Dunkin Donuts faces a very competitive environment within the coffee and snack industry. A major threat is other large competitors, including Starbucks Corporation, Peet’s Coffee, and newer entrants like McDonald’s McCafe, with the most significant threat coming from Starbucks. While Dunkin Donuts, as of April 2011, owns 16.1% of the market, Starbucks has 32.6% of market sharexxiii. Although larger competitors and chains pose a bigger threat in terms of total profit loss, local cafés are definitely worth mentioning. A small café may be able to steal customers within a given area through cheap local advertising and word of mouth. These small stores may also be able to control quality more efficiently and have more agility in providing a product suited to local markets.
Within the coffee and snack industry, rivals will be able to compete on product quality, service quality, and pricing. Product quality may vary based on the type of beans purchased, the best method of preparing coffee and food products, and the presentation of those products. While a company like Starbucks can more easily standardize processes and product quality, because of Dunkin Donuts’ choice to
franchise heavily, they may face a more difficult time presenting a standardized, quality product. This may be due to less adequate training practices or execution of training procedures across stores. Another method in which Starbucks or other rivals may compete on quality is through service and atmosphere. While Dunkin Donuts has historically provided a quick stop purchase experience, Starbucks provides an atmosphere in which customers are meant to feel comfortable enough to stay and relax or do work. This could lead to a more pleasant customer experience as well as repeat purchases within every visit by a customer, but may also contribute to higher costs and be outside of Dunkin Donuts’ strategy. The higher costs incurred...
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