If the thriving, ubiquitous presence of Dunkin’ Donuts and Starbucks locations around the USA is any indication, Americans sure do love their coffee. According to the Dunkin Donuts website, it is estimated that more than 100 million Americans drink a total of 350 million cups of coffee a day. That’s a lot of caffeine (and decaf) consumption going on from coast to coast. So how does that translate into profits for the country’s two most recognizable coffee purveyors? How well does each company’s brand capture their share of this sizeable market?

To any casual observer, the stark differences between Dunkin’ Donuts and Starbucks, and their respective demographic, is relatively easy to identify. While many Americans prefer the pleasant, flavorful blend of DD’s 100% Arabica coffee, there are countless others who crave the decidedly stronger, darker strains of high-quality, whole bean brews and Italian-style espresso beverages offered by Starbucks. The former, with its trademark hot-pink and orange logo and limited seating (at least in most locations) tends to draw in a “hit and run” type of crowd, looking for their morning shot on the way to the office. Starbucks, on the other hand, with its wireless connections, comfy chairs, contemporary fixtures and up-to-date musical ambiance, offers the perfect “gathering place” atmosphere, whether you’re an entrepreneur conducting business, a college student surfing the internet, or a hip guy or gal, looking for a “third home” to hang out and read the paper.

Yet each continues to thrive, even as they change with the times, precisely because each remains firmly rooted in its origins and purpose. Dunkin Donuts was founded back in 1950 by Bill Rosenberg in Quincy, Massachusetts, having originally operated under the name “Open Kettle,” a coffee and donut shop established by Rosenberg in 1948. Hailed as a “visionary” by Success magazine and “the father of franchising as we know it today,” by Nation’s Restaurant News, Rosenberg was the embodiment of the American spirit of hard work, passion and dedication. Having come of age during the depression, with limited education, his original concept came to life in 1948, in the form of the Industrial Luncheon Services Company, that delivered meals and coffee break snacks to customers in the outskirts of Boston, Massachusetts.

If its website is any indication, Dunkin’ Brands, which today has a unique portfolio of three complementary brands: Dunkin’ Donuts, Togo’s (the legendary California sandwich shop with the oft-mispronounced name) and Baskin-Robbins (the largest and one of the most-loved ice cream chains in the world), has no intention of abandoning its focus on high-quality, affordable food and beverages on the go. Each of their brands appeals to a different time of day, working together to offer great food and great value to their customers. The company combines the strength of its brands by housing two or three in a single storefront, completely redefining the quick service experience for their clientele.

Supporting this emphasis on quick but quality service, the Dunkin’ Brands launched its “America Runs on Dunkin” advertising campaign on April 10, 2006. With a focus on “how Dunkin’ Donuts keeps busy Americans fueled and on the go… the new campaign is a fun and often quirky celebration of life, showing Americans embracing their work, their play and everything in between, accompanied every step of the way by Dunkin’ Donuts.”

The release continues, “Visually, the ad campaign comes to life through a set of interactive icons that represent the campaign tagline - “America Runs on Dunkin’.” The icons help to drive the concept that Dunkin’ Donuts’ freshly-made coffee and baked goods energize Americans from all walks of life so they can keep the country running on their dedicated hard work and positive outlooks. The campaign pays homage to those who embody the authentic spirit on which America was founded, as everyday people are shown bringing their honesty, enterprising creativity and good humor to their work, families and communities.”

If Dunkin’ Donuts pays homage to the energetic spirit of America, Starbucks offers it a European-inspired “home away from home” alternative, complete with familiar green umbrellas, outdoor and indoor café seating and an extensive – oftentimes confusing (at least for first timers) – menu. While Dunkin’ had expanded its offerings over the years to include things like cappuccino and coffee coolattas, Starbucks began its existence with a desire to upgrade American taste as it pertained to coffee beans.

The company was founded in 1971, by three friends with a passion for fresh coffee - Jerry Baldwin, Zev Siegl and Gordon Bowker – who opened a small shop and began selling fresh-roasted gourmet coffee beans and brewing and roasting accessories in Seattle’s Pike Place Market. Named after the first mate in Herman Melville’s classic, Moby Dick, Starbucks and its mermaid logo would soon revolutionize the industry.

In the early 1980’s, Howard Schulz – a recent addition to the highly-respected local roaster and retailer of whole bean and ground coffees – took a business trip to Italy, where he became captivated by the rich tradition of the espresso beverage. According to the company profile, espresso beverages then became a core element of Schulz’s vision for Starbucks, which he purchased with the support of local investors in 1987.

Yet, according to Lawrence Cheek in a Special for the Post-Intelligencer, “it’s not about the French roast. Nor is it the caramel macchiato, the lemon scones, or the Elvis Costello CD’s. Starbucks’ globe-storming success is about place — creating coffee bars that feel grounded in their neighborhoods, that lure people to hang out for a wide spectrum of reasons, and that somehow make us think “Starbucks” for refreshment or conversation.”

Unlike the standard, energetic hot-pinks and oranges of the Dunkin’ Donuts chains, each Starbucks – while undeniably in sync with the company’s overall look – encompasses elements of the particular neighborhood in which it is located. Cheek continues, “Starbucks’ stores are worth some architectural investigation because, unlike fast-food joints, there are real differences from one location to another — not just in size, shape and furnishings, but in the feel of each. This is clearly part of the company’s formula: unlike Burger King, venturing into a Starbucks you haven’t tried before offers the hint of adventure.”

Whether located in an upscale piazza like Mizner Park in Boca Raton, Florida, or in a northwest contemporary shed on Mercer Island in the Pacific Northwest, each Starbucks beckons its clientele to not just enjoy a cup of coffee in its various forms, but to partake of a socially-relaxed yet intellectually-stimulating atmosphere that aligns itself more with a European-style café than an American fast-food-and-drink operation.

Launi Skinner, quoted in Cheek’s article, and at the time a senior vice president for store development, said Starbucks is “less about the transaction, and more about the experience. Starbucks interior design is a much closer kin to a modern book store than to a fast-food outlet because the goal is to nurture a long-term relationship with the customer rather then to provide short-term refreshment.”

Unlike Dunkin’ Donuts, Starbucks does not franchise to individuals, though it does consider licensing its operations to a master concessionaire or other company, where appropriate, e.g. in the case of an airport. So how well does the Starbucks concept feed its bottom line?

According to the company’s Fact Sheet, there are 5,393 company-operated coffee houses and 2,952 licensed locations in the United States alone. In July, 2006, net revenues increased 20%, to $596 million. Obviously, this is a business-model that’s working well for the Seattle-based coffee giant.

However, the franchise concept that pioneered the impressive growth of Dunkin’ Brands is a model that continues to generate revenue for Massachusetts-based Company. Dunkin’ Brands boasts 7,600 units in the United States, with 2004 fiscal year earnings of $4.1 billion. Though not the focus of this investigation, both Starbucks and Dunkin’ Donuts also operate thriving worldwide locations – Starbucks in 36 countries and Dunkin’ Donuts in 29.

For Americans, it all comes down to choice, and whether you prefer a reasonably-priced, quick cup of coffee on the go, or possess a willingness to fork over a few dollars more for a full-bodied brew, housed in a bookstore-type atmosphere, you can certainly find your perfect blend at either one of these corporate American coffee icons.

Written by d/visible contributor Daria Anne DiGiovanni.

This entry was posted on Friday, September 15th, 2006 at 12:09 pm and is filed under In-depth, Business, Branding, Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.