Comparative Analysis Of Starbucks And Dunkin' Donuts

Coffee resonates with general citizens. A lot of people are dependent upon coffee because it contains caffeine, and helps a person to work longer. Now people assume that the word ‘coffee’ is derived from elements that keep them warmed up for the entire day and pumped up during work hours. However, there is a myth to this narrative. Coffee is not altogether healthy as it makes people pursue the idea of coffee ‘making a person alert’.  All coffee lovers should be familiar with the two most well-known coffee shops: Starbucks and Dunkin' Donuts. But which is superior in comparison?

Despite being established 20 years after Dunkin' Donuts, Starbucks grew quickly and today is a far larger company. Dunkin' Brands recorded sales of more than $860 million in FY 2017, while Starbucks made over $22 billion in revenue. Compared to Dunkin' Brands' more than 20,500 points of distribution worldwide, Starbucks has a greater footprint with over 28,209 locations. With over 14,000 outlets nationwide, Starbucks outpaces Dunkin' Donuts, which has about 9,200 locations. Starbucks intends to expand its presence in regions like China by opening an additional 3,400 outlets in the United States by 2021, while Dunkin' expects to add 1,000 net new stores by the end of 2020. As of the end of 2017, Starbucks had far more international expansion, with 27,339 stores in 75 different nations. Although the majority of Dunkin' Brands' overseas outlets are Baskin-Robbins ice cream shops rather than Dunkin' Donuts shops, the company has a sizable global footprint. While there are only 3,397 Dunkin' Donuts outlets outside of the United States, the firm has 5,422 Baskin-Robbins locations worldwide as opposed to 2,560 in the United States.

Less than 4% of Dunkin' Donuts' overall Q1 2018 sales, which totaled $139.9 million, came from its overseas operations, which brought in $5.4 million. In the most recent quarter which concluded on April 1, Starbucks' consolidated net revenues of $6 billion were attributable to markets outside of the Americas by almost 30%. In an effort to challenge the footprint of its main rival, Dunkin' has announced aggressive ambitions for both domestic and international expansion. However, the differences in magnitude are the result of different expansion strategies.

Comparative Analysis Of Starbucks And Dunkin' Donuts

Franchising

Franchises make up the majority of Dunkin' Brands' locations. Since corporate-owned and operated stores make up 59% of the stores in the United States and 48.6% of the locations abroad, licensed Starbucks locations are disproportionately found outside of the country.

Compared to Starbucks, which is mostly owned by owner-operators, Dunkin' Donuts has a higher exposure to the franchise and rental income, which results in a fundamentally different business. This has significant effects on revenue sources, cost structures, and capital expenditures.

Operational and capital expense structures in company-operated stores differ from those in franchised sites. Starbucks' cost of goods sold (COGS) and retail running costs as a proportion of sales are substantially higher than Dunkin's. Changes in coffee bean prices have a more significant impact on Starbucks' earnings since COGS is so much more prominent in its expense structure. Considering that Dunkin' Donuts is not required to purchase cooking equipment for franchise sites, Starbucks also has a heavier load of capital expenses.

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