Why Did Dunkin Donuts Decided To Concentrate On Drinks And Beverages? Should You Do The Same?

It is no big secret that selling drinks and beverages is more profitable than selling food. Drinks and beverages are easier and cheaper to prepare. But this is not the complete picture at least for Dunkin Donuts or as what they like to be known at least in the US as just “Dunkin”.

It would be easy to dismiss that the reason for Dunkin’s success is based solely from its strategy to concentrate on its drinks and beverages products. Afterall, almost 70% of the company’s sales during the pandemic was based entirely on selling cold drinks.

If hot and cold drinks are the only reason why Dunkin is so successful, then the company would have already abandoned its donut business altogether which is harder to run and is less profitable.

But overseas, Dunkin Donuts or Dunkin still makes a lot of its money from donuts more than its drink and beverage. It might be noteworthy to add that Dunkin still makes a lot more money from its US stores than its overseas stores.

The company started out as a New England Diner in Quincy, Massachusetts in 1950. It’s original name was ”Open Kettle” but was changed two years later to Dunkin Donuts.

This is because it’s founder, Bill Rosenberg (1916-2002) decided to capitalize on the then trend of “dunking” donuts in coffee. During those years, the company sold coffee for 10 cents and the donuts for 5 cents.

So, we can see already that beverages are already a big part of the company’s business because they were selling coffee which is cheaper and easier to prepare at twice the amount of a much harder and more expensive to prepare donut.

They started selling their now famous Munchkins after noticing that they were wasting a lot of resources whenever they put holes in their donuts. Today, munchkins are a favorite of many children worldwide.

They concentrated to selling more drinks and beverages in the 1990s when consumer sentiment towards donuts turned bad. During those years, many people started to believe that donuts are unhealthy. In 2018, the company shortened its name to just “Dunkin” in the US.

Between 1996 to 2001, their “coffee houses” as what they want to be known more than doubled in numbers. Their stores grew from about 6,000 to 13,000 in just a matter of 6 years which means they opened up approximately 1,167 new stores yearly.

During 2011 and onwards, they were selling more iced and hot coffee than all the coffee shops in the US which includes Starbucks. For example, they hold 57% of the coffee shop market in New England and New York.

In 2019 they sold 1.6 billion cups of cold and hot coffee. In 2021 they sold 4.4 billion cups of cold and hot coffee. This means that for the periods 2019 and 2021, they doubled their cold and hot coffee sales each year.

But many are attributing this to the growing trend among American coffee drinkers to not only have a hit of caffeine in the morning but also at some other point of the day, most notably in the midday and afternoon.

In fact, the company’s sales of cold drinks exploded during the pandemic. It accounted for almost 70% of their sales. Take note that this figure is only cold drinks. If we factor the hot drinks then this figure would be larger.

This is because more people in general are more thirsty than hungry. Science has proven that people would die a lot earlier if they don’t drink as against if they don’t eat. Humans need to drink more than eat more if they are to survive. It’s that simple.

Just observe your normal everyday routine. Do you drink or eat more? The answer is pretty obvious: You need to drink more than you need to eat. Also, you cannot eat your meals without drinking during and after.

You also have to consider the fact that the human body is composed a majority of liquid. Also, the liquid in our body does not only bring us nourishment but also controls the salt balance in our body. That is why it needs to be replenished always.

Don’t forget also that the fluids in our body maintain our temperature and need to be flushed and replenished several times a day. You could prove this by counting how many times you eat and how many times you urinate.

Another thing to consider in the case of coffee and other sweetened drinks and beverages, is that they can be very addictive. For example, there are places where people have stopped drinking water altogether and only drink Coca-Cola because they’re so addicted to it.

According to Global News Wire, the bottled water industry alone is worth US$ 228.84 billion in 2022 and is estimated to grow at a CAGR of 5.9% between 2022 and 2028 where it would reach a value of US$ 322.85 billion.

According to Fortune Business Insights, the global non-alcoholic beverage market is worth US$ 919.13 billion in 2019 and is estimate to grow at a CAGR of 8.20% until it reaches US 1.257 trillion by 2027.

According to Grandview Research the global fast food market is worth US$ 972.74 billion in 2021 and is estimated to grow at a CAGR of 6.05% until it reaches US$ 1.467 trillion in 2028.

Adding all these statistics we come into the conclusion that the drinks and beverage industry is much bigger than the fast food industry. This proves the fact that drinks and beverages are more profitable than fast food foods which also consists of drinks and beverages.

Now that you know that drinks and beverages are not only easier to prepare but are more profitable than food, what do you do? Of course the answer is to introduce more drinks and beverages in your menu if you hadn’t done so already.

It can be as easy as introducing more canned and bottled drink and beverages in your menu up to introducing to your customers your own drinks and beverages. As you can see, this is a very simple way of making more money from your restaurant or food shop.

You can even turn some of your foods to drinks. I know for a fact that cakes and cookies are already being turned to beverages. Here’s an example: “Chicago’s Famous Cake Shake Is A Portillo’s Staple | Legendary Eats | Food Insider”.

If you own a fruit shop, it might be time to turn some of the fruits you are selling into drinks. Here’s an example of one such fruit business: ”Fresh Fruit Juice in Tourist Market - Korean Street Food”.

Dunkin Donuts or as they want to be known as “Dunkin” not only succeeded by concentrating on food and drinks exclusively. They sold both drinks and food which are likely to drive repeat sales, for lack of a better word: addictive products.

This is because their products either contain caffeine and sweeteners or both. Also, they sell fluids which people need to consume on a regular basis. In effect, they are selling food that drives their consumer to consume on a regular basis.

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