This is the detailed PESTLE/PESTLE Analysis of Dunkin Donuts which elaborate the external factors impacting the company; Political, Economical, Social, Technological, Environmental and Legal.
Introduction
The idea was launched by a man William Rosenberg during World War II when he saw that major proportion of his catering business is coming from two main menu items: coffee and doughnuts. Initially when he started his business by opening an outlet in Quincy, Mass it was named Open Kettle which later was changed to “Dunkin Donuts”. At that time franchising was seen as something illegal and taboo but Rosenberg decided to let people share the profits and gains and create a win-win situation. It has become sort of a custom in some places that occasionally one or two couples would get married in their favorite Dunkin Donuts branch and that is why Dunkin Donuts sponsor weddings too through a competition. Quality assurance teams taste coffee every day in order to ensure consistent taste and standard. (Becker, 2015)
Political Factors
Dunkin Donuts has political affiliations for which they donate huge amount to campaigns of Democrats during elections. It is very risky for the business as consumers tend to move away from companies who do not share their values and beliefs in politics as this shows who they stand for and what defines them. The customers can also put pressure on the company to change its support. One customer revoked his membership of a particular club when he found out that the club supports opposite party. Starbucks is considered to be the most liberal among all popular chains followed by Dunkin. (Newman, 2012). Another issue that is eating up chains like Dunkin Donuts is environmentalists are forcing government to impose restrictions on consumption of meat because raising these animals lead to greater amount of deforestation than the benefit that we get from them. But these chains are trying to influence the government to decide otherwise; because the firms will have to spend huge amount of money in R&D if this kind of restriction gets imposed. (Meat Consumption And The Environment: Study Calls For Eating Less Meat, 2012)
Economic Factors
When sales from one region start stagnating than there are two alternatives for the company: either introduce new products or expand into new markets that were not explored before. That’s what Dunkin Donuts did when it came to South Asian countries like Pakistan and India. In these countries there is growing middle class which means greater income to spend and more than 60% of the population is below the age of 35 representing greater opportunity for brands to benefit from greater life customer lifetime value. These chains have also standardized the operations for the purpose of successful franchising and achieve economies of scale but they have to be careful with that because their customers are very particular about taste of food and any cost cutting measure which can lead to alteration in taste of food may not be acceptable to their customers even if that means price reduction.
Social Factors
Companies are trying to change the social habits of individuals by making them consume snack items along with coffee thus developing habit of in between meals. Once consumers start enjoying the combination they get hooked to the brand. There is astonishing news of a person who lost weight by consuming fast food and daily workout. Health conscious people can be lured by marketing this fact as the biggest impediment to sales of fast food chains are health related issues. By introducing healthy options in the menu for fitness freaks, a new market segment can be tapped by Dunkin. (Zuckerbrot, 2014)
Technological Factors
Research has been carrying out in order to develop fake meat and hence reducing the cost of procurement and dependency on meat suppliers. This breakthrough research will allow scientists to create combination of proteins and other minerals that would taste like meat and feel like meat but it would not be meat. Besides this various technological innovations have been made in order to preserve the ingredients and ensure uniformity of taste and procedure, in coffee business the blend is very important, ingredients procured should be of consistent quality and they should be mixed in fixed proportion every time hence providing similar taste and this can be only ensured through automation especially when the business is franchised like in case of Dunkin Donuts.
Environmental Factors
The areas from which Dunkin procures coffee beans have to follow strict policies which ensure that productivity of per hectare increases without causing any harm to consumers of beans. Other environmental effects include health related matters which can turn into diseases if there is regular intake of fast food like donuts and subs as these are heavy calorie count food items. Dunkin has taken the initiative along with BioHiTech to reduce the land dumping and thus promoting green environment with some major cost savings. BioHiTech will convert the food waste into liquid form and inject it directly into sewerage line. It has decided to launch green restaurants by awarding its franchisees with certificates if they follow the set steps.
Law/Legal Factors
Due to a complex model of franchising that involves handling human resource which is diverse and adhering to local laws at the same which are different for different countries, Dunkin has been in trouble where 15 lawsuits were filed against it. Apart from legal battle the company has to disclose its financial position to its investors every year and tax authorities do not spare them either. Beside internal legal battles they have to fight on legal issues like taste copyright and infringements with external bodies where they are threatened by copycats who can steal the recipe and take away the competitive advantage from them.
Bibliography
Becker, E. (2015, November 27). A Dozen Facts You Might Not Know About Dunkin’ Donuts. Retrieved January 15, 2016, from Mental Floss: http://mentalfloss.com/article/71169/dozen-facts-you-might-not-know-about-dunkin-donuts
Meat Consumption And The Environment: Study Calls For Eating Less Meat. (2012, June 28). Huffington Post .
Newman, K. M. (2012, December 27). GeoPollster Reveals Campaign Contributions of the Companies You Buy From. Retrieved January 16, 2016, from tech.co: http://tech.co/geopollster-campaign-contributions-2012-12
Zuckerbrot, T. (2014, Janauary 9). Fast food can be waist-friendly. Fox News .