Dunkin's Gungho But Watch That Doppleganger

The New England doughnut chain is riding high on the popularity of its brew. Can it go coast to coast?

Who'd have thought a frumpy regional chain from outside Boston - best known for a somnambulistic TV spokesman mumbling "time to make the doughnuts" - could be sparking a frenzy in suburban Tennessee? Even more striking has been Dunkin's transformation from a musty doughnut house that sells coffee into a blue-collar-chic coffee retailer that happens to sell doughnuts. CEO Jon Luther admits that Dunkin' has considered removing "Donuts" from its name (he's mum on potential alternatives) now that sugary confections represent a mere 15 percent or so of its sales.

Caffeine is delivering a jolt to the company. Sales have surged more than 40 percent during Luther's nearly four years as CEO, and Dunkin' claims its coffee-drink market share is up from 15 percent to 18 percent. Meanwhile, the company has been expanding at top speed, opening 550 outlets in the past year. [via Fortune]

...While Dunkin Donuts fights to be national, Canada's Tim Horton knocks on the back door

In the meantime, TIm Horton's keeps coming from the north. Since the year it merged with Wendy's in '95, Horton's system-wide sales have "grown at a compound annual rate of 18.5 percent. Same-store sales, the lifeblood of any restaurant, have grown for 13 straight years in Canada at a 7 percent annual clip, which is roughly double the industry average."

"Tim Hortons' vibe is decidedly blue-collar, just like Dunkin's, and its menu also resembles Dunkin's, with coffee and donuts at its core. But Hortons also offers soups and sandwiches to generate lunchtime sales - a weak spot in Dunkin's business right now, as two-thirds of its $4 billion-plus in sales come before noon."

Another Fortune article asks, "Can the hottest Canadian export since Mike Myers woo Dunkin's loyal customers while also dealing with a U.S. restaurant industry slowdown? It won't be easy, but never underestimate our nation's appetite for fried dough and caffeine".

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Photo by Zerberus.