ROLLING IN DOUGH
Imagine a double-chocolate cake doughnut. Picture yourself taking a bite. Go ahead. You know you want to.
Swoon as the dense, cocoa-rich confection envelops your taste buds.
Next, think about the perfect cup of coffee to wash it down. Hazelnut? French vanilla? Maybe toasted almond, or perhaps even caramel.
Now, hold that thought until August, when Dunkin’ Donuts, purveyor of those tasty treats, opens its first Las Vegas store at Silverado Ranch Boulevard and Bermuda Road.
The Silverado Ranch outpost will be the first location in a 62-store rollout Dunkin’ Donuts is planning in Las Vegas in the next seven years.
As many as five more stores will follow by the end of 2007, said franchisee Don DeMichele, whose company, Kainos Partners, is also building Dunkin’ Donuts franchises in New York and South Carolina.
DeMichele said Kainos will open 41 Dunkin’ Donuts stores in Southern Nevada in the next 3 1/2 years. Dunkin’ Donuts officials are looking for additional franchisees to launch the remaining 21 stores. The doughnut-store blitz is part of a strategy to place multiple locations on busy byways so the company’s most loyal customers can get a fix any time.
Population growth and demographics are drawing Dunkin’ Donuts to the Las Vegas market.
Many Las Vegans hail from the East Coast or the Midwest and know the brand, said Robert Rodriguez, president of Dunkin’ Donuts.
More important, the typical Las Vegas consumer fits the standard Dunkin’ Donuts customer profile.
“(Las Vegans are) hardworking, dedicated people, and they’re constantly on the go,” Rodriguez said. “They’re working 24 hours a day, and our products are very well-aligned against that. Not only can you have a great cup of coffee, but we have breakfast and snacks on the go for people who are trying to grab and run.”
The Las Vegas stores are part of a major U.S. expansion for Dunkin’ Donuts. Executives hope to triple the franchise’s number of stores from 5,000 to 15,000 by 2020. They’ve also arranged a deal with Procter & Gamble to place Dunkin’ Donuts’ java on grocery shelves in the next year, and they recently arranged to offer the company’s coffees on JetBlue flights.
Longtime customers from back East will see a distinctly different Dunkin’ Donuts in Las Vegas. The familiar pink-and-orange logo remains, but branches will be brighter and airier, said Lynette McKee, vice president of franchising for the company. Dunkin’ Donuts has also expanded its menu with smoothies, bagels, omelets, breakfast sandwiches and delicatessen sandwiches.
Industry experts say the Las Vegas market has room for the new and improved Dunkin’ Donuts despite entrenched competitors such as Starbucks and Krispy Kreme.
Malcolm Knapp, president of food-service consulting firm Malcolm M. Knapp Inc. in New York, said consumer research has found that patrons of Starbucks and customers of Dunkin’ Donuts fall into distinct camps.
A study that gave regulars of each coffee shop cash to spend with the competition showed that Starbucks coffee buyers didn’t take to the grab-and-go atmosphere at Dunkin’ Donuts. The feeling was mutual for habitués of Dunkin’ Donuts, who preferred the in-and-out vibe of the pastry shop to the stay-a-while air at Starbucks.
“Research showed there are two tribes of customers, and there’s enough room for both Starbucks and Dunkin’ Donuts,” Knapp said. “That is the key to why Dunkin’ Donuts can go outside its New England stronghold.”
The doughnut chain also opted for medium-roast coffee rather than the heavy-roast joe that Starbucks peddles, and the resulting difference in flavor profiles should translate into a distinct client base for both brands, Knapp said.
John Stanton, a professor of food marketing at St. Joseph’s University in Philadelphia, agreed that Dunkin’ Donuts will find a niche in Southern Nevada.
“Starbucks has a lot more to do with the environment and (the brand on the) cup than it has to do with the coffee,” Stanton said. “Krispy Kreme has come in with the allure of this incredible doughnut. But Dunkin’ Donuts is really like your blue-collar shop, with a really good cup of coffee and a delicious doughnut at a really fair price. They’re really targeted to different markets, and there’s absolutely room for all of them.”
There’s also room in Las Vegas for more than the 62 stores Dunkin’ Donuts is planning, DeMichele said.
The company generally launches in a new market with one store per 25,000 residents. Once the first wave of franchises is up and running and Dunkin’ Donuts has penetrated a market, that ratio drops to one store per 6,000 residents, DeMichele said.
“As I talk to people and tell them we’re coming, they’re excited,” DeMichele said. “I’m really excited about bringing Dunkin’ Donuts to Las Vegas. I want to get my Dunkin’ Donuts coffee while I’m here, and I also want the people who live here to have the opportunity to purchase it here. We’ll bring them coffee and some great baked goods, and give them quick, convenient service.”
