Why Dunkin’ Donuts Is Failing in India

Why Dunkin’ Donuts Is Failing in India


Dunkin’ is synonymous with breakfast
pretty much everywhere you go. There are more than 12,600 restaurants in 46
countries from Kuwait to Aruba. But there is one market where the
company is failed to capture national attention, India. As of 2018, it closed
more than half of its stores in just over two years, citing a lack of
profitability and operational efficiency. So what went so wrong for Dunkin’ in
India? To answer that let’s go back to 2012, when Dunkin’ launched its first
location. Dunkin’ granted exclusive franchising rights to Jubilant FoodWorks, the same franchisee that brought Domino’s Pizza to India, one of the top
restaurant brands in the country. Dunkin’ entered with its typical breakfast first
strategy and it braced for heavy traffic at the start of the day. But it didn’t
take long to figure out that Indians weren’t all that interested in the
American morning routine. The majority of Indian consumers don’t prefer to
grab-and-go their breakfast. They’d rather have a sit-down meal. Yeah
basically when you look at doughnuts. So basically when Dunkin’ Donuts came to India it’s it’s regarded as a breakfast for all the Western countries or
wherever the Dunkin’ Donuts have their outlets. But in India, it’s the consumer
preferences are totally different. So here, people you know they generally
prefer their local cuisine for their breakfast. And it wasn’t just the timing
of the offering, it appeared to be the menu itself. To be fair, Dunkin’ tried to
localize its offerings. It had custom doughnuts catered to Indian tastebuds,
like the mango doughnut. It had Lychee coladas. And for a brand that rarely
ventures outside its core product, Dunkin’ even rolled out a spicy sandwich lineup.
In an effort to localize its menu, this coffee loving brand even downplayed its
beverage branch of business, which accounts for about 60% of Dunkin sales.
Instead, it marketed its food to a nation that’s not exactly crazy about coffee.
But it wasn’t enough to help Dunkin’ shake its doughnut first reputation.
Dunkin’ was seen as more of a pastry shop and Indians didn’t want to start their
day with sweet baked goods. Doughnut is basically considered as a desert right and a desert which is a lot of other assortment added onto it so it’s a high
calorie assortment. And therefore, it’s more like a
luxury. It’s more like impulse kind of a purchase. Which you make if you are
celebrating or is there a special occasion or you know once in a while
Indians having a switch tooth would like to indulge in that kind of a purchase.
So Dunkin’ pivoted. It pushed it’s operating hours later, it rolled out its
Diwali doughnut, which touted savory flavorings like chickpeas, saffron and
chilly. But key Dunkin’s tweaked image, was actually to downplay the doughnut. So it tried something it hadn’t done before, burgers. With burgers, Dunkin’ was able to
get more foot traffic in and the non beef lineup was designed to appeal to
the country’s vegetarians. But making burgers the anchor product of the brand,
just appeared to dilute Dunkin’s image rather than help it. Decided advertising
on burgers rather than doughnuts. I’m gonna need to go global brand wind
doughnut in your name. You cannot say that we are not doughnuts than here’s something else, right? So that’s really against the basic rule of marketing, which is focus.
In a statement to CNBC, Dunkin’ Brands said that it finds it important to
include core Dunkin’ products alongside more regional menu items to cater to
local tastes. But Dunkin’ didn’t comment on its store closures in India. Another
potential misstep had nothing to do with the menu. Dunkin’ expanded too fast, its
locations were too big and those huge retail spaces translated into higher
operational costs. So when Jubilant FoodWorks announced plans to pare back more Dunkin’ shops in 2018, it came as little surprised that its new plan was
to focus on small stores and kiosks. But keep in mind, Dunkin’ isn’t alone in its
struggle with the doughnut. Dunkin’s main doughnut rivals, Krispy
Kreme and Mad Over Donuts, entered the market within a few years of one
another and at first things were pretty great. Doughnuts were initially a hit
when they were first introduced into the Indian market. The young population which was more acceptable to American tastes and culture. And so for them it was the
issue of novelty and therefore, doughnut market saw a surge in the in
in the Indian, you know, subcontinent and we had Dunkin Donuts, which entered the
market at that point of time and we all know the drive, right? From 22 stores, they reached up to 77 stores in 2017. Which was the peak of Dunkin Donuts in India.
But Aggarwal said that the donuts popularity has started to stagnate and
now the doughnut chains of India are feeling the pressure. The doughnut is
struggling. It’s not just Dunkin’ and Krispy Kreme. There have been declining
sales across doughnuts for quite some time. Not just in India but if doughnuts
were working they would be Dunkin’ Donuts doughnuts but they’re now just
Dunkin’. And so that’s if it’s not working here, it’s it’s certainly not working in
India. That precipitous fall in the popularity of the doughnut is partly to
do with the more health-conscious India. India’s becoming a very health conscious
market, right? So people are moving away from sugar and salty food and looking
for more healthier options. So that’s one of the reasons why I feel that the sales
have kind of stagnated. But even though Indian consumers are
looking for healthier foods, some desert chains in the country aren’t struggling
like Dunkin’. In fact, one of Dunkin’ Brands other businesses, Baskin-Robbins, is
killing it in India. Baskin-Robbins which is franchised in India by Graviss Group,
has more than 725 stores in the country and claims to be the largest ice cream
chain in India. So if Baskin-Robbins and Dunkin’ are two fruits from the same tree, then why is one doing so much better than the other in India. Euromonitor says
it’s because Baskin-Robbins focused on its signature product, ice cream. And
according to a Mintel report, the ice cream industry is heating up in India.
Mintel estimates that in 2021 657.2 million litres of ice cream will be
purchased in India. But doughnuts well they’re just not a favorite for the
adult Indian consumer. So Dunkin’s big problem in India seems to have more to
do with the fact that it’s failing to give Indian consumers what they’re
looking for and less to do with any mistake made by either Dunkin brands or
Jubilant FoodWorks. Take Dunkin’ Brands, the company in the United States is by
no means failing. The company has seen a steady grow than revenues over recent years. The Indie market isn’t biased against
international companies, more specifically, Dunkin’ Brands because
Baskin-Robbins has seen such success in India. And Jubilant FoodWorks, which
franchises Dunkin’ in India, also franchises Domino’s Pizza, one of the
most popular brands in the country. It’s also not the first time an international
Dunkin franchise agreement has flopped either. Dunkin’ has tried and failed to
enter China twice. And in 2015 it decided to step back in a third time with a
better understanding of what Chinese consumers want and an ambitious goal to open 1,400 restaurants. So will Dunkin’ in India have the same story as Dunkin in
China? or will it be able to turn things around? Experts say it’s certainly worth
trying. With the population size second only to China, India is thought of as the
last great battleground for international fast food rivals. Only
about three percent of all food service establishments there are chained. In
Western markets, it’s over 50 percent. So if you’re looking to capture market
share in the U.S., you have to take it away from somebody else. But if you enter
India in the right way, with the right formula, there’s tremendous potential
upside. And reducing store sizes is part of that formula. For the U.S. store, they
have been reducing their sizes, store sizes, which which is the same strategy
which was being followed by Mad Over Donuts or Krispy Kreme. The brand
slashed unprofitable stores and instead started focusing on small kiosks to sell
their products. And remember how they basically ignored their beverage unit
when first entering the country, that’s not happening anymore. They’re planning
to introduce more teas to their menu to cater to Indian. Tastes they’re probably
better off on the hot beverage focused side of it than trying to localize
the menu to get away from it being donuts. So yeah, Dunkin’ in India has had to overcome a lot upon entering the market and it
still does. But by adding tea based beverages to their menu and offloading
unprofitable stores for kiosks, Dunkin’ may be able to save itself in India
after all.

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About the Author: Oren Garnes

100 Comments

  1. Their r like 1000 DIFFERENT incredibly tasty food cousine avelable in India ….this country is having so much to offer from vada Pau to extraordinary thali.. What will make India have donuts… I mean every 150 km religion,food,language,coustumseven clothing changes .

  2. Americans eat donuts for breakfast?
    Man, i dont know how America became so developed when they all have to share just one brain cell.

  3. *I will try to help you…. *

    First of all, no one for sure is going to buy tea for 200rs. You have to do something about it. Than I afraid the problem is in the very core… THE DONUTS. Indian are really not into donuts or anything sweet in the morning. Rather than focusing on morning breakfast focus on evening and night time. If you do some research you would know almost all McD and Dominos store were empty in the morning. All this franchise make the most profit at evening in India by the teens. Maybe try to sell Ice-Cream on donuts or something. India loves Ice-Cream because of heat.

  4. Okay hold up. The donuts are not hand made. There frozen and then let to defrost then bake. We never fry donuts. I used to work for Dunkns.

  5. donuts taste horrible. I am a rasgulla jalebi lover but I have to say with sweetness u gotta have taste too. Donuts are just tasteless hard too much sweet Gulab jamuns.

  6. No Indian will eat donuts in the breakfast if they have even 1 Indian option. There are like a hundred breakfast options in India . Dunkin Donuts must be crazy to be optimistic of their sales in India.

  7. Only 2 Kinds of Food are Popular in India – Chinese and Italian.
    Mexican would the most Popular Food because its spicy and we Indians love Spicy, But there is no Mexican Restaurant Food chain in India.

  8. The first and big reason for falling most of the brands is cost. in India hourly wage is so low even if a donut cake costs 1 dollar a normal Indian can't afford to buy it

  9. If Any Indian wants to eat a high calories delicious breakfast……one would rather eat Aloo poori…..jalebi…..alu paneer bread pakora……yummmmmm……why the hell would anyone want to eat overpriced donut.

  10. I neeeeeed to see local Indian businesses take back their market from these FORIGN investors.indians are very creative ppl they can do it.they can beat these foreigners on price first.i think their greatest weakness is visual cleanliness and appearance.but Indians in India should be able to send these FORIGN food business es back to where they came from.

  11. Donut… The worst Brkfast ever.. 😂😂 We love Poha, Patra and Dhokla…😍😍😍 50 Rs is enough for a Brkfast in India..

  12. I'm a Filipino and I would never eat donut for breakfast. I'd also rather spend money on Starbucks coffee than on Dunkin Donuts coffee. Sorry🙄

  13. We r not fond of American foods……once we ate pizza paying approximately 270 rs…. We literally thrown it in dustbin….

  14. KFC n McDonald's already indianised their menus, I mean nan with gravy n biryani kinda dishes ?

    But Dunkin guys were probably drunk, I mean they think its bf of world, in India ppl eat different bfs everywhere, I mean pranthe chole bhature,nali nihari,naan, poha, masala pav, eggs omelettes, idli dosa vada uttpam n what not.

    First its costly, secondly in India you have to localized.

    They could have sold jalebies to rich ppl, could have been doing better

  15. It's simple? We don't want to pay 150 rs for a sugarcoated bun. We would rather buy a Dilkush or Dilpasand which is essentially the same thing but costs 10Rs.😂

  16. I prefer khasta aloo as breakfast..zyada se zyada ek aat jalebi and dahi..doughnut toh jab salary mile tab khate hain..200 rs ki chai..hai hai..!!

  17. I would go back to DD if they had those flavors with beautiful designs for India or even the vegetarian food since not found anywhere near me in US. Also McD's has much better coffee and cheaper too with breakfast items all day

  18. Its too sweet. Just trying it once is enough.
    Cant think about eating donuts as breakfast.. best is when one is really really hypoglycemic. Otherwise yew

  19. CNBC and SP Jain both neglected mention that local bakery also sell donuts for 1/10th the cost of Dunkin donut. A single Dunkin donut is priced at an entire meal in highly price sensitive Indian market. Domino's survived by adding smaller size pizzas near ₹100 / about $2 mark. Do your homework CNBC.

  20. Open YOUR EYES. It Says 199 "Serves 4" that make it 50 RS per cup. Very similar to Chayoos and Chaipoint.
    And yes we can get tea for 5 or 10 on the street..but there times you wanna sit in a air conditioned place and talk or sit in a warm place in winter and talk plan and discuss…in that situation how long would you all sit or stand on the street? different circumstances – different needs. I am just reasoning with tea idea as many are spreading misinformation and others are acting smart.
    In regards to Dunkins…they need to scale down and open in places where people are interested to spend on donuts.

  21. Its ridiculous to even think donuts will work here like how can u have so much sugar every day that too at such high price. India is really becoming health conscious and we have plenty of good and cheap alternatives.

  22. I used to stay in United States for 2 years. Instead of going outside for breakfast, I used to cook in the house by myself like vada paw and Dosa's.
    American breakfast means donuts, cookies and a bakwas tea and worth of rs 1000 to 1200 😂😂😂 Chutiya hai Kya bc

  23. "Dunkin is synonymous with breakfast pretty much everywhere you go"
    No sir, only in America. I doubt Asia, Africa, Middle East eat "sweet sugary buns" for breakfast, when they can have healthy food.

  24. Resell this as a desert business model. I miss dunkin donuts 😔
    Their products was good. The price can brought down by putting halve the icing!

  25. Unless DD starts selling Poha, Upma, Idli, Dosa, Parathas, cutting chai and filter coffee for breakfast they will never succeed in India.

  26. I think the two most obvious reasons why Dunkin donuts failed in India was :
    1) Unusual breakfast option for Indians
    2) Expensive Prices

    It's not that Indian don't have sweet breakfast options but they prefer giant breakfast over a small donut or one burger.

    And most consume tea in the morning and when it can be prepared at home, for cheap who would want to spend 200 for one cup? And rather than 300 rupees donuts people would go buy local food for less than 50.

  27. yo i didn’t even know there was a dd in india . then again ive always thought that they are kind of over rated! indians don’t seem to like that kind of donuts.. they could buy Biriyani for that

  28. 5:09 IDK why, but people in my country think that only Indian food is healthy and anything foreign has high calories and is bad for health.

    I would choose Dunkin' Donuts for breakfast.

  29. First thing, people don't eat Sweets at Breakfast even if they are sweet-tooth and Second, no one would like to spend Rs 199 for breakfast. at an average breakfast, they prefer between Rs 20 to 50.

  30. because you can legit get better sweets and breakfast at every corner of the street, cheaper too – nobody cares about dunkin in India.

  31. I'm thinking the hot climate plays a part. Indians rather eat something cold like ice cream than donuts, because of the climate

  32. The only thing why medu vada is so famous in India because we get free sambhar & chutney with it. We indians love free things.

  33. 7:35 we don't need large outlets wasting the space & maintaining the ambience. We be like 'Are ismein to aur 10 Jan baith jaate'

  34. Dunkin donuts is also struggling in my city in Indonesia, because we have local donut chain which tastier, fluffier and cheaper than dunkins.

  35. Dunkin failed because we have alternative breakfast dishes available in India…they are cheaper, tastier and healthier!

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