Watching all the hand-wringing at Starbuck’s over the pasting they took in last month’s Consumer Reports taste tests (not to mention their nosediving customer loyalty numbers) makes me think of the old adage that sooner or later every overnight success has to go to work for a living. For years now the good folks out in Seattle have been convinced they are the unstoppable, can-do-no-wrong Brand of the Future. How ironic then that the chain that’s really out there gunning for them is one of the oldest there is: Dunkin’ Donuts. Yes it seems that even though Starbuck’s now has some 14,000 stores (almost as many as McDonald’s) compared to Dunkin’s 4,800, Starbuck’s success has the Dunkin’ people convinced that there’s a national market for their coffee.
For you see, as every Krispy Kreme doughnut shop owner will tell you, there’s no money in doughnuts. It’s all in the drinks, especially the coffee, where profit margins are truly astounding. This is of course why coffee is the focus of every Dunkin’ ad campaign (especially the latest one: “America Runs on Dunkin'”). And indeed they’ve always had an extremely loyal following for their coffee. The last few years especially, they’ve done a great job at positioning themselves as the regular guy’s alternative to Starbuck’s yuppie java paradise. The only thing that’s kept them from going head-to-head with Starbucks is that they’re a regional chain concentrated in the Northeast. Well, not for much longer. Not long ago Dunkin announced plans to triple the number of stores they have in North America by 2015. Meantime Starbuck’s has announced they plan to expand to a global empire of 40,000 stores in the same timespan. Will Dunkin’ have taken over Starbuck’s domestic consumer base while they’re off building stores inside the Taj Mahal? Only time will tell.