Crucial

The rivalry between Starbucks Corporation and Dunkin’ Brands Group Incorporated has been brewing throughout the years. In the United States, both companies are the largest restaurant chains that specialize in coffee. Although they share similar menus and overall strategies, key differences can be found in their store ownership, branding, and business models. With a coffee cup featured in their company’s logo, Dunkin’ Donuts is primarily identified as a coffee seller that also offers donuts and food. In 2014 Dunkin’ Donuts introduced steak to its menu and included other food options outside of their breakfast menu such as heartier food items and several sandwiches. Dunkin’ Donuts interiors resemble fast food stores and target customers who are on the go. On the other hand, Starbucks provides a more comforting environment for customers to relax, socialize with friends, or to enjoy the free wireless internet access. Their logo exhibits a green siren that lures people to high-quality coffees/beverages, fresh food items, and offers customers the ability to customize their drink orders. The premium experience does come with a higher cost compared to the competitive pricing provided by Dunkin’ Donuts. In 2009, the retail coffee and snacks store industry suffered a major slowdown due to the economic crisis. “Due to the economic slump, consumers spent less on luxuries like eating out, choosing to purchase low-price item instead of high-priced coffee drinks due to shrinking budgets.”() The average growth rate per year for this industry from 2008 to 2013 was 0.9%. The economy improved throughout the years and both retailers expanded their menu offerings and increased consumer confidence.

Originally, Starbucks was a provider of coffee to fine restaurants and espresso bars but all that changed with on trip to Milan. In 1985 one of the founders, Howard Schultz adopted the style of Italian espresso bars into the culture found in Seattle. Their coffee supplier from California could not keep up with their demand so a year later they had no choice but to brew their own coffee. With rising popularity and increase in revenues, more stores were opened and new items became available like the Frappuccino. In 1948 on the opposite side of the country, Bill Rosenberg opened up a donut restaurant ‘Open Kettle’, which later became known as Dunkin’ donuts, in Massachusetts. Seven years, Rosenberg signed a franchise agreement and more restaurants are open. The world’s largest chain of ice cream specialty shops joined forces with Dunkin’ Donuts in 2006 and are known as Dunkin’ Brands, Inc. These two companies are dominating the ice cream, baked goods and coffee field.

Most of the success from Starbucks and Dunkin’ Brands is their customer service, ability to adapt to new technology, and providing benefits for their employees. With the introduction of Apple Pay, it provided customers an easy and secure way to complete a transaction. This process made it faster by accepting traditional debit and credit cards, and other methods of payment. Starbucks and Dunkin’ Brands both accept apple pay and have their own application available on iPhone and Android. In recent years, both companies have targeted a younger audience. Starbucks has created unique drinks like the Unicorn Frappuccino and Zombie Frappuccino to appeal to Millennials and Generation Z. These drinks quickly sellout and create a large stir on social media with kids of all ages uploading images of these limited time offered beverages. Dunkin’ Donuts tried a similar approach by adding donut fries on the menu and giving away the item for free on National Donut Day. In June 2014, Starbucks partnered with Arizona State University and launched the Starbucks Achievement Plan, which provides U.S. employees the opportunity to earn a bachelor’s degree with full tuition coverage through graduation from ASU’s online degree program. A college education is crucial in today’s world and Starbucks is creating a pathway for young people. Both companies provide health coverage, retirement plans, and paid time off. Loyal employees are an important asset for companies to invest in to continue to see a company thrive.

Starbucks was founded in 1971, which is about 20 years after Dunkin’ Donuts, but it managed to become a larger company and generate more revenue. In fiscal year 2017, Starbucks made greater than $22 billion in revenue whereas Dunkin’ Brands reported more than $860 million. Both companies had changes in leadership in mid-2018. Howard Schultz served as CEO and chairman of Starbucks for four decades. Under his leadership Starbucks expanded from eleven stores to more than 28,000 stores in 77 countries. “The company’s growth was fueled by his decisions to provide uncommon benefits for those who work for Starbucks, including comprehensive healthcare, stock ownership and free college tuition, even for those working part-time.”() Since January 2009, Dunkin’ Brands was under the leadership of Nigel Travis, who delivered strong financial results and allowed almost 2.7 billion to shareholders. “Over the past ten years, he has guided the Company through one of its most dramatic growth periods, which included entry into 25 new international markets and the addition of almost 6,000 net new restaurants globally, including more than 2,800 net new Dunkin’ Donuts restaurants in the U.S.” () Several key initiatives were launched under Mr. Travis’ direction including ready-to-drink bottled iced coffees and Dunkin’ Cups. A mobile application that started a loyalty program, mobile ordering and home delivery programs was pioneered across the globe. Starbucks recently made headlines with their decision to become straw-free by 2020. Plastic has caused a negative environmental impact and most companies are pushing to go green. They have introduced sippy cup lids to help eliminate the billion straws used each year. Starbucks is not the only one becoming more environmentally friendly, Dunkin’ Donuts will phase out polystyrene foam cups by 2020. Both companies plan to improve their packaging while making it better for the planet and meeting the needs of consumers.