A Holdout, Dunkin' Will Now Sell Single-Serve Coffee in Supermarkets
Dunkin'-branded K-cups will now be sold in grocery stores and online.
Dunkin’ Brands reversed itself today and announced it will sell Dunkin’ K-cups, the plastic pods used for single-serve coffee, in grocery stores and online. The franchisor had limited such sales, begun in 2011, to its restaurants for fear of cannibalizing store sales.
Nigel Travis, CEO, said 15 months of research, including an independent study commissioned by franchisees, made a convincing case for the change.
K-cup sales “grew tremendously over the period ’12, ’13, ‘14. We realized more and more people were buying more of their K-cups in grocery stores, and other brands were there” but Dunkin’ was not, Travis said.
“We also realized by our studies, they may be learning the taste profiles of other brands. That didn’t make sense,” he added
And finally, Dunkin’ is an East Coast brand, with only 280 stores west of the Mississippi, “so this was an opportunity to allow people to try Dunkin’ coffee. And if they had the chance to taste our coffee, they might come back to the store.”
Dunkin’ has inked a profit-sharing agreement with franchisees, in which net profits will be shared 50-50 between the franchisor and the operators. “We’re in this all together. We’re acting totally as one,” he says.
He’s sharing modest projections with franchisees so far, forecasting $2,500 to $3,000 added profit per store per year, for each of the first five years of the 20-year program. There’s still much uncertainty around the numbers, he adds, because it’s a new venture and online sales, in particular, are hard to predict.
Travis reported poor results for its K-cup sales in the fourth quarter, when they were limited to in-store only, down by more than 10 percent, while at the same time K-cup sales by Keurig Green Mountain, the original maker of K-cups that put the ‘k’ into the name, rose 13 percent in 2014.