DUNKIN’ DONUTS

1988 DISTRIBUTION STRATEGIES

• ANKUR JAIN
• DARPAN SH AH
Group 9 • D A R S H A N PAT E L

Batch 1 • KHUSHBOO
HANJURA
• SARTHAK MISRA
• VANASHREE
KANSARA
Q1. EXPLAIN THE FRANCHISEE VS OWN STORE POLICY?
WHICH IS EASIER TO MANAGE?

FRANCHISEE OWN STORE POLICY

• Franchisee stores were operated • Own stores were operated on
on company owned land and company’s own land and
managed by external party managed by the company
• A large number of units of Dunkin itself
Donuts were franchisee owned and • It resulted in a lot of staffing
it could earn more due to rental problems and administrative
income. costs

Franchisee policy is better as it is easier to manage and more rental income can be generated.
Moreover, market penetration was higher due to the presence of franchisees.
Q2. WHAT IS THE MAIN PROBLEM IN REGION 1 AND
REGION 2?

REGION 1 REGION 2

Overpenetration and No Trademark

Excess Capacity Recognition

Intensive DD had approved

Distribution sites that has ‘Selective’
Operational
leading to affected Haphazard
frenetic individual Inefficiency
franchisee business of Distribution
development franchisees
Q3. WHAT ARE THE ALTERNATIVES THAT ADDRESSES THE DD
DISTRIBUTION PROBLEM AND SUITS THE AIM IN BECOMING
NATIONAL AND NOT HAVING LOPSIDED DISTRIBUTION
DEVELOPMENT?
• Supply the Convenience Stores from Local Commissary
Area Franchising in Region 2
• Focused sequential development of Underdeveloped
Markets in Region 2
• Selling Exclusive Micro-territories to qualified existing
franchisees.
 Q4. DIFFERENCE BETWEEN EXCLUSIVE MACRO AREA
DEVELOPMENT AGREEMENT AND MICRO DEVELOPMENT
AGREEMENT AS A PART OF THE SATELLITE DESIGN STRATEGY.

• An Area Development Agreement is made with a franchisor

which states that a franchisee must open a certain number
of franchise units in a particular area within a set
timeframe.
• In case of macro area development agreement, the territory
is vast and a single producing units will have to deliver
donuts to far off places.
• This would increase the payroll expense of delivery person.
Sudden fluctuation in demand in a satellite outlet cannot
be catered on time, since the production unit is not near by.
 Q5. WHAT IS THE CAPACITY UTILIZATION IN OUTLETS OF
REGION I AND II?
• Franchisees were facing operational issues related to capacity utilization
• Production capacity of a Dunkin Donuts kitchen with basic configuration was 250 dozen donuts
per shift
• Franchisees run 3 shifts: 11PM to 6AM, 7AM to 11AM and Noon to 7PM with maximum sales
between 6AM to 10AM
• Dunkin Donuts had diversified its product portfolio by introducing various products like
croissants, soups, sandwiches etc
• Franchisees normally has one baker who is overburdened with baking the donuts, glazing and
filling them and also preparing muffins and croissants which reduces the production efficiency to
140 dozen per shift
• Donuts cannot be pre baked in the other two shifts due to quality issues and thus work is never
evenly distributed
 Q6. WHAT WOULD HAVE TO CHANGE FOR YOU TO SUPPORT
THE FOLLOWING DESIGNS?

1. Area development agreements in region II

•The new franchisees should be given limited control with a short term
and long-term plan of development of stores in the area

2. Sub-franchising in Region II
• The issue to be solved was better penetration in Region II so that by
opening new outlets the existing outlets do not experience added
pressure due to smaller territories

3. Focused fill ins development in region II

• It was needed to increase the producing units which will supply to these
fill-ins
 Q6. WHAT WOULD HAVE TO CHANGE FOR YOU TO SUPPORT
THE FOLLOWING DESIGNS?

4. Revitalization of co-owned stores division

• Revitalization of these stores will involve more capital expenditure with no
surety of return

5. Focusing on Branded products through supermarkets channel design

• If the friction between the convenience store and the producing store could be
reduced this strategy would be more profitable

6. Satellite units and exclusive micro areas

• The logistical problems involving satellite units were needed to be solved. The
design of exclusive areas and allotment of those to the existing franchisees
was an issue. Moreover, the main problem was to device such a plan which
addresses all the issues pertaining to exclusive micro areas
 Q7. WHAT'S MOST DIFFICULT PROBLEM IN DEVELOPING
SATELLITE AREAS?
• Should territories be defined so as to include more than one franchisee’s
existing shop, or should some markets be immune from exclusive territory
development?
• Development of a policy regarding the design of the exclusive development
micro-territories
• What criteria should be used to determine whether to permit a franchisee to
buy a territory?
• How big should territories be? Should they require more than one or two
additional shops
• A particularly difficult issue involved those markets where there had already
seen significant development
THANK YOU