As one of the country’s major players in coffee service, Dunkin’ was facing fierce competition and pressure from both ends of the market: coffeehouses on the top-end sought to elevate their aesthetic and offerings, while convenience stores on the low-end doubled down on speed and ease-of-use, squeezing Dunkin’ into an ill-defined middle tier. Additionally, with the rising popularity of tech-enabled user experiences, the Dunkin’ in-store customer experience was in need of an update. To top it off, franchisees felt increasing pressure to reduce operating costs as the U.S. minimum wage was projected to rise in the near future.
We were tasked with developing a store-of-the-future customer experience and store design concept as a proof-of-concept solution to these impending threats.
The Key Insight
Through intensive consumer and category research, we learned that what customers want most from their morning coffee run is a boost of positive energy to keep them moving. It became crucial that Dunkin’ act as the facilitator of this momentum. We spent 16 weeks partnering with a cross-functional leadership team at Dunkin’ Brands, as well as a multi-disciplinary design collaboration with leading brand experts, to develop an innovation strategy for the store-of-the-future experience that focused on easing these moments of transition. Our strategy also focused on owning the “middle ground” between sit-and-stay coffee shops, and grab-and-go convenience stores, a largely overlooked market segment, but one that Dunkin’ was uniquely positioned to occupy and win.
We designed an omnichannel store experience and end-to-end customer journey blueprint that separates on-premise from on-the-go journeys and provides customers with full choice of how they engage—from low-tech + high-service to high-tech + low-service. We were also specifically tasked with solving for the drive-thru, whose locations boast 40% higher sales volume, yet had seen minimal change and improvement throughout the years. As most franchises have an inflexible property footprint, Dunkin’ challenged us to increase speed and efficiency while maintaining existing drive-thru layouts. In response, our team developed a mobile-order, pickup-only drive-thru concept that aimed to eliminate friction and boosting throughput, simultaneously pushing adoption of the digital app.
At the end of the engagement, we worked to guide the development and execution of the front-of-house store design, and the back-of-house kitchen design, creating the initial ROI model for the pilot store, as well as the test-and-learn experiment architecture through which to optimize it. A crucial part of the buy-in was attributed to the sensitivity analysis we conducted as part of the financial model, which showed that the Store of the Future would outperform the current store even if no labor savings could be achieved.
The first store featuring the redesigned experience opened in January 2018 in Quincy, Massachusetts, the birthplace of the first Dunkin’ location 68 years prior. The store was marketed as the ‘the brand’s U.S. store of the future experience,’ and featured recommended store elements including the industry’s first mobile-order-only drive-thru lane and separate pickup experience for in-store mobile-order customers. The store provides multiple ways for consumers to engage with the store, depending on preference, and also supports an increased adoption of mobile ordering—which is particularly exciting for Dunkin’, whose crew members spend an estimated 30% of time taking orders.
With positive feedback on the redesigned format, Dunkin’ Corporate has announced plans to invest $100M in its franchise network to open up 50 locations that feature the updated design by end of 2018. Leadership has emphasized the importance of the new store format in helping Dunkin’ grow and differentiate as an on-the-go, beverage-led brand. Our original insights that highlighted the contrast between what consumers need from Dunkin’ and the realities of its store have continued to influence the brand and strategic initiatives.