Dunkin Donuts Case Study

1636 Words 7 Pages
Introduction: Dunkin Brands is a multinational company operating in almost 60 countries. Dunkin Brands expands on franchisee model with its two quick serving restaurant chains (QSR) Baskin and Robbins and Dunkin Donuts. Dunkin Donuts is now looking for entering the Finnish market. In 2014 Dunkin Brands did not meet its expectations and its stock price fell .Moreover many of Dunkin Donuts competitors have already taken advantage of growing Finnish fast food and coffee shop market and in highly competitive and fast-paced QSR market, it´s important to grow and increase sales to remain profitable. Therefore I am investigating: Should Dunkin Donuts enter Finnish market in order to increase its sales?
1.1 Methodology: I will use secondary
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The start-up costs of a one Dunkin Donuts is about 103 520-1 523 050 dollars depending on the type of the outlet.
Payback period=(initial investment cost)/(contribution per period)=(average cost of Dunking Donuts)/(average gross profit of a international franchisee)
=(680 428,33)/(73 329,98)=9,28
9 years 3 months 10 days The payback period for franchisee appears to be quite long, almost ten days, but the franchising period is 20 years giving a franchisee a great deal of time to profit from the investment. However the long payback period in addition to high demands might decrease the amount of possible franchisees.
Calculations:
Average cost of a Dunkin Donut=(average cost of a freestading unit+average cost of shopping centre outlet+average cost of a convenience unit)/3
=((272600+1523050)/2+(216 100+1 124 050)/2+(103 520+843 250)/2)/3=680 428,33
Average gross profit of an international franchisee:
Royalty income (international): 15 383 000
Royalty percentage:
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Finland has a great potential market for QSR offering beverages such as different coffee drinks and Dunkin Donuts is already a well-known brand in Finland as a result from travelling. Moreover Dunkin Donuts would gain first movers advantage over large multinational QSRs. There are risks of failure even with the franchisee method which is a low risk method of entering a new market. The risks of growing too fast are significant in the case of Dunkin Donuts but risks of not doing so are also major. McDonalds for example have been performing poorly although it was a market leader for years. There might be opportunity cost in not entering Finland. However Dunkin Brands might want to consider lowering the demands on the franchisee if no possible franchisees appear and add Finnish raw materials and ingredients in their products in order to gain goodwill and competitive advantage in

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