Has Dunkin Donuts failed in India?

Dunkin Donuts brand is owned by Dunkin Brands Group which is a well known pioneering brand of quick service restaurants. It has more than 18000 points of distribution in the world with presence in more than 60 countries (Dunkin Donuts, 2014). The company is headquartered in Canton, Massachusetts. The company reported a sale of $9.3 billion in the year 2013. The company operates on a 100 perecent franchised model and there are nearly 11000 Dunkin’ Donuts restaurants in 33 countries (Dunkin Donuts, 2014). The company has an established leadership in coffee segment for more than 60 years and sells more than 1.8 billion cups of coffee all over the world. The brand has a high level of customer loyalty and is a socially responsible brand. India is an attractive expanding economy for global fast food chains such as Dunkin Donuts and offers the company with a large customer base.

Dunkin Donuts was launched in India in the year 2012 on the basis of the classic donuts model to serve breakfast to customers 7 am onwards. The brand quickly realized that Indians do not like doughnuts and are unlikely to buy doughnuts in bulk (Rana, 2014). The concept of doughnuts is new in India and Indians are more likely to consume burgers or pizza than doughnuts in the current fast food market scenario. The brand had to quickly customize its menu in India to include burgers like competitor McDonald’s and had to advertise in its marketing campaign that the brand offered much more than Bavarian Cream and coffee in its menu. This article shall highlight the issues faced by Dunkin Donuts brand in India and its offerings for the Indian customers and how the brand was repositioned to suit the Indian customers.

Dunkin Donuts began offering American Doughnuts for breakfast in India with its stores opening at 8 am with the aim of offering breakfast to Indians. The brand offered doughnuts that were priced high in accordance with the American culture of having a light breakfast.

How Dunkin Donuts failed to understand consumer preferences?

The company was treated no more than a pastry shop initially on its launch in India in the year 2012 where people would visit to consume Doughnuts as a dessert. The company was initially launched as an AM brand that offered breakfast menu to customers. Dunkin Donuts had initially failed to understand the consumer preferences in India for a fast food restaurant that offered full meals rather than light doughnuts for a breakfast. After looking at poor response from customers with respect to doughnuts, the company decided to rebrand itself as a PM brand that offered much more than doughnuts and coffee.

New strategy

Dunkin Donuts offers the American food menu that includes coffee, sandwiches, doughnuts along with India centric menu items that include vegetarian burgers, spicy sandwiches and lychee coolattas (Garber, 2014). The Doughnuts have also been customized to suit Indian taste with the introduction of flavors such as Kesar Badam, Soan papdi and milk cake specially targeted for the festive season in India. The doughnuts are priced at nearly 65 rupees or a dollar each at the stores in India (Rana, 2014). Coffee has become an increasingly popular product in India and therefore the store is focusing on its strategy to boost the sales of coffee in India, while facing tough competition from leading global coffee chains such as Starbucks. The store Dunkin Donuts has introduced an expanded menu of vegetarian burgers in India as vegetarian burgers are quite popular fast food among the Indian customers. While competitors such as Mc Donald’s have already tasted success with Mc Veggie and Mc Aloo Tikki burger, Dunkin Donuts has launched a range of more than 10 burgers in India that are suited to the Indian tastes and preferences.

The company has adopted a penetration pricing strategy for its food products in India. Penetration pricing strategy allows companies to boost sales, quickly gain a larger market share and gain a market acceptance for the brand by setting a price lower than those of the competitors (Ferrell & Hartline, 2010). The price of Dunkin Donuts products are nearly 10-15 percent lower than those of the competitors in the Indian fast food industry such as Starbucks and Mc Donald’s (FPEditors, 2012). Dunkin Donuts charges INR 45 for a doughnut and INR 75 for a coffee at present. Such a penetration pricing strategy shall allow the company to position itself as an affordable brand in India and offer value for money advantage to the Indian customers. Indian customers are highly price sensitive and prefer products that are of good quality and that are offered at attractive prices. Penetration pricing strategy shall therefore allow Dunkin Donuts to attract a large number of Indian customers towards the brand and quickly gain a larger market share in India.

Dunkin’ Donuts less than impressive performance so far

Dunkin Donuts has been successful in adapting its donought menu to suit Indian preferences by offering India centric doughnuts in its menu that are a hit among the Indian customers. Since its launch in the year 2012, Dunkin Donuts has been successful in expanding its reach to 38 locations in India (Spiegel, 2014). The restaurant faced rejection initially as a breakfast menu restaurant that offered only American doughnuts at 7 am. The company failed in India due to its inability to understand the Indian culture and the concept of healthy and complete breakfast in India with family members. The restaurant has now customized its food menu to offer burgers and cheese sandwiches that are popular among the Indian consumers. In view of successful fast food chains such as McDonald’s and KFC well established in India, Dunkin Doughnuts has also expanded its menu to lure Indian customers. However, it remains a challenge for the company to expand its operations and menu items to increase its market share in the Indian fast food industry.

References

Priya Chetty

Partner at Project Guru
Priya is a master in business administration with majors in marketing and finance. She is fluent with data modelling, time series analysis, various regression models, forecasting and interpretation of the data. She has assisted data scientists, corporates, scholars in the field of finance, banking, economics and marketing.
Discussions

1 Comments.

  1. Kuldeep sharma

    Dunkin dounuts have to face failure in non metro cities coz there people not aware with this brand.
    I’m a caterer and also runned 3 restaurants in the age of 26 by own income. And I persionally analysed that it’s so tough for Dunkin dounuts to run thier outlets in non metro cities in India.

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