Coffee Wars: Starbucks vs Dunkin Donuts

Dunkin Donuts and Starbucks both have their own unique flavors of coffee. “More than 100 million people in the U.S. alone drink coffee every day.” (Information taken from The National Coffee Drinking Trends Study, 2004 ) Each of these people do have a preference to which chain of coffee makers they chose. It can almost be broken up into a red state blue state debate. These two are divided in coffee bean choice, style and even price. They both define our culture in a unique fashion.

It all began with the simple invention of the donut. “Captain Hanson Crockett Gregory was the inventor of the donut with a hole in the middle. William Rosenberg, the food-franchising pioneer founded the Dunkin’ Donuts chain. Rosenberg opened his first coffee and doughnut shop, called the Open Kettle, in Quincy, Massachusetts in 1948. The name was changed to Dunkin’ Donuts in 1950. According to “Donuts and the Salvation Army” – While The Army may not have invented the first donut, it can certainly take credit for [helping] the popularity of donuts today. June 4-5 marks the 61st anniversary of Salvation Army ‘Donut Day” In Chicago. The tag day was established in 1938 to honor the work of World War I Salvation Army âÂ?¢’lassies’ who prepared donuts for thousands of soldiers in World War I.” www.http://inventors.about.com/library/inventors/bldonut.htm The donut made way for a company based on the donut and of course their coffee.

The first company to be started based on their coffee was Dunkin Donuts. “It all started in 1946 when Mr. William Rosenberg founded Industrial Luncheon Services, a company that delivered meals and coffee break snacks to customers in the outskirts of Boston, Massachusetts. The success of Industrial Luncheon Services led Rosenberg to open his first coffee and donut shop, the “Open Kettle”. Then, in 1950, Rosenberg opened the first store known as Dunkin’ Donuts in Quincy, Massachusetts.” (www.dunkindonuts.com) Massachusetts started it all. The branch grew from their little by little.

Starbucks later opened their doors with their own unique take of Dunkin Donuts. “The story began in 1971 when the first Starbucks opened at Pike Place Market, which is Seattle’s and the Nation’s oldest Farmer’s Market (opened August 17, 1907). But at this time the company was a local coffee roasting facility. That remained their core business until 1982 when Howard Schulz joined the company. He was the new marketing executive and began right away to convince more and more local cafes, upscale restaurants, and hotels to buy Starbucks coffee. The turning point for the company and the begin of writing coffee history should be one year later when Schulz traveled through Italy. He got inspired by the old Italian coffee bar tradition to serve fresh brewed Espressi and Cappuccini. He convinced the Starbucks founders to give his idea a chance and in 1985 he opened the first coffee bar in Seattle and gave it the Italian touch by naming it ‘Il Giornale’.” (Credit: Starbucks Corporation; magazineUSA.com) Just like Dunkin Donuts the demand for more Starbucks arose.

Dunkin Donuts known for its simplicity and unique colored orange and red cups. Starbucks however is known for many different qualities. “Without even paying for the publicity, the name Starbucks had become synonymous with fine coffee, hip hangouts, and upscale image. (Pendergrast 368)

But the uniqueness of flavors is one of the most important things, when it comes down to who will by who. Dunkin Donuts just recently trying to keep up with Starbucks launched a new line of flavored drinks. “The fresh new flavors include Blueberry, Coconut, Raspberry, Marshmallow, Caramel, Toasted Almond and Cinnamon. Iced coffee enthusiasts will be given the opportunity to sample Dunkin’ Donuts latest flavors in participating stores, and also when the Ice Lounge sampling van tour stops by several cities and towns in America.”(www.dunkindonuts.com) These flavors can be added or combined with various items such as Original Blend Coffee, Dunkin’ Decaf, Iced Coffee , Iced Lattes, Hot Cappuccinos and Lattes, Hot Chocolate, and their Coolattas. This adds a lot of different variety to these drinks. Making everyone feel like an individual, having their own individual flavor and drink.

Coolattas have become a growing trend among people as well. More and more people are trying iced coffee as a quick afternoon pick-me-up. According to the National Coffee Association, more than 41 million Americans switch to iced coffee during the spring and summer months. And millions of these iced coffee lovers turn to Dunkin’ Donuts because they recognize the quality of their iced coffee stands apart from the competition, made with the same high quality Arabica beans used to make hot coffee.

Although these are becoming a fast hit the most popular flavors sold at Dunkin Donuts are Original Blend, Hazelnut, French Vanilla, Caf�© Blend and their Dunkin Decaf.

Discovering your favorite Starbucks coffee begins with an understanding of where they are grown. They have a special roasted blend of coffee from a different section of the world. Examples, Latin America, Africa, and Asia. The other uniqueness of Starbucks is that they take their unique flavors and sell them outside their stores. They sell iced drinks to ice cream in their flavors. They also have a unique blend and selection in their teas. Something Dunkin Donuts has not take advantage of. “Hot Teas (Filterbags and Full Leaf) Whether you are looking to soothe your psyche or revive your spirit, Tazo has a black, green or herbal tea to suit you. Bottled Iced and Juiced Teas These crisp and refreshing bottled beverages are a delightful departure from traditional teas. Artfully blended and freshly-brewed in the Tazo tradition, these bottled beverages are so invigorating, anytime becomes a good time for tea. Tea Lattes Tazo Tea Lattes expand the notion of what tea can be. Drawing from cultures, these exotic, full-flavored teas are lightly sweetened and served with other milk, and are delicious hot or cold.” (www.star bucks.com) Also Starbucks has its own special brand of liquor, which comes in coffee and in cream.

Though both make coffee, they receive their beans from uniquely different places. “Dunkin’ Donuts uses 100-percent Arabica coffee beans and has its own coffee specifications, which are recognized by the industry as a superior grade of coffee. Based on Dunkin’ Donuts Quality (DDQ) specifications, coffee is milled and processed specifically for the company.” (www.dunkindonuts.com)

In a slightly different area and less known about is Starbucks. “Because coffee grows in many different environments around the world, there is no one best way to grow coffee. But there is general agreement that utilizing shade trees for growing coffee can help sustain a healthier ecosystem and promote biodiversity. Starbucks on-going support for farmers who produce Shade Grown Mexico is a great example of helping farmers while preserving our natural environment.”

(www.Starbuck.com) Starbucks always known for its environmental friendly attitude has made the growing of coffee beans into a cause.

Besides the difference of beans, the number of stores and locations are also unique. Dunkin Donuts attaching itself to Baskin-Robbins and Togo, uses the different companies as an advantage to set up shop in various places. “Based in Canton, Massachusetts, Dunkin’ Brands Inc. is part of U.K.-based Allied Domecq PLC and is responsible for the worldwide development and marketing of quick service restaurant brands including Dunkin’ Donuts, Baskin-Robbins and Togo’s. With the combined retail units of these three brands, Dunkin’ Brands is one of the world’s largest quick service restaurant companies, represented by more than 12,000 worldwide points of distribution, including approximately 7,600 units in the United States and 4,400 units in 46 countries around the world.” (www.Dunkindonuts.com)

Starbucks also has an impressive amount of stores open also. “Starbucks operates and licenses more than 8,500 coffee shops in more than 30 countries. The shops offer coffee drinks and food items, as well as beans, coffee accessories, teas, and CDs. Starbucks operates more than 5,200 of its shops in five countries (mostly in the US), while licensees operate more than 2,800 units (primarily in shopping centers and airports). The company also owns and franchises the Seattle’s Best Coffee and Torrefazione Italia chains in the US (more than 100 shops). In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products.”

http://www.hoovers.com/starbucks-corporation/ – ID__15745 – /free-co-factsheet.xhtml Both impressive in numbers. Dunkin donuts and Starbucks each make sure that they have stores everyone for the customers satisfaction. Their customers are their number one priority beside of course their profits.

Each store gathers in large amounts of money for their business. Both have amazingly strong stocks and profits for being a coffee shop. Business Magazine says that Dunkin Donuts is the “largest coffee and donut shop chin in the world” (www.business.com) The brand itself has made a huge profit. “Dunkin’ Donuts delivered an 11% growth in global system-wide sales driven by a 5.2% increase in US same store sales and a 7% increase in global distribution points. The strong growth in same store sales growth which continues to outpace the overall QSR industry has been driven by product innovation and effective marketing. The innovation program has successfully launched a new range of coffee offerings, which include latte, cappuccino and espresso products, in 1,800 stores in the New England and Mid Atlantic areas. The launch has been supported by the introduction of new high speed coffee machines which maintain Dunkin’ Donuts reputation for speed, quality and value for money. In addition, a new limited time offer hot apple pie product has been very well received and helped to extend Dunkin’ Donuts sales into the traditionally quieter afternoon period. Marketing campaigns have focused around the new coffee offerings and highly successful regional program with Curt Schilling, the Boston Red Sox All-Star baseball player.. (King)

Just as well the Starbucks company has made a name of itself and benefits of its brand name also. “As anyone who bought stock in Starbucks in the last decade knows, business has been good. Starbucks’ share price has risen almost tenfold in 10 years, and the company has steadily raised retail prices while wholesale prices fell. Fair trade coffee was initially plagued by complaints about bad quality, yet producers have made great strides in improving the quality of the brew and it has found a comfortable niche in the specialty coffee market, alongside organic coffee and other similar labels, such as “sustainable coffee.” After years of public pressure from activists who singled it out because of its high visibility and yuppie clientele, Starbucks now sells fair trade coffee in all its stores and has given it prominent play in university markets. Rice, whose organization gets paid 10 cents a pound by Starbucks to certify its fair trade coffee, thinks it’s time that activists turn their pressure elsewhere.

But when it comes down to it statistically and other wise Dunkin Donuts wins. “For years, the product lines of the major U.S. brewed coffee sellers have been well defined. On the high end there is Starbucks Corp., with 5,439 locations in the U.S. During the past decade, the chain has made its expensive cappuccinos, frappuccinos, espressos and lattes part of the regular lexicon. On the other end, there is Dunkin’ Donuts, which has 4,100 stores. Although concentrated in the Northeast, Dunkin’ Donuts is the nation’s largest seller of regular, nonflavored brewed coffee through fast-food outlets, with a 17% market share, compared with 15% for McDonald’s Corp. and 6% for Starbucks, according to market-research organization NPD Group.” (Ball) Statistically Starbucks looks like it is much behind Dunkin Donuts. This maybe why it has become more abundant and more commercial over the years.

Cost could be the big factor why Dunkin Donuts is the number one coffee brewery in the country. “On average, the new Dunkin’ Donut drinks cost at least 20% less than Starbucks’s offerings – and an espresso shot is just 99 cents, compared with $1.45 at Starbucks.” (Ball) Dunkin Donuts keeps its prices low and offers a high quality product. It gives the people what they want at a price everyone can afford.

But the uniqueness of flavor and the uniqueness of product is a huge factor. The conclusion is the flavor you are craving is the on you are going to chose.

Bibliography

Bellis, Mary, Inventor of the Donut, http://inventors.about.com/library/inventors/bldonut.htm, 2005
Business.com,Restaurants & Foodservice > Dunkin’ Donuts, Inc
http://www.business.com/, 2001-2005

Dunkin’ Donuts Incorporated, https://www.dunkindonuts.com/aboutus/ , 2005

Jeffrey, Paul, Depressed Coffee Prices Yield Suffering in Poor Countries, http://www.globalpolicy.org/globaliz/econ/2003/0207coff.htm, February 7, 2003

Magazine USA, Starbucks History, http://www.magazineusa.com/us/info/show.aspx?unit=originals&doc=33, 2000 – 2005

Murray, Barbara, Starbucks Corporation,
http://www.hoovers.com/starbucks-corporation/ – ID__15745 – /free-co- factsheet.xhtml , 2005

Pendergrast, Mark, UNCOMMON GROUNDS
The History of Coffee and How It Transformed Our World, Perseus Books Group, 1999

Starbucks Coffee Company, http://www.starbucks.co.jp/en/company_history.htm, 2003

Starbucks Corporation Company Profile, http://biz.yahoo.com/ic/15/15745.html, 2005

Starbucks European History, www.starbucksjapan.com/history, 2003

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