How Dunkin' Donuts keeps operations simple with fast LTO pace
Dunkin' Donuts' LTO strategy is among the most prolific in the restaurant industry. In 2013, the brand introduced 40 new products.
And while such a quick rollout pace has caused other QSRs to stumble and simplify, Dunkin' continues to reap the rewards of its launches — posting a nearly 8-percent comp increase throughout the past two years.
QSRweb.com had the chance to talk to John Costello, Dunkin's president of Global Marketing and Innovation, about how the chain prioritizes its rollouts, how it gets franchisees to buy in and how it keeps operations running smoothly.
QSRweb.com: What does Dunkin's 'LTO strategy' entail?
John Costello:At Dunkin' Donuts, we take a disciplined approach that balances consumer demand with operational execution as we develop and launch new products. LTOs are a key part of our strategy to provide a differentiated menu of choices to our guests and to set ourselves apart from other restaurant brands
QSRweb.com: How do you prioritize launches?
JC:Driving a product through the LTO process is a collaborative effort between our Culinary, Brand Marketing, and Operating Systems teams and also is guided by feedback from our franchisees, who are very involved in the testing of new products. We evaluate all of our products as they go through testing and then fit them into a plan that drives profitable top line sales for our franchisees and new, exciting menu items for our consumers on a regular basis.
QSRweb.com: What has been the franchisee reaction to such a quick pace of product introductions?
JC:Our franchisees understand the need to bring new and exciting menu items to guests and are very supportive of the LTO strategy and ongoing new product introductions. We have healthy dialogues about the need to balance consumer demand with operational execution. Involving our franchisees in the process from concept to launch is crucial to our success.
QSRweb.com: What is your training process for LTOs?
JC:Our Culinary, Brand Marketing, and Operating Systems teams work together to make sure that each product launched can be executed successfully in our restaurants. We then have Field Operations, Field Marketing, and Field Training teams that provide both hands-on and online training to crew members who make the products every day. Clear communication, driving consistency in how we build different products, and upfront management of complexity leads to a better experience for our crew members and the guests that they serve.
QSRweb.com: What is the key to not compromising speed of service?
JC: We have an excellent core menu, and look to LTOs to enhance our all-day menu, offer special seasonal flavors and more. In addition, we place great emphasis on evaluating new products and working closely with franchisees to ensure that the products we introduce are an asset, rather than a compromise to each restaurant's service and offerings.
QSRweb.com: Some chains have cited the complexity of too many rollouts as a reason for struggling sales. How does Dunkin' avoid this trap?
JC:We've seen those articles, but our experience has been just the opposite. We have found that unique, differentiated products continue to work very well for us, and are an important contributor to both our strong comp store sales performance and profitable top line sales for our franchisees.
We think our success with LTOs is driven by disciplined processes we have put in place over the last couple of years, and the strong partnerships between Culinary, Brand Marketing, Operations, and our Franchisees
QSRweb.com: Why is such a vast pipeline important for your specific brand and your specific fans?
JC:With coffee, baked goods and customization at the core of our heritage, we have found that menu items that are "familiar with a twist" tend to resonate well with our guests. We have given our guests the ability to try new things while also being able to count on a fast and friendly experience every day.
Our research also tells us that Millennial consumers are looking for more variety from QSR brands. We aim to provide familiarity, which can come from seasonality, favorite flavors, classic dishes and more. At the same time, we are looking to put Dunkin's stamp on a product. A great example of this is our Big N' Toasted breakfast sandwich, which started as a LTO and is now a permanent menu item. It was inspired by the old-fashioned diner meals our culinary team ate while growing up.
The pipeline provides the ability to keep up and ahead of short term culinary trends, let our guests try new things, and round out our overall menu on a regular basis.
QSRweb.com: Is this pace something that is sustainable?
JC:We're excited to offer guests a range of new products in 2014, including coffee, beverages and products to expand both the AM and PM dayparts. While I can't share specific sales figures, I can confidently tell you that our guests have responded very positively to our efforts to provide them with more all-day menu items and we look forward to continuing to bring new news to the market.
Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.