Starbucks vs Dunkin Donuts

Topics: Coffee, Dunkin' Donuts, Starbucks Pages: 16 (4779 words) Published: October 29, 2014
Table of Contents:
1.Introduction3
2.Industry Overview 3
3.Competitive Landscape3
4.Industry Lifecycle4
5.Industry Trends5
6.Macro Environment Impact6
7.Porter’s Five Forces7
8.Starbucks Company Overview9
9.Starbucks SWOT11
10.Starbucks Balanced Scorecard15
11.Dunkin Donuts Company Overview15
12.Dunkin Donuts SWOT16
13.Dunkin Donuts Balanced Scorecard19
14.Conclusions21
15.Reference22



1.INTRODUCTION
This study gives a brief review of the U.S. and international coffee shop industry. The coffee industry includes 20,000 stores with combined revenue of $11 billion. Approximately 20 million people work in the coffee industry worldwide. The coffee industry is very concentrated at the top and fragmented at the bottom with the top 50 companies taking up to 70% of the sales. Starbucks lead the way with over 16,680 stores worldwide; and there are some other competitors following them very close. 2.INDUSTRY OVERVIEW

The coffee industry and the coffee shop business has boomed in recent years, especially with regards to specialty coffees. Companies in this industry sell coffee drinks and other food and beverages for consumption on the premises or for takeout. Major companies include Starbucks, Dunkin Donuts, and Krispy Kreme and so on. The US coffee shop industry includes about 22,000 stores with combined annual revenue of about $12 billion.(Starbucks Website) Coffee shops are part of the specialty eatery industry, which also includes outlets specializing in products such as bagels, donuts, frozen yogurt, and ice cream. 3.COMPETITIVE LANDSCAPE

Demand is driven by demographics, consumer tastes, and personal income. The profitability of individual companies depends on efficient operations and high volume sales. Large companies have advantages in purchasing, finance, and marketing. Small companies can compete effectively by offering high-quality menu items and providing superior customer service. The industry is fragmented: the top 50 companies account for about 45 percent of revenue.(Hoovers) Companies in this industry operate limited service restaurants that serve specialty snack items or nonalcoholic beverages for consumption on-premises, such as bagel shops, coffee shops, doughnut shops, ice cream parlors, juice bars, and smoothie shops. Major companies include Dunkin’ Brands, Einstein Noah Restaurants, Krispy Kreme Doughnuts, and Starbucks (all US-based), along with Costa Coffee (UK) and Tim Hortons (Canada). 4.INDUSTRY LIFECYCLE

As the economy fell deeper into a recession in 2008 and unemployment numbers rose, consumers became more selective about how they spent disposable income. In 2009, consumer spending declined by 0.6%, and luxuries like eating out and a morning cup of coffee at Starbucks were among the first expenditures to go. Some consumers cut out coffee and snack shops from their budgets entirely and opted to save money by eating in. This trend reversed slightly in 2010, when consumer spending rose by 1.7%. Consumers who continued to purchase coffee and snacks during the recession still bought lower-priced items that they would not have chosen prior to the recession. In other words, instead of springing for a Cafe Mocha at Starbucks, they settled for a plain cup of coffee. This trend has forced coffee and snack shop chains to compete with each other to convince consumers that they can get the most bang for their buck at their particular establishment. (IBIS World Industry Report) As a result, competition has intensified, with coffee and snack shop chains focusing on taking market share from each other rather than trying to win a larger share of a growing market, as was the case in years past. Consumers are becoming increasingly health-conscious, and retailers have responded by expanding the number of healthy and low-calorie options on their menus. For many...
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