Dive Brief:
- Dunkin' is relaunching espresso across its U.S. stores, and has invested in "state-of-the-art" espresso equipment, new restaurant training and product packaging to offer its customers revamped hot and iced espresso drinks by the holiday season, according to a company release. The news comes about a month after the chain dropped "Donuts" from its branding in an effort to double down on its beverage strategy.
- The company is currently testing new lattes in Baltimore for $3.59 — 60 cents less than the equivalent 16-ounce drinks at Starbucks, according to The Wall Street Journal. "There's no reason to go to Starbucks anymore," Dunkin' marketing chief Tony Weisman told the Journal.
- Dunkin’ has invested $100 million into marketing and equipment this year to advance its new beverage-focused mission. Espresso drinks will be served in new bright-orange cups adorned with a bold exclamation point.
Dive Insight:
Dunkin's relaunch of espresso drinks is the the most significant change to its beverage menu since it first began serving espresso in 2003 — albeit from less sophisticated machines. The chain claims that espresso is one of the fastest growing coffee categories among younger consumers, and it seems a savvy move to target this demographic, which is often drawn to more premium beverage experiences. According to Nation’s Restaurant News, millennials consume nearly half of the country’s coffee, including 48% of consumers aged 18 to 24 and 60% of those 25 to 39.
But these consumers are often drawn to more premium beverage experiences, and whether or not Dunkin' will be able to shake its reputation as a stop for quick, cheap coffee remains to be seen. The company's investment in espresso comes after a string of previous innovations aimed at dressing up its beverage portfolio: in 2015, it launched macchiatos to little fanfare, and rolled out cold brew in 2016 — two years before McDonald's began testing the product.
It's possible that Dunkin's use of espresso beans sourced from Rainforest Alliance certified farms could help brighten the brand's premium halo and lure younger consumers, who are attracted to mission-based products. Dunkin' claims that these beans, coupled with its new equipment, "will deliver a stronger and more robust flavor profile."
This chain-wide espresso revamp follows McDonald's 2017 overhaul of its McCafe line, which included adding $12,000 espresso machines to its stores. Though Dunkin' didn't disclose the cost of its new machines, more than half of the $100 million its investing in the company this year is going toward restaurant technology.
The chain is also testing a tech-heavy format in Quincy, Massachusetts that features digital menus and digtal ordering kiosks, as well as two drive-thru lanes — one for traditional purchases and one for mobile pre-orders through the Dunkin' mobile app — and bar-like coffee taps. If the location performs well, this revamped store style could permeate Dunkin's plan to add 1,000 new locations outside of its major markets by 2020. This futuristic format, coupled with its new suite of higher-quality coffees, could help Dunkin' shoulder past rivals like Starbucks, McDonald's and Peet's Coffee as these brands battle for market share in the coffee segment.
