A Study on The Use of Swot for Assessment of Dunkin Donuts

S.W.O.T. Analysis for Dunkin’ Donuts

Introduction

The S.W.O.T. Analysis I chose is for the famous Dunkin’ Donuts, forerunner of the beverage and baked goods market. I figured it would be interesting to see how the world’s largest coffee and baked goods chain in the world lines up to the competition. I also thought it would be interesting to get some knowledge about the business psychology of Dunkin’ Donuts compared to other popular donut/coffee chains like Krispy Kremes and Starbucks. More so Krispy Kremes since they are more primarily known for donuts than Starbucks which is solely coffee based product besides the few pastries they provide for customers. The target market for Dunkin’ Donuts is students and or teens who are between the ages of 15-18. And young adults who are between the ages of 18-45 years old. The mission statement of the founder is as follows:

"Make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores.”

Strengths

• Location: Dunkin’ Donuts are usually located within walking distance of schools and business centers
• Price: Cost of coffee/beverages/donuts/pastries are cheaper and more reasonable than its two top competitors (Krispy Kremes and Starbucks)
• Customer Service: Prompt, friendly and has a “Mom’s & Pop’s” feeling when you walk through the door.
• Franchisee-owned and Operated: 100% of the 10,000+ Dunkin' Donuts stores are franchised
• Competitive Value System: They have a twelve point set of values: Honesty, transparency, humility, integrity, respectfulness, fairness, responsibility, leadership, innovation, execution, social stewardship and fun

Weaknesses

• All Dunkin’ Donuts stores are franchised which means each store will have a different mission statement and different business values. In franchises there is little room for creativity since everything is regulated by the franchisee.
• Poor selection of coffees and beverages. Lack of innovation when it comes to products for customers
• Little to no discounts or coupons.
• No eCommerce. No ordering done online or through kiosk.
• Donuts and pastries tend to not taste fresh.
• Employee pay is not competitive
• Often times the cleanliness of the stores are subpar
• Their original glazed donuts are inferior to Krispy Kreme’s original glazed donuts

Opportunities

• Dunkin’ Donuts can switch from Franchise to a Corporation. They would benefit two fold by doing this. Business philosophy and core values would be consistent throughout the majority of Dunkin’ Donut stores. And a corporation would open up more opportunity for creativity since it wouldn’t be regulated by strict laws from the franchisee
• Offer a more competitive menu and train employees to make these new beverages. For instance, you can order a Frappuccino from Starbucks with 10 to 12 modifications (i.e. soy milk, almond milk, coconut milk, flavor boosters, espresso shots etc.) Dunkin’ Donuts can also offer more than just coffee based beverages like tea and smoothies.
• Dunkin’ Donuts can start a rewards program where customers can purchase products once they accrue a certain number of points like Starbucks. Or they can post online coupons offering a free dozen or half dozen of donuts when you buy one dozen. Krispy Kremes does this special promotion at least once a year and they generate a high volume of traffic/sales.
• More and more retail/food businesses are implementing the use of eCommerce. At Starbucks you can purchase your order before you even pull to the window or counter. Ecommerce would be more convenient for Dunkin’ Donut’s target market. But personally I would go with having a kiosk in the stores like McDonald’s.
• Dunkin’ Donuts should update their equipment or source of their products so when a customer bites into a donut or pastry it tastes like it was just made.
• Dunkin’ Donuts can improve employee retention rate and customer service by offering higher pay or better benefits
• Dunkin’ Donuts should hire an employee strictly for cleaning or maintenance services. It would improve the store quality and the morale of the customers who walk into the establishments
• Dunkin’ Donuts should implement a “hot sign” like Krispy Kreme’s to let customers know their donuts are currently. Red signage is still used as a marketing ploy and it still works. If Dunkin’ Donuts improves the quality of their donuts it might drive out Krispy Kremes.

Threats

eCommerce – businesses like Starbucks and Krispy Kremes are already blowing Dunkin’ Donuts out of the water in this arena. When everything becomes automated will Dunkin’ Donuts still be standing? Probably not regardless of being the current leader of the beverage and pastry market

Mergers Between Competition – Sales have not been good for Krispy Kremes over the last twelve years. And Starbucks is steadily rising year after year. However, Starbucks has a poor selection of pastries. Imagine if Krispy Kremes merged with Starbucks. Dunkin’ Donuts would probably go out of business.

Conclusion

I conclude that although there are some significant weaknesses in areas that can easily resolved, Dunkin’ Donuts still has a competitive advantage. For one, Dunkin’ Donuts has established it’s brand through marketing its products as the best (even though its debatable) and has stood the test of time as the leader of it’s market. When you think of donuts you either think of Dunkin’ Donuts or Krispy Kremes. That says a lot considering that there are thousands of coffee shops across the country and the majority of the populous only think of two brands. The weaknesses (lack of creativity, inconsistent business module, eCommerce etc.) does not outweigh the strengths on a business scale. The prices and locations of Dunkin’ Donuts has played a big part in it’s success which is why they can still operate on a high level and bring in better revenue compared to Krispy Kremes. It’s almost like the Walmart effect, you can have inferior product as long as the price is affordable or cheap.