Group 15- Dunkin' Brands
Transcript of Group 15- Dunkin' Brands
Dunkin’ BrandsCompany Valuation
Jigar Bhakta, Alexander Bye, Victoria Kalamaras, Amanda Ladenheim, William Tamposi, David Sher
Dunkin’ Brands is fairly valued; the firm is positioned for low, steady growth and should be valued at $45.16 per share
2
Adaptable Core Business
Low Risk Franchise Model
Stable Revenue Growth
Currently Fairly Valued
● Room for expansion with limited capital investment● Collects revenue royalty, advertising contributions, and licensing
fees from franchisees and partners
● Demonstrated flexibility in their approach to attract and maintain consumers in unique segment of the market
● Implementation of technology to expand on the scope of interactions with consumers
● More than 19,000 points of distribution globally● Three consecutive years of over 5% growth in stores● Increased expansion into international markets
● The firm is valued at $6.25B, implying a target share price of $45.16
Franchise Model
Adaptability Growth Valuation
Dunkin’ Brands is fairly valued; the firm is positioned for low, steady growth and should be valued at $45.16 per share
3Franchise Model
Adaptability Growth Valuation
Adaptable Core Business
Low Risk Franchise Model
Stable Revenue Growth
Currently Fairly Valued
● Room for expansion with limited capital investment● Collects revenue royalty, advertising contributions, and licensing
fees from franchisees and partners
● Demonstrated flexibility in their approach to attract and maintain consumers in unique segment of the market
● Implementation of technology to expand on the scope of interactions with consumers
● More than 19,000 points of distribution globally● Three consecutive years of over 5% growth in stores● Increased expansion into international markets
● The firm is valued at $6.25B, implying a target share price of $45.16
Dunkin’ Brands reduces costs and risks by spreading responsibilities
4Franchise Model Adaptability Growth Valuation
Source: DNKN Website
Sales royalties comprise of 63% of the annual revenue for Dunkin’ Brands
5Franchise Model Adaptability Growth Valuation
Source: DNKN 2015 10-K
Dunkin’ Brands is structured into four segments
6Franchise Model Adaptability Growth Valuation
75%
13%
6%
6%
Dunkin’ Brands is fairly valued; the firm is positioned for low, steady growth and should be valued at $45.16 per share
7Franchise Model
Adaptability Growth Valuation
Adaptable Core Business
Low Risk Franchise Model
Stable Revenue Growth
Currently Fairly Valued
● Room for expansion with limited capital investment● Collects revenue royalty, advertising contributions, and licensing
fees from franchisees and partners
● Demonstrated flexibility in their approach to attract and maintain consumers in unique segment of the market
● Implementation of technology to expand on the scope of interactions with consumers
● More than 19,000 points of distribution globally● Three consecutive years of over 5% growth in stores● Increased expansion into international markets
● The firm is valued at $6.25B, implying a target share price of $45.16
Dunkin’ Brands occupy a unique market segment
8Franchise Model
Adaptability Growth Valuation
High PriceLow Price
High Quality
Low Quality Source: fastfoodmenuprices.com
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Dunkin’ is utilizing strategic promotions and advertising to declining same store sales growth
9Franchise Model
Adaptability Growth Valuation
Promotions and Advertising DD Perks® Rewards
Source: Brand Promotions
Dunkin’ seeks to maximize sales revenue by responding to consumer trends and competition
10Franchise Model
Adaptability Growth Valuation
Introducing healthy options
Increasing variety of popular products
All day menu items
Source: dunkindonuts.ccm
67% of Dunkin’ Donuts sales come from coffee
Introduced espresso-based beverages and cold brewed coffee
Increasingly health conscious consumers
DD Smart® labels on menus
Capitalizing on popularity of breakfast items
Directly responding to competition from McDonald’s
Dunkin’ introduces new products to reach other consumer segments and expand market share
11Franchise Model
Adaptability Growth Valuation
● More than 150 million sold between May and December of 2015
● 360 million more cups of coffee sold following K-cup launch
Home
80%
70%
60%
50%
40%
30%
20%
10%
0%Work Eating Place Traveling Other
Coffee Consumption in the U.S. By Location In 2016
Source: statista.com
Source: dunkindonuts.com
Dunkin’ Brands is fairly valued; the firm is positioned for low, steady growth and should be valued at $45.16 per share
12Franchise Model
Adaptability Growth Valuation
Adaptable Core Business
Low Risk Franchise Model
Stable Revenue Growth
Currently Fairly Valued
● Room for expansion with limited capital investment● Collects revenue royalty, advertising contributions, and licensing
fees from franchisees and partners
● Demonstrated flexibility in their approach to attract and maintain consumers in unique segment of the market
● Implementation of technology to expand on the scope of interactions with consumers
● More than 19,000 points of distribution globally● Three consecutive years of over 5% growth in stores● Increased expansion into international markets
● The firm is valued at $6.25B, implying a target share price of $45.16
GROW DD U.S. same store sales and profitability
Revenue growth is primarily driven by same store sales growth and store expansion
13Franchise Model
Adaptability Growth Valuation
ACCELERATE DD U.S. store expansion
DRIVE international growth across both brands
SHORT-TERM GROWTH DRIVER
MEDIUM-TERM GROWTH DRIVER
LONG-TERM GROWTH DRIVER Source: MarketRealist
GROW same store sales growth of BR U.S.
Declining Dunkin’ Donuts U.S. same-store sales growth pose a risk to future growth
14Franchise Model
Adaptability Growth Valuation
2011 2012 2013 2014 2015 2016 (E)
DD U.S. Same Store Sales Growth
5.1%
4.2%
3.4%
1.7%1.4%
2.0%
Source: Annual Reports
15Franchise Model
Adaptability Growth Valuation
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Number of Dunkin’ Donuts Stores Worldwide
U.S. International
2007 2008 2009 2010 2011 2012 2013 2014 2015
These risks are mitigated by stable growth in domestic Dunkin’ Donuts stores
Source: Dunkin’ Donuts Annual Reports
Dunkin’ Brands is aggressively expanding into international markets
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Adaptability Growth Valuation
● Dunkin’ signs largest development agreement in company history in China
● European Expansion: first restaurant openings in Denmark, Georgia, Iceland, and Poland
● Master franchise agreement in South Africa
Source: Market Realist
Dunkin’ is expected to experience Revenue growth of 5.5% through 2020
17Franchise Model
Adaptability Growth Valuation
Source: 10-K & Projections
Revenue CAGR=5.5%
Dunkin’ Brands is fairly valued; the firm is positioned for low, steady growth and should be valued at $45.16 per share
18Franchise Model
Adaptability Growth Valuation
Adaptable Core Business
Low Risk Franchise Model
Stable Revenue Growth
Currently Fairly Valued
● Room for expansion with limited capital investment● Collects revenue royalty, advertising contributions, and licensing
fees from franchisees and partners
● Demonstrated flexibility in their approach to attract and maintain consumers in unique segment of the market
● Implementation of technology to expand on the scope of interactions with consumers
● More than 19,000 points of distribution globally● Three consecutive years of over 5% growth in stores● Increased expansion into international markets
● The firm is valued at $6.25B, implying a target share price of $45.16
The firm value is ~$6.25B, suggesting an appropriate price per share of $45.16
19Franchise Model
Adaptability Growth Valuation
Cost growth matches revenue growth, bringing DNKN gradual increases in net income
20Franchise Model
Adaptability Growth Valuation
WACC: 3.22%Terminal Growth Rate: 2.25% Beta: 0.46
Current Market Value:$4.09B
Estimated Market Value:$6.25B
Current Share Price:$44.61
Estimated Share Price:$45.16
Dunkin’ Brands is fairly valued; the firm is positioned for low, steady growth and should be valued at $45.16 per share
21Franchise Model
Adaptability Growth Valuation
Adaptable Core Business
Low Risk Franchise Model
Stable Revenue Growth
Currently Fairly Valued
● Room for expansion with limited capital investment● Collects revenue royalty, advertising contributions, and licensing
fees from franchisees and partners
● Demonstrated flexibility in their approach to attract and maintain consumers in unique segment of the market
● Implementation of technology to expand on the scope of interactions with consumers
● More than 19,000 points of distribution globally● Three consecutive years of over 5% growth in stores● Increased expansion into international markets
● The firm is valued at $6.25B, implying a target share price of $45.16
22Appendix
Appendix23. Historical Share Prices24. Key Financial Ratios25. Base Case DCF26. Bull Case DCF27. Bear Case DCF28. Beta Calculation29. WACC30. Sensitivity to Terminal Growth Rate31. Sensitivity to Beta32. Sensitivity to Return on Debt33. Revenue34. Cost of Goods Sold35. Selling, General & Administrative36. Other37. Franchise Logistics39. Five Part Plan40. Advertising42. Research & Development43. Supply Chain46. Debt Financing49. Advisory Boards
50. Industry at a Glance51. Market Share52. Industry Revenue53. Industry Life Cycle54. Industry Sales by Product55. Sector Costs vs. Industry Costs56. Labor Intensity vs. Capital Intensity57. Consumer Economic Demographics58. Smartphones vs. Consumerism60. Technology Trends61. Consumer Loyalty63. Mobile Payments64. Location-Based Marketing65. Mobile Ordering66. Brand Entertainment & Engagement67. Consumer-QSR Characteristics & Offerings68. QSR Menu Categories69. Size of Operations
70. Additional Risks72. Commodity Volatility74. Japan Joint Venture75. South Korea Joint Venture76. Other Joint Ventures77. Leadership and Management79. Dunkin’ Donuts Products80. Baskin Robbins Products81. Mobile Apps and Functions83. DD Perks84. DD Smart85. Dunkin’ Donuts SWOT86. Baskin Robbins SWOT87. Starbucks SWOT88. McDonald’s SWOT89. Carvel SWOT90. Coffee and Tea Industry Breakdown91. Ice Cream and Gelato Industry Breakdown92. Perceptual Map Prices93. Additional Promotions94. Social Media95. Espresso-Based Beverages
Historical Share Prices
23Appendix
Current: $44.61 High: $55.48 Low: $24.58 IPO Date: 07/27/2011
Source: Google Finance
Key Financial Ratios
24Appendix
P/E PEG P/SLeveraged
Ratio ROACurrent
RatioTurnover
Ratio D/E
DNKN 35.19 1.57 4.96 5.20 to 1 3.33% 1.33 0.26 4.91
Comparables 23.70 1.44 1.30 3.65 to 1 16.01% 1.07 0.77 58.80
Source: Yahoo! Finance
Base Case Discounted Cash Flow
25Appendix
Current Share Price as of Market Close,
07/07/2016
Bull Case Discounted Cash Flow
26Appendix
Current Share Price as of Market Close,
07/07/2016
Bear Case Discounted Cash Flow
27Appendix
Current Share Price as of Market Close,
07/07/2016
Beta Calculation
28Appendix
WACC Calculations
29Appendix
Sensitivity to Terminal Growth Rate
30Appendix
Sensitivity to Beta
31Appendix
Sensitivity to Return on Debt
32Appendix
Revenue
33Appendix
● The two important drivers of revenues are (1) same store sales growth and (2) store growth○ (1) Same store sales growth has been declining and were negative for the first time in Q4
2015 which is worrisome for Dunkin’ prospects○ (2) Over 19,000 points of distribution and steadily growing at over 5% in each of the last 3
years● Dunkin’ generates revenue from five primary sources: (1) royalty income and franchise fees, (2)
rental income from restaurant properties that are leased or subleased to franchisees, (3) sales of ice cream and other products to franchisees in certain international markets, (4) retail store revenue at company-operated restaurants, (5) other income
● Breakdown of 2015 revenue: Total- $810,933○ Franchise Fees and Royalty Income- $513,222○ Rental Income- $100,422○ Sales of Ice Cream and other products- $115,252○ Sales at company-operated restaurants- $28,340
Cost of Goods Sold
34Appendix
● Cost of ice cream and other products (pg 38): ○ $76,877 (2015), decreases 7.5% ○ $83,129 (2014), increases 4.9%○ $79,278 (2013)
● Net margin on ice cream products increased for FY2015 to $38.4M due to a decrease in commodity costs, increase in pricing, and favorable foreign exchange rates (these factors more than offset the decrease in sales volumes)
● Net margin on ice cream products increased slightly for FY 2014 to $34.4M due to favorable Australia inventory write-offs, an increase in sales volume, offset by an increase in commodity costs
Selling, General & Administrative Expenses
35Appendix
● Personnel costs always increasing (but not at a rate faster than revenue)● Incentive-based compensation● “Increase in costs incurred to support our consumer packaged goods”
○ K-Cup Pods. New to the market, costs of packaging● Gift card business● Third party product volume guarantee● Legal/litigation issues, recorded in SGA
○ Bertico and other legal issues on the horizon.○ Business in Canada. Not enough monetary aid.
Other Expenses
36Appendix
● The annual reports classifies operating costs and expenses into 7 categories. Their total operating costs and expenses (for example 2015: 451,051) minus the first four categories (-54,611, -76,877, -29,900, -243, 796) leaves us with our analysis numbers (approx 31,000). The last three categories: Depreciation, Amortization of other intangible assets, and long-lived asset impairments charges, therefore make up other operating costs.
● Nearly 100% franchised ● 20 year agreement, often renewable● $25,000-$100,000 agreement● Approximately 5.9% royalties, plus 5% of gross sales go to advertising● Franchises fund most of new restaurant development
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Franchise Logistics
● Site must be approved (location, traffic patterns), meet training requirements (in-house training for franchise managers)
● Abroad, the franchise agreements cover a geographic area● Evaluate franchisees based on experience, financial background
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Franchise Logistics, continued
Five-Part Plan
39Appendix
● Focus on Coffee leadership, espresso based drinks● Improving innovation process to successfully, quickly bring new
products to market● Targeted value and smart pricing, including promotions● Mobile ordering and delivery tests● Improve traditional service
Advertising Logistics
40Appendix
● 5% of gross sales committed to advertising fund● Contributions almost exclusively from franchisees, but fund is
controlled by Dunkin’● “Includes all expenses related to marketing, research and
development, innovation, advertising and promotion, including market research, production, advertising costs, public relations, and sales promotions” (2015 annual report, page 4)
● Less than 20% of fund is used for administrative costs
Advertising Logistics, continued
41Appendix
● Local advertising sponsored by franchisees must be approved by Dunkin’, and is occasionally reimbursed
● Goals: Brand differentiation, increase sales● DD Perks Rewards program-4.3 million members● Popular Dunkin’ Mobile App makes it easy to order on the
go, caters to Dunkin’s quick-service model
Research and Development
42Appendix
● Included in advertising budget● Lab located in Canton, MA● Includes sensory lab, test kitchen, quality assurance lab● Projects driven by consumer research, led by culinary team
Supply Chain Structure
43Appendix
Supply Chain Structure, continued
44Appendix
● Dunkin’ Brands does not supply goods to franchisees, with the exception of domestic ice cream via a contract with Dean Foods
● Principal suppliers include The Coca-Cola Company, New England Tea and Coffee Co., S&D Coffee, Inc., Silver Pail Dairy, LTD, Continental Mills, and Pennant Ingredients Inc.
● Dunkin’ Brands monitors and approves suppliers for franchises● 12 suppliers provide approximately half of Dunkin’s goods● Contingency plans help Dunkin’ mitigate this risk
Supply Chain Structure, continued
45Appendix
● CMLs are franchise-owned production centers of baked goods
● Dunkin’ has a long term agreement with the NDCP is a franchise-owned distribution center
● NDCP maintains contingency plans with its approved suppliers
● Some franchises bake donuts on site
Debt Financing
46Appendix
● Class A-2-I 1/26/2015: 7.5 million principal/month. 3.262% interest. 750 million total. Due 2/2019
● Class A-2-II 1/26/2015: 17.5 million principal/month. 3.980% interest. 1.75 Billion Due 2/2022
● No principal amortization due if leverage ratio is above 5:1. Rapid amortization if loans not paid by anticipated due dates
● Variable fund notes:repaid on or prior to 2/2020. Libor plus 2.25%, 26.3 million of letters of credit outstanding against variable fund notes
Debt Financing, continued
47Appendix
Year Class A-2-I Class A-2-II Total
2016 7,500 17,500 25,000
2017 7,500 17,500 25,000
2018 7,500 17,500 25,000
2019 721,875 17,500 739,375
2020 X 17,500 17,500
Source: DNKN 2015 10-K
Debt Financing, continued
48Appendix
● Average cost of debt 3.67%● If DNKN issues new debt when interest rates are higher, its debt
payments will increase● Debt payments divert cashflows, and higher debt increases WACC,
which lowers value● If there are not enough cashflows to pay debts, the firm will have to
refinance indebtedness, sell assets, or delay capital expenditures● Presents a risk of default, which would result in seizure of the
company’s resources
Advisory Boards
49Appendix
● Advisory boards allow franchise managers to relay information, problems, and concerns to corporate
● These boards communicate and maintain relationships with franchises
● District, regional and national level● Limits legal issues down the road by working with managers (avoid
another Bertico situation)
Coffee Industry at a Glance
50Appendix
Source: IBISWorld.com
DNKN’s Market Share
51Appendix
Source: IBISWorld.com
Projected Industry Revenues
52Appendix
Source: IBISWorld.com
Industry Life-Cycle Stage
53Appendix
Source: IBISWorld.com
Industry Sales by Product
54Appendix
Source: IBISWorld.com
Sector Costs vs. Industry Costs
55Appendix
Source: IBISWorld.com
56Appendix
Source: IBISWorld.com
Labor Intensity vs. Capital Intensity in the Industry
Economic Demographics of Consumer Base
57Appendix
Source: IBISWorld.com
Relationship between Smartphones and Consumerism
58Appendix
Source: QSRweb Report
Consumer Reliance on Smartphones in the Food Industry
59Appendix
Source: QSRweb Report
Technology Trends in the Corporate Sphere
60Appendix
Source: QSRweb Report
Dunkin’ Donuts earns very high marks in Customer Loyalty
61Appendix
Source: Brand Keys
Cost of Expanding Consumer base vs. Cost of Loyalty
62Appendix
Source: QSRweb Report
Mobile Platform Payment Revenues
63Appendix
Source: QSRweb Report
Marketing Focused around Consumer Location
64Appendix
Source: QSRweb Report
Ordering Options in Mobile Applications
65Appendix
Source: QSRweb Report
Brand Entertainment and Engagement
66Appendix
Source: QSRweb Report
Consumer-QSR Characteristics and Offerings
67Appendix
Source: FastCasual.com Report
Menu Categories for QSR Franchises
68Appendix
Source: FastCasual.com Report
Size of Total Franchise Operations
69Appendix
Source: FastCasual.com Report
Additional Risks
70Appendix
● Competition in QSR industry● Sub-franchisees● Changes in technology or consumer behavior● Economic conditions● Intellectual property
Additional Risks, continued
71Appendix
● Technological failure-FAST and EFTPay systems● Supply chain● International: political, social, legal, economic● General legal risk: Bertico
Milk Fluctuations
72Appendix
Source: NASDAQ
Coffee Fluctuations
73Appendix
Source: NASDAQ
14 year amortizable franchise rights (and related tax liabilities), and nonamortizable goodwill
Limited trading volume
Lack of market reaction to underperforming stock
Inability to recover the carrying amount
74Appendix
Japan Joint Venture (with B-R 31 Ice Cream Co., Ltd.)
● DNKN owns 43.3% of the Venture, Partner owns 43.3%, and Japanese shareholders hold 13.4%
● Acquired by three PE firms on 03/01/2006. Known as the BCT Acquisition● As a result, B-R 31 recorded a step-up in basis
● In Q4 2014, annual impairment test on indefinite-lived intangible assets found that carrying value exceeded fair value by $54.3M, to a new carrying value of $8.7M
South Korea Joint Venture (with BR-Korea Co., Ltd.)
75Appendix
Due to a deficit of cost relative to the underlying equity in net assets of BR-Korea
Accounted as an impairment of long-lived assets in 2011, and carries amortization through 2016:
2012: $710,000
2013: $634,000
2014: $553,000
2015: $467,000
2016: $375,000
● DNKN owns 33.3% and Korean shareholders own 66.7% of the Venture
● In 2011, BR-Korea was handed down a $19.8M impairment charge to equity method investments, reducing carrying value to $60.8M
Other Ventures
76Appendix
DNKN owns 33.3%, Coffee Alliance owns 33.3%, and shareholders own 33.3%
Very stable, incurred impairment charge of $873,000 in 2013, bringing carrying value down to $1.36M
DNKN sold 80.0% of its franchising business to equity investors in 2013, producing a gain of $6.3M
Currently retains 20.0% ownership in the Joint Venture, carrying value of $216,000
Very stable, low growth venture
● Spain (with Coffee Alliance, S.L.)
● Australia (with Palm Oasis Pty. Ltd.)
Leadership
77Appendix
● Nigel Travis,CEO, Chairman of the Board● CEO since 2009, Chairman of the Board since 2013● From 2005-2008, CEO of Papa Johns● Bachelor’s Degree in Business Administration from
Middlesex University in England● Srinivas Kumar, President● Has held various roles within Dunkin’, including Vice
President International, Interim COO, and Vice President of Europe and the Middle East
● He previously worked for the master licensee for Baskin Robbins
Leadership, continued
78Appendix
● John H. Costello● President of Dunkin’ Brands from 2009 to 2016● Innovative multichannel marketing● 2013 store redesign included new furniture and lighting● Expanded product line, followed consumer preferences
Complete List of Dunkin’ Donuts Products
79Appendix
● Espresso based drinks (hot and iced)○ Lattes○ Cappuccinos○ Macchiatos○ Espresso
● Drip coffee (hot or iced)● Cold brew coffee● Tea (hot or iced)
○ Regular tea○ Green tea○ Sweet tea
● Hot chocolate○ Mint○ Caramel○ S’mores
● Coolatas○ Various coffee and fruit-based flavors
● Breakfast sandwiches● Bakery sandwiches (Tuna salad;Chicken
salad; Chicken wrap; Steak wrap; Ham & cheese; Chicken bacon; Texas toast grilled cheese; Turkey, cheddar, bacon
● Bagels● Cookies● Danishes● Donuts● Muffins● Munchkins● Hashbrowns● Other bakery favorites (apple fritter, biscuit,
brownie, coffee cake, english muffin, croissant, pretzel twist
● Oatmeal
80
Complete List of Baskin Robbins Products
80Appendix
● Soft serve ice cream● Hard ice cream● Cones
○ Cake○ Sugar○ waffle
● Sundaes○ Brownie sundae○ Warm cookie sundae○ Banana split○ Chocolate-chip cookie dough, Snickers, Oreo and Reese’s Peanut
Butter Cup sundaes● Warm desserts
○ Warm brownie○ Warm cookie
● Beverages○ Milkshakes○ Cappuccino Blasts○ Fruit smoothies○ Floats
● Parfaits○ Caramel○ M&M’s○ Snickers○ Oreo○ Reese’s ○ Strawberry and Almonds
● Mix-ins○ M&M’s○ Butterfinger○ Snickers○ Oreo○ Reese’s ○ Heath○ Chocolate chip cookie dough
● Novelties and treats○ Individual treats○ Clown cones
● Pre packaged quarts● Fresh packed quarts● Cakes● Polar pizza
Mobile App and Functions
81Appendix
Source: DD Mobile App
Scan and payAccess DD PerksFind Store LocationsMenuOnline Ordering
(encouraged by giving double the points)
82
Mobile App and Functions, continued
82Appendix
Source: DD Mobile App
DD Perks® Rewards
83Appendix
Source: Promotions
8484Appendix
DD Smart
Foods and Beverages with the DDSMART® logo are:Reduced in calories, fat, saturated fat, sugar or sodium by at least 25% compared to a base
product or other appropriate reference product and/or
Contain an ingredient or nutrient that is nutritionally beneficial.
Source: DNKN Website
Dunkin’ Donuts SWOT
85Appendix
Strengths● Price/Quality value customers trust● Internationally recognized and
trusted● Innovative and responsive to
consumer and market trends
Weaknesses● Franchising model leaves gives up a
small portion of control over operating units
● Consumer preferences towards healthier food/snack product
Opportunities● Growing breakfast/snack
compliments for coffee● {Something about BR}
Threats● Variety of coffee substitutes and
competitors (smaller cafes)● Higher input costs (milk rising)
Baskin Robbins SWOT
86Appendix
Strengths● Extensive flavor varieties
Weaknesses● Lack of healthy alternatives ● Comparably small number of
locations
Opportunities Threats● Frozen Yogurt popularity● High degree of competition
Starbucks SWOT
87Appendix
Strengths Weaknesses
Opportunities● Tapping into healthier beverage and
food preferences
Threats● Increasing competition● Fluctuation in supply costs
McDonalds SWOT
88Appendix
Strengths● Internationally established brand● Low prices ● Number of locations
Weaknesses● High fat and sodium content● Consumer trends toward healthier
and lower calorie foods diverges from core offerings
Opportunities● Growing coffee market segment with
McCafé ● Increasing international presence
Threats● Large variety of consumer choices
and alternatives to products● Increasing minimum wages
Carvel SWOT
89Appendix
Strengths Weaknesses
Opportunities Threats
Coffee and Tea Industry Breakdown
90Appendix
Ice Cream and Gelato Industry Breakdown
91Appendix
Perceptual Map Prices
92Appendix
Store Price of Small Coffee Price of Small Icecream Price of Glazed Donut
Dunkin’ Donuts 1.99 0.99
Baskin Robbins 2.79
Starbucks 1.85
McDonald’s 1.00
Dairy Queen 1.99
Coldstone 5.00
Carvel 3.48
Krispy Kreme 1.57 0.66
Tim Hortons 1.59 0.99
Additional promotions
93Appendix
31 Promotion: $1.31 cone every 31st of the month highlighting their 31 flavors
Pink Day promotion where you can purchase two cones for the price of one on specialized day
9494
22.3 Mlikes
1.2 Mfollowers
1 Mfollowers
4.3 Mmembers
Facebook DD AppTwitterInstagram
Source: DNKN Newsletters
Appendix
Social Media
Espresso-Based Beverages
95Appendix
Source: dunkindonuts.com