PAMANTASAN NG LUNGSOD NG MAYNILA

(University of the City of Manila)

Intramuros, Manila

Dunkin Donut Franchise

Apolinario, Neille Teresse M.

Galindo, Sopia Marie V.
Percil, Janwil E.

Yasmin P. Rasuman
Adviser
 1. Introduction

History of Dunkin Donut in the Philippines

Mr. William Rosenberg founded Industrial Luncheon Services in 1946 at Boston,

Massachusetts. People who need warm food during winter days find comfort and enjoyment
with every bite of donut. Mr. Rosenberg made his own recipes and variations of donuts
dunked in hot delicious coffee. The success of this in Industrial Luncheon Services led him to
open his first coffee and donut shop named "Open Kettle".

After four years, in 1950 he opened his first Dunkin Donut store in Quincy,
Massachusetts. Selling a 52 variety of donuts and a wide array of beverages. After the
success in Quincy, Massachusetts, Dunkin Donut opened its outlets around the
world. Dunkin Donuts' first ever shop here in the Philippines was in Quad Park Makati under
Philippine Franchisee Golden Donuts Incorporated (GDI) in 1980. The widespread use of
Dunkin 'Donuts made growth in the country. Dunkin Donut southward expansion started
when The Queen City Food Chain Inc. opened the first ever store in Fuente Osmeña, Cebu in
December 1986. This is the first outlet outside Metro Manila. After the store in Cebu, The
Gesalem Corporation opened its Dunkin Donut store in Cagayan De Oro at LimKetKai Mall
in November 1991. People loved Dunkin Donut outlet in Cagayan De Oro which made
TQFCI in leadership of Gesalem opened 26 more outlets in Cagayan De Oro.

After the branch in LimKetKai Mall, it followed in Ororama in the same year and made
its third outlet after 9 months in Divisoria. After a new environment, they decided to follow
more stores like in Puerto Macasanding in Liceo de Cagayan University. The success of
branching Dunkin Donut made it aggressive and opened the 7th store in Ororama
SuperCenter at Agora terminal. The Golden Era Food was amazed by the success of
branching out Dunkin Donut in 1998. The first ever Dunkin Donut Drive-Through was
opened in Tomas Morato in Quezon City. In January 2019, Dunkin Donut named to Dunkin.

Growth Record of Dunkin Donut

The growth of Dunkin’ in the Philippines proves that it is a success. For more than 40
years, Dunkin’ has been the favorite “pasalubong ng bayan” of the Filipino people. Up to this
time, many businessmen are still interested in franchising Dunkin'.

Dunkin Donut won MITX or Massachusetts Innovation & Technology Exchange

Interactive Marketer of the Year in 2009. Also won the Best Cross Media Campaign award.
Units of Franchisor currently operates

There are currently 567 Dunkin’ stores in the Philippines as of franchise data
organization. 132 stores in Metro Manila, 112 stores in Central Visayas, 103 in Calabarzon,
41 stores in Central Luzon, 18 stores in Northern Mindanao, 14 stores in Ilocos region, 14
stores in Western Visayas, 10 stores in Soccsksargen, 10 stores in Davao region, 9 stores in
Bicol region, 8 stores in Cagayan Valley, 8 stores in Eastern Visayas, 5 stores in Cordillera
Administrative region, 4 stores in Zamboanga Peninsula, 3 stores in Caraga, 2 stores in
ARMM, and 2 stores in Mimaropa.

2. Why did we choose this franchise?

We chose this franchise because we are curious about the expansion of Dunkin’ here in
the Philippines and where it came from. Since all of us, groupmates, love to eat doughnuts
from Dunkin’ and crave coffee, why don’t we choose what we love to eat?

Why does this opportunity fit your lifestyle, financial goal?

It fits our lifestyle because it is affordable and, in our generation, doughnuts and coffee is
one of the favorite combinations as a snack when doing schoolwork’s or work related.

3. Cost Analysis

Franchise fee:

The financial fee for the Dunkin' Donuts business will range from P 200,000 to P
250,000. The initial franchise will cost about P50,000, and the final cost may increase up to
P250,000. The total investment may cost up to P300,000, depending on the desired market.
The fee amount is just a measurement based on the overview but will change due to
conditional factors in the business. Upon the approval of the paid application, all the
requirements will be met.

As Dunkin' Donuts is known and we would use its brand, business model, franchise IP,
and resources, the charges to own the franchise are part of this stage. All the ongoing fees,
such as the royalty fee, are based on a percentage of the gross revenue; therefore, they
indicate existing growth in the franchise system. The focus of ongoing franchise fees is on
items such as initial and ongoing marketing fees, royalty fees, and branding costs.
Other Ongoing Fees:

The franchise will pay for the advertising and marketing fund. They will have
ongoing fees on behalf of the network that are about 5 to 9 percent of the gross sales. The
opening of the franchise is part of the initial cost and will exceed it in the coming weeks.
Upon payment of the ongoing fee, the business will manage to have an ongoing
assessment of assets and net worth.

Initial Cash Investment:

The flow of cash will circulate throughout the project planning stages. The new
location of the franchise will have a greater need for money. This project will be ongoing,
so the first share is included in the initial cost. The machine and structure will be part of
the overall cost.

Other Cost:

The current and necessary business expenses are included in the short- and long-
term plans. The legal rights and fees for the next few years will be covered. As the
economic issues arise, the other costs will be analyzed. The expenses in the materials, the
salary of personnel, interests, sales of assets, impairments, and restructuring costs will be
fixed.

COST:

The full extent of payroll will be given to 4 employees with a salary of P17,200
per employee in a month and has 2 shift every day, opening time until afternoon then
afternoon until the closing time We will be opening from 5am to 10 pm. And the shift
will become 6am to 2pm, and 2pm to 10 pm, both has with break time. On behalf of a
governmental body, the franchise should get barangay licenses that cost P500–1000 and
business licenses that cost P1,000–2,000.

These fees occur prior to legally managing the Dunkin' Donuts franchise.
 Initial Franchise Fee: P200,000
 Marketing Start-Up Fee: 350,000
 Rental fee: 49,500
 Additional Advertising Fee: 25,000-75,000
 Gross Sales (per week) = 243,200 x 4 (4 weeks) = 972,800
 Brand Fund Fee: 5% of gross sales = 48,640
 Royalty Fee: 5.9% of gross sales = 57,395.2
 The overall cost will estimate of 350,000

4. Financing

How would you finance your business? Assume you put 20% of the total amount
needed in cash and borrowed the rest. Discuss how you would fund your cash
contribution. Assume you will borrow the balance of the money for five years at 6%.

The estimated cost to franchise a Dunkin’ business is 40,000 pesos if we will

borrow the rest of the money and have 6% interest in 5 years. We will contribute, and
loan money from the bank we chose which is BPI. We will not hire employees that would
be up to 5 employees or more. Pay for the rent where it is located, and do the permits
needed. The training program that is required by the franchisor is included in the
franchise fee.

 Franchise Fee: P200,000 (including materials and equipment)

 barangay licenses that cost P500–1000 and business licenses that cost P1,000–2,000.
 Salary of employees 17,200 per employee in a month (times 4 = 68,800)
 Advertisement fee of 75,000
 Rental fee: 49, 500 monthly (12 sqm)
 Total estimate of 400,000 pesos

The franchisee will contribute 17,000 pesos each which is a total of 51,000 pesos, and the
rest of the amount needed will be loan from the bank. Since the market start-up fee is
350,000 pesos, the remaining 300,000 pesos will be loaned from the bank. And that
300,000 has 6% interest in 5 years.

17 000 pesos x 3 = 51, 000

350,000 - 51,000 = 299,000
300 000 x 6% = 18,000
300,000 + 18,600 = 318,000
18,600 divided by 5 = 3,600 per year is the interest that we will pay from the interest rate.

Return of Investment

Percentage
Net income divided by cost investment x 100
 34,742 divided by 350,000x (100) = 9.92%
 Days
Cost investment divided by net income.
 350,000 divided by 34,742 = 10 days

In 10 days, the initial investment will be return, and it has 9.92%

5. Ownership

We would have partners/investors in franchising Dunkin Donut because it would be an

excellent way to expand the business, as well as making more money for each party
involved. Partners could help us develop the business by providing capital and expertise and
We would be able to help them grow their own businesses through our experience in
franchising. We think this situation is a win-win for all parties involved. We have a lot of
potential partners who are interested in investing in Dunkin Donut, but we need to figure out
how much they need to invest before we can move forward with an agreement. We also need
to determine whether they want to take part in the whole process or just provide capital for
our initial stages. Once we have these things figured out, we can move forward with our
plans for expansion and growth.

6. Location
We chose to locate our business Dunkin Donut in LRT 1 Baclaran Station because
of the convenience and fast service. When people are on their way to work, or when they
need to grab some quick coffee before heading to school, it's easy to get to a Dunkin'
Donuts near them. Additionally, Customers can easily visit our stores because this
location is close major roadways and highway. Dunkin Donuts has always been the go-to
gift and pasalubong of Filipinos for the longest time. That's why placing it near lrt
stations is a good idea because of their convenience and accessibility. The lrt stations are
usually located at busy areas in Metro Manila where people gather so placing Dunkin'
Donuts there could be a huge success.

7. Market Study

Dunkin Donuts markets itself primarily as a coffee seller that also offers donuts
and food, a fact made apparent by a coffee cup prominently featured on the company’s
logo and executive management explicit assertion that Dunkin Donuts is a Beverage
Company.

Historical Data

To understand the historical data performance and growth of Dunkin Donuts in

the Philippines, we reviewed the financial reports and annual reports by studying the
 historical data on store openings, closure and sales figures. We also gained insights into
the brand's success, market expansion and customer demand.

We are able to gather a comprehensive overview of the fast-food market in

Bonifacio Global City. This approach enabled us to make well-informed projections and
recommendations for the establishment of a Dunkin Donuts franchise in the area.

Marketing Mix of Dunkin Donuts

The marketing mix refers to the mixture of the four components that make up a
company’s marketing system: the product, price structure, promotional activities, and
distribution system. In the following section, we’ll look at Dunkin’ Donuts’ marketing
mix.

Product

Being a fast-food joint, it mainly sells donuts, burgers, hot and cold beverages
[like coffee, mocha, iced teas and fruit shakes], wraps, and snacks. The company decided
to get coffee back in 2014 thinking it might be their most profitable product. And in 2018
it became a successful strategy. Since coming internationally in 2014, its menu now has
been spread across the world.

Dunkin has started giving combos with giving donuts, beverages, and burgers together.

Pricing

The prices of the different products are not very high and quite affordable. The
company has different prices in different countries, which is called Global Pricing. This
strategy is used to ensure better quality products at an affordable price to customers.

Place

With over 12,900 restaurants spread across 42 countries, it has been one of the
world’s major fast-food food joints. Now it has started picking up its online way to order
the products. Dunkin has partnered with Jubilant fast-good food for franchising in India,
with a little less than 100 stores. It has opened in the form of online marketing also.

Promotion
 The company promotes its brand by having a bright logo on its cups and
packaging material. This helps in recognizing and memorizing the logo easily. It has
changed its tagline in India to ‘Dunkin Donuts and more’ because in India doughnut-
eating culture was not present at that time. And also brought new flavors in India to
attract customers like mango, litchi, and many more.

Marketing Strategies

The marketing strategy of Dunkin Donuts is unique. It uses unique marketing

techniques to get out to its customers rather than traditional marketing techniques. The
brand maintains a low profile in the media due to its marketing strategies. Continue
reading to learn how to do it.

Event Marketing and Sponsorship

Dunkin Donuts is a big deal when it comes to event promotion. Event marketing
is beneficial, but it is even better when a company sponsors major events. Madison
Square Garden Company and Dunkin Donuts had a multi-year deal. It became a sponsor
of the NBA basketball team, the National Women’s Hockey League, and several other
clubs. Being a sponsor of the biggest sporting event increases brand awareness.

Dunkin Donuts is also a sponsor of America’s Got Talent, a prominent television

reality show. Dunkin Donuts raises brand recognition on a large scale by partnering with
a show with a large audience.

SWOT ANALYSIS

Strengths:

 International Presence with stores across 42 countries has gained its power
internationally.
 Customer service- the company has paid attention to its service. They have provided
training and learning programs to their employees and thus result in the best service.
 Strong portfolio- after entering into the new markets, it has created huge success and thus
has created a very strong brand portfolio.

Weakness:

 Competitors – being a fast-food joint it has competitors like Starbucks. it has a low share
in the coffee market in foreign markets. Starbucks has over 40% share while Dunkin has
only a 14% share in the market.
 Franchising – there are not many franchises worldwide compared to our competitors and
has a deficiency in control and management.

Opportunities

 Healthy food- nowadays people have become very health conscious and thus Dunkin can
start adding healthy and safe food into their menus.
 Expansion – compared to Starbucks which is in 65 countries this company has only been
in 42 countries. It can expand and increase its sales volume.
 Research and development – Dunkin can invest more in research and development and
know more about its target customers and competitors.

Threats:

 Competitors – KFC, Starbucks, McDonald’s, and burger king are the main competitors
which are growing rapidly. Thus, it has also increased its pace.
 Healthy lifestyle- with rapid changes in lifestyle people or customers have adopted
healthier lifestyles.
 Seasonal demand- some products are demanded based on seasons like cold beverages
only in summer.

The purpose of Dunkin Donuts’ marketing strategy is to make customers aware of

their brand in any manner feasible. Dunkin’s entire marketing strategy is aimed at attracting
customers’ attention. Dunkin Donuts’ advertisement style evokes emotions in the audience,
whether it’s surprise or laughter. The brand appeals to a vast customer base thanks to its
unusual communication.

One of the most important lessons learned from Dunkin Donuts’ strategy is the
importance of proactive communication with customers. Brands should be aware of current
events and incorporate them into their marketing strategies, which Dunkin Donuts excels at.

8. Franchisor Relationship

The relationship between franchisor and franchisee must be professional. It must have
a contract that is an agreement. A franchisee must pay the fee that is stated in the contract
and follow the terms and conditions given like royalty fee. Of course, it is also needed to
protect the Intellectual property of the brand. For the franchisor, it is needed to be fair when
it comes to the payment, it must have consent if there’s any changes. Overall, respect and
trust are a must for both parties.

9. Exit Strategy
 We are planning to run the business Dunkin Donut for at least five years. The initial
investment of 400,000 pesos will cover for the first year of operation. The second year, we
will be able to pay back 50% of our investment because we believe that this business is
profitable considering the location that we chose to locate our store. We believe that this
business is becoming more profitable with each passing month. In the third year, we will
make a large profit. Dunkin Donuts will be able to produce high profits since it can offer its
products at a lower price than other rivals in the business, allowing us to start making
payments on our loans for that year. After four years, we will be able to pay back 75% of our
initial investment because the business has reached a point where it can sustain itself without
any external help needed from investors or banks. This will allow us to pay off 80% of our
original loan. We are also working on expanding and maintaining the store this year. This
includes hiring more employees, buying new equipment and supplies, and paying for
advertising for our products and services. In the fifth year, we will still be able to make a
profit and pay 100% of my original loan. In this time, we will be able to get enough
experience and knowledge about the business. We can also improve our products and
services. In addition, in these five years, we will need to build up a strong customer base. We
want to offer some attractive products or services that people would like to buy from us. We
want to keep our customers satisfied with our products or services and make them happy
with their purchase experience.

In conclusion, we believe that Dunkin Donuts can run for 5 years because our
business has excellent customer service, and we are very knowledgeable about our products
which will help us get more customers.

10. Conclusion

The Dunkin Donuts brand is a well-known name in the market and has been a
successful franchise for many years. The company has made its mark in the coffee business
and has become an icon of the industry. The company has been successful in expanding its
presence and customer base internationally, where it has opened over 1,300 locations
worldwide. The company has also been very successful in maintaining its core values and
principles, which include integrity and quality products and services. This is important
because it allows customers to have assurance that they will receive high quality products
from Dunkin Donuts when they purchase them at their stores or online. As a franchisee, we
conclude that we will franchise this business because of maintaining the taste of their product
and we believe that we can gain profit and expand more in the future.
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