Although two-thirds of Dunkin's U.S. locations are in the Northeast, its growth in the American South and West is key for its future development, company CFO Katherine Jaspon said at the JPMorgan Gaming, Lodging, Restaurant and Leisure Conference on Sept. 15.
Expansion into the South and West, where Dunkin' locations are few and far between, is where the Canton, Massachussets-based chain's "future development is really coming from," Jaspon said, according to Food Business News.
Many customers outside of the Northeast think of Dunkin' "as a doughnut shop that also sells coffee," Restaurant Business wrote, "even though beverages are a more important source of revenue." This reputation has complicated the chain's break into the consumer mindset in its Southern and Western markets, leading it to remove "donuts" from its name in January 2019.
Dunkin' is operating drive-thrus in many of these newer locations, which has been a substantial draw for new customers. "Our franchisees are fired up in those markets," Jaspon said. "We're loving what we're seeing. And even though our competitors are reopening, we believe that we are maintaining those customers."
Amid the coronavirus pandemic, Dunkin' kept its doors open, while competitor Starbucks opted to close several locations, particularly in hard-hit areas such as New York. The only Starbucks locations to remain open for a stretch of time between March and June were its drive-thrus.
"We hate to say this out loud, but when our competitors decided to close, we decided to stay open," Jaspon said. "That forced people that really saw us as a bakery-only concept to come in and try our beverages."
In those months, Starbucks customers may have rerouted to Dunkin', creating customer growth opportunity over the coming years. Additionally, the pandemic has introduced customers in newer markets to Dunkin's beverage offerings which, Restaurant Business said, they may have been avoiding, under the impression the chain mainly sold doughnuts.
Jaspon said this new direction was "perfect timing," as Dunkin' recently launched a slate of new espresso-based beverages and "products [customers] were getting [from] other places."
During the period where Starbucks, among other coffee retailers, shut it doors, Dunkin' was "really on our game" with digital services and pick-up options, Jaspon said, adding it has since started offering oat milk nationwide, which Starbucks has yet to do.
"We really believe we have convinced folks in those markets where it was outside our core," Jaspon said. "We are a beverage player."
Jaspon's remarks follow Dunkin's July announcement of its potential plans to close 800 U.S. locations, about 8% of its stateside presence, as part of a "real estate portfolio rationalization," Restaurant Dive reported.
In her Tuesday remarks, Jaspon said Dunkin' and its franchisees continue to work through financial challenges. Dunkin's same-store sales declined 18.7% in its second quarter, Restaurant Business reported, while Starbucks' declined 40%. Notably, the bulk of Dunkin's locations operate in the hard-hit Northeast region.