US-based foods chain Dunkin’ Donuts has come to India just a few months ahead of the arrival of its global archrival Starbucks, by launching its first store in the national capital on Tuesday. Starbucks is expected to launch in September this year.
The company, headquartered at Canton in Massachusetts, plans to set up eight to 10 stores this financial year — all in Delhi. That, it says, would earmark its journey to slowly turn out to be a pan-India player with about 100 stores in the country in the next five years. Its strategy is to be an “affordable” eating place that would bring in the moolah from food. This would thus be unlike the case in the US, where coffee reigns supreme in terms of revenue.
Hari S Bhartia, co-chairman and founder of Jubilant Bhartia Group, said the aim was to launch an affordable brand in India. “Our products like coffee are priced 10 per cent to 15 per cent lower than competitors,” he noted. “We want more customers to come in so that we get scale in the business.”
|DUNKIN’ DONUTS CHECKS IN
|Founded in 1950, Dunkin' Donuts is a popular US food chain for coffee and baked products.
|It has more than 10,000 outlets in 32 countries
|In 2011, it reported global sales of $6.4 billion
|Plans to open 100 stores in India by 2017
|It’s Indian business is a joint venture with Jubilant FoodWorks Ltd, a master franchiser of key brands
|In India, its doughnut will cost Rs 45 and coffee Rs 70
|Jubilant Foodworks to invest Rs 12 crore to open a minimum of 10 stores in the country in 2012-13. Initially, the focus will be on the Delhi-NCR area, before moving on to other locations. It has invested Rs 9 crore in setting up the back-end, research and development, and a factory in Noida
The stores will be wholly owned by Jubilant FoodWorks, which also has the rights for Domino’s Pizza and replicate the same model of affordibility. It will pay a royalty fee to Dunkin. Globally, Dunkin’ Donuts has over 10,000 restaurants across 32 countries. It recorded a sales of $6.4 billion in 2011. The 1950-founded company, which is scaling up presence in Asia, is planning to open 300 restaurants in the region over the next few years.
Bhartia wants to clearly differentiate Dunkin from its rivals, especially that of Starbucks. “There are 1,800 coffee cafes in the country and diverse brands; Starbucks will be one of them,” he points out. “Our effort will be to differentiate between other coffee players by offering all-day services.”
To achieve that, Dunkin Donuts & More’ will offer a diverse food options ranging from donuts (or doughnuts, at Rs 45) to cabiatta sandwiches (Rs 90-110) and, of course, donuts. However, Dunkin is the market leader in the US in regular, decaf ice and hot flavoured coffee in the US.
To keep a tab on costs as well as on the quality, 90 per cent of the ingredients are being sourced locally. “We took a year to develop our vendor base,” Bhartia said. “We only import items, for which we didn’t find the right quality.”
The company will leverage Domino vendors. It is also synergising many departments like human resources, finance, IT and supply-chain operations between both the brands to ensure profitability in the store-level operations by the year-end. Also, Bhartia said he would be looking for a third foods brand once he consolidates on Dunkin.
Suprisingly, Bhartia does not think that the US model for the chain would work in India. “In India, the coffee culture is growing. We expect 60 per cent to 70 per cent of our revenues to come from sale of food products. That is why we have worked hard on our menu,” he revealed. “In the US, coffee is the biggest revenue earner.”
Dunkin’ Donuts like its pizza business is being targeted at urban consumers aged up to 35 years.