Dunkin‘s Brands which also owns Baskin-Robbins. The CEO and president, Nigel Travis, is in charge of a renowned company with a specific structure to enable the company to continue to prosper. The headquarters of Dunkin‘ Brands is located in Canton, Massachusetts. Dunkin‘ Donuts is a very successful franchise and continues to grow every day. More stores are being opened all over America as well as internationally. It is up to the franchisee not only to come up with the funding but to be able to run the franchise as the franchisor has intended. There must be continuity within the branches, which is why there are four main areas of business that Dunkin‘ Brands focuses on. These areas of business include marketing, finance, engineering, and human resources. Each of these is needed in order to run a successful corporation. Marketing is important in any company to make consumers aware of the product or service and promote business. Dunkin‘ Donuts has a unique marketing strategy which targets the masses. They have positioned themselves as ―low-brow and everyman‖ and wish to provide services to help target on-the-go customers. They are constantly changing their menus to give the consumers what they want and because stores are located not only throughout the country but throughout the world, this means that the company has high demands to fulfill. The most important message that Dunkin‘ Brands is conveying for Dunkin‘ Donuts customers is that they

will be provided with a quality cup of coffee even when they‘re on the run. They must maintain a certain edge to compete with the competition and their easy going, simple positioning has helped keep them on top (Kotler). The next area of business is finance and without this there would be no marketing. The finance plan for 2010 that was proposed by Dunkin‘ Brands is straight forward and beneficial to both the companies that this corporation oversees. They intended to raise 625 million through an offering of senior notes. These proceeds would be used along with other borrowings under an approximately 1.35 billion senior facility and would be available in cash. This could then be made available to repay in full the outstanding securitization debt of Dunkin‘ Brands and to pay a cash dividend to the stockholders. This plan was created in the best interest for the 9,186 Dunkin‘ Donuts franchises and 6,207 Baskin-Robbins franchises. In total the sales of both franchises raise nearly 7.2 billion and operate in a total of 49 countries (King). There is no reason that Dunkin‘ Donuts does not have the capacity to enter into another business venture by opening a division in Ireland. As the competition between Starbucks and Dunkin‘ Donuts heats up, it is important for Dunkins‘ to decipher the advantages their brand has over Starbucks. There are distinct customers that are loyal to each. The upper scale consumers who wish to sit and enjoy their coffees and specialty drinks prefer Starbucks, while on the other hand, Dunkin‘ Donuts customers are everyday people who are always on-the-go. There have been several complaints on the overall style of how the Dunkin‘ stores are decorated and this is where the engineering aspect of business becomes a key for the future image of the company. Right now many people believe that Dunkin‘ Donuts tends to look a little cheap with minimal resources. These people do not mind the simple, no frills of the company but would prefer a slightly higher class look. Designers are faced with the challenge of making Dunkin‘ Donuts slightly more upscale while keeping a far distance from the elegance of Starbucks. A remodel has been proposed in which the cheap looking laminate tables will be replaced with imitation granite tables and sleek chairs as well as espresso colored walls with hints of pink and orange. The overwhelming color scheme that currently defines the brand seems to be slightly overwhelming for customers. There was also debate over whether wireless internet should be added but this was decided against because they would like to stay true to their positioning strategy and continue to cater to consumers on-the-go. Creating a quick service, café style image may also help Dunkin‘ Donuts expand internationally. In America the majority of customers are always on the run and have little time to sit and enjoy their coffees. European countries, like Ireland where we intend to expand, will most likely respond well to this change because the average person makes sure they take time out of their day to enjoy their meals. By acknowledging this aspect of their daily lives, they will be more willing to entertain the idea of our brand expanding into their country. This all ties together within the bigger scheme of the company; which provides for the masses and makes sure they get what they desire (Kotler). The final aspect of business that helps set the tone of the company is the human resource team. The Dunkin‘ Brands‘ mission statement gives a great summary of what they are striving for and allows customers to understand the thought behind their actions. The statement shows their goal, ―to be the premier quick service franchisor, with a leading position in coffee, bakery, and ice cream segments of the QSR category.‖ This shows their commitment to both Dunkin‘ Donuts and Baskin-Robbins while creating similar standards for two different types of companies.

The goal of Dunkin‘ Brands, to position them in the best possible way to satisfy the customers, all relies on their marketing strategy, financing, engineering, and human resource team. These factors combined with their uniform brand image of both Dunkin‘ Donuts and Baskin-Robbins will allow future loyalty and success. Expanding this company into Ireland will take some time to catch on because it is a new start for their country, but because this brand is located all over the world there will be no reason to doubt their success. As long as the standards are upheld and the customers are provided with what they want and need, there will no question of success. 4. DUNKIN DONUTS INTERNATIONAL BUSINESS STRATEGY ―The Dunkin' Brands Inc. scope encompasses 30 countries and territories, with franchises spawning seemingly every second. This is serious business for a mom and pop chain founded by Massachusetts businessman William Rosenberg back in 1950.‖ (International brand for Average Joe‘s) But from the very beginning, Rosenberg conceived of Dunkin' Donuts as a brand for the masses. As early as 1962, Dunkin‘ Donuts crossed the border into Canada. It reached Japan by 1970. This makes sense, considering Rosenberg started the International Franchise Association. According to recent reports the café segment is currently growing in leaps and bounds. ―Though the primary component from which a café earns its revenue is the coffee they brew, foods like sandwiches, donuts etc. are slowly becoming money spinners too‖ (Dunkin‘ Donuts). However, because the Irish culture is so similar to the American culture, we have the advantage of understanding the Irish consumers‘ tastes and preferences. The international business strategy of a company is defined as ―the action‘s that managers take to attain the goals of a firm.for most firms, the preeminent goal is to maximize the value of the firm for its owners and shareholders.‖ (Hill, 2009, p. 420) An important part of international business strategy is value creation, which is simply ―the way to increase the profitability of a firm to create more value‖ (Hill, 2009, p. 421). The more value Dunkin‘ Donuts customers place on the products, the more or higher price the firm can charge for those products. As a Dunkin‘ Donuts brand, establishing our self in Galway, Ireland is going to be highly dependent on our transnational strategy. Because we are originally a small firm that started in the Northeast, we have established and executed our localization strategy. However, because we face global competition from Starbucks, we are faced with the pressures of reducing our cost structure. Ireland is a foreign land and a foreign market not yet tapped into by our company. It is our goal and duty to ―differentiate our product offering across geographic markets to account for local differences and foster a multidirectional flow of skills between different subsidiaries in our firm‘s global network of operations.‖ (Hill, 2009, p.440) For example, in our Galway store we will differentiate our food and beverages according to the Irish culture. While we are aiming to maintain consistency with our Dunkin‘ Donuts brand on an international scope, there will be certain differentiations. We will offer different seating, and promote a more comfortable, sophisticated, relaxing café atmosphere. There will be no drive-thru, which cuts costs of electronic headsets, and setting up that type of technology. We will sell Irish soda bread muffins, and add a selection of specialty coffees. As stated before, because we are normally a Northeast-operated franchise, establishing a Dunkin‘ Donuts branch in Galway is going to be the ultimate international test for our organization. Our key goals and what we ultimately want to accomplish are all within the scope of breaking down international barriers. Our first main goal is brand awareness. We hope to

promote our name within the Irish culture, and measure consumer behavior so we can meet their needs. We want to continue our idea of low cost, affordable, and quality coffee. Although the Irish economy and disposable income has seen better days, according to a recent article on the Irish times, ―while growth is set to re-emerge, the bank warned that employment and disposable income will remain under downward pressure in the short term. For many people there is likely to be little sense of improvement in their economic situation.‖ (Irish Times) Lastly, our goal for our entrance into Ireland is to remain a consistent brand, further our brand equity, and simply raise brand awareness in the Irish culture. The key elements of our international business strategy will mainly focus on the areas of economy, leadership and interpersonal skill. Due to the current economic downturn, the main question is, will Dunkin‘s be able to compete in the Irish market? We feel that the answer is, of course, yes. We strongly believe, and have seen in the past that ―even in these down economic times, the gourmet coffee industry is heading upward. While many are cutting back in other areas, some are discovering the limitations of their morning coffee and are moving into more specialty coffee, driving the growth of this burgeoning industry of farmers, importers, roasters, retailers, coffee shops, and coffee equipment manufacturers.‖ (Gourmet Coffee Industry Flourishes) Due to consumer‘s interest in more gourmet coffee, we have decided to introduce new types o

9,760 Dunkin‟ Donuts stores in over 30 countries worldwide Products Fresh coffee and baked goods 52 varieties of donuts Over a dozen coffee beverages Specialty items around the world Finances and Long Term Goals 2010 Revenues: 577,100,000 7% increase from 2009 *Predominantly due to Dunkin‟ Donuts domestic sales Account for 71% of revenues