Dunkin Donuts Adding Locations Means Trouble For Vending

Dunkin' Donuts recently announced it was opening new restaurants on 10 college campuses. This is part of their plan to double the number of stores in the next 20 years. We do not know what sort of deals DD is offering to these new sites. It might be franchising, but it's more likely to be some sort of licensing deal with the college (if self-op) or the foodservice contractor (at that campus).

In one sense it is NOT news. Think back to the surge of "branding" in the 1990s, when so many restaurant brands expanded at colleges, hospitals, B&I's, etc. That evolutionary process continues to this day.

What is news now, in my opinion, is that the growth challenge for restaurant chains is much more difficult today than it was 10 to 15 years ago. There are not many good spots to deploy restaurants "on the street." "Branding" might be back in a really big way.

Operators need sales strategies

The issue, and it's significant, for operators, is that these chains will be stealing sales from "us." If operators do not have a plan to compete more effectively, they are in trouble.

It is NOT about college student coffee dollars. It is about the critical dayparts: "breakfast, lunch and snacking - both A.M. and P.M." These dayparts are where our industry hopefully thrives. We are at risk of seeing it "taken away" from us. 

It's NOT about colleges. It's about every host venue type where our industry operates. The stated business strategies of QSRs and convenience stores are driving their growth in (a) beverages; (b) snack portion size foods and (c) store upgrades/re-modeling. They want the 10 a.m. and 2 to 4 p.m. snack sale. They want the beverage-only sale.

People "drink" from 5 to 8 times per day. They "eat or snack" 4 to 5 times per day. Increasing evidence suggestions that people are eating smaller meals and heartier snacks.

The chain stores (in so many retail categories) have overwhelmed the independents. This time the chain stores will be restaurant brands coming to the locations we serve. They will cannibalize our sales. 

Meal options have increased

Look at the 15-iminute radius. People at work will walk or drive 15 minutes to get a meal/snack/beverage. The number of foodservice alternatives (most chain restaurants and QSRs) in that radius has multiplied dramatically in the last 20 years. Now those chains are going to be moving inside the same buildings where we have our stores.

We're also seeing a new generation of competitive deployment in mobile catering. College foodservice operators are creating and placing their own branded food trucks. These "stores" are positioned to capture traffic hurrying around campus from class to class. This will impact our sales because students (and faculty and staff) will encounter the food trucks on the street before entering buildings where our "stores" are located.

It's been stated many times the industry needs to wake up. Many companies in our business are engaging in much more focused strategies to win in the future. There are still too many operators who are asleep at the wheel.