Fast Company published this interesting article on Dunkin' Donuts' strategic pursuit of Starbucks. Although Dunkin' attracts new customers of specialty coffee beverages with lower prices and faster sevice, coffee experts contend that Starbucks customers come back for the Starbucks experience -- upholstered furniture, good music and clean environment. The article is a good review of how far value will go to win customers -- or conversely, how much customers will pay for a better experience.
It's also a commentary on the importance of one of the principal principles in franchising -- uniformity. The vast majority of Starbucks locations are corporately owned and operated; in contrast, Dunkin's units are franchised and according to the Fast Company piece, customers expressed frustration at the difference in coffee quality from location to location. The other critical variation in the Dunkin' brand, according to the article, is the cleanliness of the locations.
Dunkin' has crusaded for years now to improve quality assurance and get its franchisees to meet the franchisor's standards. It may still have a long way to go though. According to this article, if Dunkin' intends to catch Starbucks, it may not need Ray Charles' music and leather sofas, but it still has to convince its customers that its stores are clean.
Posted by franchiselawblog at December 2, 2004 06:13 PM