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Dunkin' Donuts' CEO reveals the 2 reasons behind the chain's decision to slash the 'Donuts' from its name

Business Insider 標誌Business Insider 26/9/2018 Kate Taylor
a hand holding a glass of beer © Business Insider/Jessica Tyler

  • Dunkin' Donuts' name has changed to just "Dunkin,'" the company announced on Tuesday.
  • The chain is focusing more on beverages, adding a range of new drinks to the menu.
  • Dunkin' also has a symbolic reason for changing its name as the company attempts to simplify business more generally.

Dunkin' Donuts is dropping the "Donuts" from its name. And, the reason for the change is rooted in two strategies that are driving the chain forward.

"This isn't a change for the sake of change," Dunkin' Brands CEO David Hoffmann said in a call with reporters on Tuesday.

Hoffmann continued: "For two years, we have been focused on evolving Dunkin' into the premier, beverage-led, on-the go-brand and have been implementing what we call our blueprint for growth."

The Dunkin' name change embodies two pillars of this blueprint: beverages and an increasing emphasis on simplification.

Why coffee trumps donuts

a display in a store © Business Insider/Jessica Tyler

Dunkin' Donuts hasn't been quiet about its aspirations to build up its drinks business, which currently makes up roughly 60% of the company's sales. Doughnuts don't currently have the best reputation as Americans move away from sugar, and they also have lower profit margins than many beverages.

"It's clearly the right move," Mizuho analyst Jeremy Scott told Business Insider of the name change. "They've been a beverage-led brand for years now."

Now, Dunkin' is eager to push beverage sales even higher.

"In recent years as American and indeed the world's appetite for coffee and coffee-type beverages have grown, we've put even more focus on being a beverage-led business," said Tony Weisman, Dunkin' Donuts' US CMO.

Hoffmann said that while the overwhelming majority of Dunkin's beverage sales are still coffee, he is "optimistic about expanding into teas and other categories that we, as a beverage-led brand, need to get into and will get into."

In next-generation locations, Dunkin' is working to push not just coffee sales, but to expand more into new types of beverages. New stores feature a tap system for cold beverages that include nitro cold brew, cold brew, original-blend coffee, dark-roast coffee, decaf, green tea, and iced tea.

As cold-drink sales boom, these beverages are a major opportunity for growth in Dunkin's future, in a way doughnuts are not.

The power of simplification

a sign on the side of a building © Business Insider/Jessica Tyler

Dunkin' Donuts is also sending a slightly more symbolic message that, even as the chain is emphasizing how extensive its menu is, it wants to keep simplicity and - more importantly - efficiency at its core.

Hoffmann said that the simplicity is part of the "overarching strategy," which speaks to the "breadth and depth of the menu."

"The simplicity of our new brand creates energy," Weisman said.

Talk of simplicity can sound like lip service. However, it has already had concrete results at Dunkin' Donuts.

Dunkin' Donuts began the process of cutting down its menu by 10% earlier this year. And, the chain is increasingly turning to tech solutions as it pares down the number of employees required to work in stores, due in large part to labor shortages. A shorter name matches a wider story of simplification with fewer menu items and workers.

"Dunkin' is a shorter, simpler, more modern version of who we've always been," Weisman said.

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