Dunkin’s Run: A Love Story
Since opening the doors of its original shop 60 years ago, Dunkin’ Donuts has grown into an international juggernaut. Here’s why Bostonians don’t hold that against it.
IN 1963, AFTER MORE THAN A DECADE running Dunkin’, Bill Rosenberg turned over day-to-day management of the chain — which now featured 100 or so stores across New England — to his son Bob, who had just graduated from Harvard Business School.
McCarthy: Bill had just an eighth-grade education. He knew he wasn’t the man to take the company to the next stage.
Bob Rosenberg: I graduated on May 23, and on July 15 I became the CEO and president of Dunkin’. I was 25 years old. It was kind of a frightening prospect.
Ann Rosenberg: When Bob first came in, Bill said something to him about the quality of the coffee in the office. Bobby said, “Well, I don’t drink coffee.” Bill said, “You damn well better drink it, or you’re gonna get it in an enema.”
Bob Rosenberg: The first five years, it was a pretty good run. We went public in 1968. We were the third food-service company to go public, after McDonald’s and Kentucky Fried Chicken. We were the darling of Wall Street. And then I made some bad mistakes.
DUNKIN’ BEGAN LOSING MONEY after aggressively expanding beyond its New England roots. The stock plummeted as the chain was forced to close roughly 100 stores. In 1972 a group of Philadelphia franchisees filed suit against the parent company, alleging that the financial terms of their contracts were unfair. There was talk of Dunkin’ being seized by its irate franchisees, or even going under. But the runaway success of a bite-size new product helped save the day.
Kam Kamerschen, former marketing VP, Dunkin’: The franchisees felt the company was more interested in selling new locations than in building up the ones they already had. That created great mistrust and anger and led to the suit.
McCarthy: If they prevailed, it would destroy the company.
Kamerschen: There was a lot of fear. Think about it: The class-action suit was seeking four times the net worth of the company.
Rosenberg: I was in a meeting in my office when we got word of the lawsuit. I excused myself and was sick.
Kamerschen: For Bob the first couple of years, everything was wonderful. Then one day he wakes up and the stock price is $2.50.
Rosenberg: You could buy a share of stock for the same price as a dozen doughnuts. I opened too many stores; I grew too fast.
Schwarz, former president, Dunkin’: Rather than focusing in New England and the Mid-Atlantic, we went out West, we went into the Southeast. Texas was a disaster.
Rosenberg: The board decided I should resign. I said, “Give me one more quarter. I think we can right the ship.”
Kamerschen: We had to do something fast.
Rosenberg: We had always sold doughnut holes, but only at Halloween. The franchisee in Hartford, Connecticut — Bob Demery — called me one day. He had been experimenting.
Demery: It wasn’t me; it was my wife, Edna.