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.
SPURRED BY THE SUCCESS of the Coolatta — and coffee’s high profit margins — Dunkin’ set about completely reinventing itself: Instead of a doughnut shop, it would become a coffee shop that happened to sell doughnuts. That transformation forced a certain iconic baker into retirement in 1997.
Bacheller: Coffee as a percentage of the business kept growing, year after year after year.
Stan Frankenthaler, executive chef, Dunkin’: We launched espresso very quickly. Cappuccinos and lattes became really important at coffee shops, so we said, “Let’s get into it sooner rather than later.”
Shafer: Sixty to seventy-five percent of sales are coffee-driven. It’s an easier and more profitable business to manage.
Binder: For Dunkin’ Donuts, the money is in the coffee. It’s mostly water. The labor to make it is very small. The most expensive item is the cup.
Shafer: We got serious about moving from doughnuts to coffee — Fred the Baker had served us well in the past, but he was a baker.
Berger: We got the advertising assignment to figure out if Fred should be retired. You couldn’t have Fred say, “Time to make the coffee.” It just didn’t work.
Kussell: It’s really hard to overstate how important he was to building the brand as unpretentious, hard-working, and fun. Retiring him was one of the most difficult decisions I’ve ever had to make.
Binder: Michael Vale and I finished a commercial shoot in New York City. We sat at a restaurant for dinner, and I talked to him about the whole thing. Obviously, he was very sad. He was Fred the Baker; Fred the Baker was him.
Vale: It wasn’t a happy thing, I’ll tell you. We weren’t happy. But they gave him such a great sendoff.
Binder: We had a parade and a huge event in Copley Square. Fred announced that it was no longer time for him to make the doughnuts, but he would bake one last time, and it would be free coffee and doughnuts all day in all the shops.
IN 2006 A GROUP OF PRIVATE equity companies — including two from Boston, Bain Capital and Thomas H. Lee Partners — bought Dunkin’ for $2.43 billion (a seven-fold return on Allied’s initial $325 million investment). The owners may have been local again, but they made a few initial missteps that alienated some franchisees, including selling coffee beans in supermarkets, a move store owners felt cut into their profits (a new chief executive was eventually brought in, and he helped smooth things over). In the meantime, the chain launched a new advertising campaign to once again take Dunkin’ national at the same time it was facing a threat on its home turf.
McCarthy: Franchisees were definitely concerned about Krispy Kreme coming to Massachusetts. A Krispy Kreme would open up and the place would be mobbed.
Coen: One of the things that Dunkin’ Donuts used to have was these boxes that would stack the doughnuts up on their sides. Well, Krispy Kreme laid them flat in a box, which was much more aesthetically appealing. So what did Dunkin’ Donuts do? They went to a flat box.