Dunkin'
Donuts Inc
In 1956
two brothers-in-law, Bill Rosenberg and
Harry Winouker, broke off their
partnership, each to begin his own chain
of coffee and doughnut shops. Harry
founded Mister Donut which grew to 550
shops, while Bill founded Dunkin' Donuts
which grew into over 1,800
shops.
In late
1989 Allied-Lyons plc made an offer to
acquire Dunkin' Donuts Inc., the world's
largest doughnut and coffee franchise
chain. The board of Dunkin' Donuts
unconditionally recommended the offer and
the American government approved the deal
in January 1990. According to the Report
of the Directors (Allied-Lyons plc) the
consideration was £196
million.
At this
time (1990) Dunkin' Donuts had 1,850
outlets around the world selling
sandwiches, croissants, muffins and bowls
of chilli as well as coffee and doughnuts.
Some 1,600 of these stores were in the US
and a further 120 in Japan. Dunkin' Donuts
were already associated with the company
as DCA (another American subsidiary) were
already supplying mixes and ingredients.
This was not the only doughnut operation
which Allied-Lyons were running, they were
already in partnership with the Spanish
bakery company Panrico.
Within
days of Dunkin' Donuts becoming an
Allied-Lyons company it made an offer to
buy the Mister Donut chain, the business
which had been started by Harry Winouker.
Mister Donut had 558 shops in the United
States and Canada and claimed to be number
two in the US market after Dunkin'. Mister
Donut, with its one-eyed chef logo, was
owned by the American food processing
company International Multifoods Inc, and
after US government approval, the sale was
concluded at the end of February 1990.
Mister Donut operated as a subsidiary of
Dunkin Donuts but the franchisees of
Mister Donut stores were offered the
opportunity to convert to Dunkin' Donuts
stores if they so wished. Collectively the
two operations had 2,400
outlets.
On 30
January 1991 it was announced that Robert
Rosenberg, Chairman and Chief Executive
Officer of Dunkin' Donuts Inc., would be
joining the Board of J. Lyons & Co.
Ltd. from the start of the new financial
year.
The first
Mexican store opened in January 1991 in
Guadalajara, Mexico's second city. The
licensee, Jose Farah, hoped to open
several satellite stores following the
opening of the main store which featured a
drive-through service area. Dunkin'
Donuts' Robert Rosenberg, writing in the
staff journal Lyons Mail, said
negotiations were well advanced with major
petroleum companies with a view to license
them to sell Dunkin' Donuts. The Marriott
hotel at Los Angeles airport also became a
franchisee during 1991.
Wherever
you go in America there are doughnut shops
with the doughnut becoming part of US
culture. It is different in Europe and by
early 1991 there were only seven doughnut
stores in the area; four in London
(Charing Cross, Piccadilly Circus, Carnaby
Street and Notting Hill Gate), two in
Dublin and one in Glasgow. Andy Gallaher,
General Manager of Dunkin Donuts UK, was
recruited to put that right. The idea was
to establish a firm foundation in the UK
before trying to expand the business into
Europe. One of the first projects was to
develop a relationship with Oven Door, a
Swindon based DCA subsidiary who supplied
small ovens to bakeries. The sales success
of Dunkin' Donuts is based upon franchises
and Licenses. The difference between the
two are that a franchise is granted to a
single store whereas a license would cover
typically a geographical area. Both allow
the owner to use the name, packaging and
the Dunkin' Donut concept. In return
Dunkin' Donuts provided a whole range of
technical, sales and marketing support
including advice on the sourcing of
equipment, ingredients, shop design, and
quality control. Each franchisee also
attends the Dunkin' Donuts University in
Quincy, Massachusetts, for a six week
course which covers all aspects of running
a Dunkin' Donut shop from managing people
to portion control. In the Dunkin' Donut
stores coffee is kept no longer than 18
minutes before it is discarded and
doughnuts are given a shelf life of no
more than eight hours.
The growth of Dunkin' donuts
outlets in the United Kingdom progressed slowly. This may
have been due to the dissimilar eating habits of the British
and the Americans. At the time there was a strong emphasis
in the UK for healthy eating although that trend seems to
have been short-lived. After the sale of Allied Domecq plc
to Pernod Ricard of France, the Dunkin' Donuts business
was grouped with Baksin Robbins (the American ice-cream
business which Lyons had owned) to form Dunkin' Brands Inc
- a necessary strategy for disposal. In 2006 Dunkin' Brands
Inc was sold to the venture capitalists: Bain Capital LLC,
The Carlyle Group and Thomas H. Parteners LP.
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