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Dunkin' CEO: Franchisees excited about Tim Hortons' merger 'distraction'

September 30, 2014

Dunkin' Brands' CEO Nigel Travis appeared on Bloomberg TV this week, offering his take on a number of industry trends. Highlights from the interview include:

Competition. As it continues to grow in new and emerging markets throughout the US, Travis said Dunkin' Donuts gets "a lot" of customers from independent coffee stores.

He also said the most intense battle in the industry is within the breakfast daypart and with coffee.

"Coffee is a big ($28B) business. It's increased an average of 5 or 6 percent in the last five or six years. People love coffee. It's continuing to grow, it's continuing to grow internationally," he said. "Coffee is part of the battle, but breakfast is a broader part of the same battle."

Pumpkin flavors. Dunkin' was criticized by some for not launching its pumpkin line sooner this year (late September was the launch). The brand offers pumpkin-flavored coffee, donuts and pies. Pumpkin, Travis said, is everywhere and it is Dunkin's biggest LTO of the year.

Consumers.The fight for consumer loyalty is tricky. "Virtually everyone who goes to a Starbucks or a Dunkin' Donuts or McDonald's will go to another chain the same week," Travis said. "People are driven by convenience, offers and great service, and new ideas."

"Speed is critical," he said.

Healthy offerings.Travis said most of Dunkin's consumers order indulgent items, such as breakfast sandwiches and donuts, versus its DDSmart offerings. But, he added, it's important to give them the choice. "The most important thing is to let the consumer decide. It's not our job to educate our consumers," he said. "Our job is to follow consumer trends, listen to what our franchisees say and listen to what the research says."

The Burger King/Tim Hortons merger.Travis pulled no punches referencing the recent merger of Burger King and rival Tim Hortons.

"We've really got our franchisees fired up about that. Any merger – by definition means disruption – is an opportunity for us. Our franchisees see this as an opportunity to grow, to cement their strength in various markets," Travis said. "We're very excited about the fact that they're going to spend two years working on this merger and all the distractions that come with it."