This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.
I took my son to his spring-break baseball camp this morning in Lakeland, Florida. After dropping him off I drove past a Dunkin' Donuts: Hey I worked out yesterday -- I'm going in. I had a nice conversation with the clerk, Ralph. Ralph, I ask, do your customers ask you for a choice of coffee flavors? Ah, no, he says, just small, medium and large. Wanna a donut, they're fresh? Sure, I ask for a chocolate glazed, please, with a medium coffee. Do you sell CDs or popular, theme-oriented books here? Huh? No, he says, just the donuts and three coffees: small, medium, or large. The guy in line behind me urged me to hurry up -- he was hungry. I moved out of the way as he ordered four different donuts. Being a social kind of guy, I asked him if he was going to a meeting and bringing the goodies? No, he says, these are for me, my breakfast. OK, I got that.
Dunkin' Donuts and Starbucks: Milk and sugar vs. non-fat lattes. The success of the two is enviable, yet their customer base is quite different. Dunkin' Donuts serves, in general, millions of blue-collar workers with scrumptious, made-that-morning donuts in several varieties. The coffee is actually quite good, but Dunkin' Donuts is not known for its ambiance or as a place to sit and work on your laptop. It's buy the donuts, thank you, and move on. The donuts are delicious and addictive. My guy Ralph even suggested they need a rehab facility for Dunkin' Donut addicts. He explained that he has about 350 regular customers. He defined regulars as "people that are in at least four or five times per week, every week. I even know their vacation schedules!" Now, that's loyalty.
A couple of hours later I went to the local Starbucks and the clerk serving me was named Serge. After ordering my grande non-fat caramel latte with an extra shot, I selected the local newspaper from among a choice of four papers offered, listened to a great CD of Tony Bennett, and fired up my laptop. The ambiance is welcoming and warm. There is no hurry-up and move on sentiment at Starbucks. The furniture is comfortable and the environment just screams out "You must come back ... and often!"
I asked Serge about his regular customers. He said, by the hundreds, almost every day, and he tries to remember their favorites! We discussed the merits of the new De'longhi coffeemaker, on sale for $369, and what CDs were selling well. He also mentioned that almost half "his" customers use their Starbucks card for the purchase. The majority of his customers are white-collar workers and soccer moms. Starbucks is focusing on selling more food items, such as warm breakfast sandwiches and healthy sandwich platters for lunch. The incremental sales carry very high margins and leverage the store unit level economics.
Both are successful and both dominant: Starbucks (NASDAQ: SBUX) with over 11,000 units, and on its way to 40,000, and Dunkin' Donuts with over 7,000 units and committed to growth. Both have thousands of units spread out to more than 40 countries. The brands have popularity and traction outside U.S. borders.
Starbucks and Dunkin' Donuts may not have much customer cross-over, but the markets they do serve -- they serve superbly. I would like to introduce Serge to Ralph, but ...
Georges Yared is the author of Stop Losing Money Today and Baby Boomer Investing. For more information see www.georgesyared.com.
Be sure to vote in our poll for Dunkin' Donuts or Starbucks as your preferred brand, and let us know why you love it in the comments. Results of all Battle of the Brands match-ups coming soon.
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Reader Comments (Page 1 of 1)
10-21-2008 @ 9:58AM
David B said...
idk what the rest of the world is like, but around here in Massachusetts... when I walk into a dunkins and order a coffee, it is ALWAYS overloaded with sugar and overloaded with bad cream (open the lid and see tons of floaters) , and very poor flavor.. the donuts are all stale and 1/3 times my order is wrong... When i go to starbucks, i get a great variaty of choices of fresh very flavorfull coffee, very relaxing environment, fresh cream, sugar is good.. the only complaint i have for starbucks is that it is 8 miles away... and within 8 miles there are literaly 13 dunkin donuts'! (checked through my GPS).. Very much worth the trip!
4-07-2007 @ 11:17AM
J. Fiedoral said...
I prefer Starbuck's breakfast blend and I love Dunkin donuts chocolate frosted.
4-26-2007 @ 5:32PM
Steve Herbenick said...
I have tried both coffees and prefer Starbucks.Unfortunatly there are none within 10 miles of where I live..By far the best coffee I have had is Bear Claw in Michigan wich are drive thru establishments
4-27-2007 @ 10:02PM
Malissa said...
Dunkin Donuts knocks Star Bucks out of the water. They have the best cup of coffee in the world. They may not have the atmosphere like Star Bucks but once they catch up with time there will be no comparison between the two.
4-29-2007 @ 2:22PM
Joanne said...
Back to Walmart versus Target! I definitely vote for Target! I have boycotted Walmart before for ruining small businesses in the area which has definitely happened in Yukon, Okalahoma!
4-29-2007 @ 2:22PM
Joanne said...
Back to Walmart versus Target! I definitely vote for Target! I have boycotted Walmart before for ruining small businesses in the area which has definitely happened in Yukon, Okalahoma!
6-01-2007 @ 5:09PM
worked in dunkin said...
I worked at a dunkin and its not all that everyone thinks that it is I have seen so much happend the coffee not being made every 18 mins or donuts not fresh or bugs flying around I do like there coffee but I have seen to much that goes on in there and I have worked more than one store .......
8-15-2007 @ 4:07AM
goodgirl728 said...
starbucks by far. definitely worth the extra 2 or 3 dollars.