- [Narrator] "Dunkin'" has long said,

"It's on time to make donuts."

- Who else goes to that trouble?

- But it's not just pastries.

Over its 70 plus years

"Dunkin'" has repeatedly spotted and adapted

to new trends even when that meant focusing less

on donuts.

- Donuts literally used to be part

of their name and now it is not.

And it definitely reflects how their sales

have really changed and how beverages

become so much more important

than just selling donuts.

- [Narrator] From 2009 to 2019,

a time when Dunkin' introduced many drink options

and rebranded, it grew from around 6,000

to over 9,000 locations.

The shift away from donuts and towards drinks is

just one change that has helped the company evolve

from a New England diner to a worldwide chain

worth around $9 billion.

This is the economics of "Dunkin'".

In 1948 restaurateur, William Rosenberg

opened a diner called "Open Kettle"

in Quincy, Massachusetts selling coffee

for 10 cents and donuts for five.

Two years later, he changed the name

to "Dunkin' Donuts" inspired

by seeing others dunk donuts into their coffee.

It was one of the first trends the company capitalized on.

- Donuts were actually served

to troops during the wars.

- [Commentator] Behind the American lines

in Italy, a brief interlude

and good old fashioned donuts.

- And when troops came home, it was 1950s

and people were going back to offices

and donuts were a really great way to quickly

have breakfast on the go.

And "Dunkin' Donuts" really capitalize on that.

- Dunkin' the magic munchkin.

- [Narrator] The company took donuts a step further

in the early 1970s when they introduced the munchkin

as a way to use the leftover dough

from the center of donuts.

- This is what a munchkin looks like.

They have them down at "Dunkin' Donuts"

in quite a few flavors.

- [Narrator] Donuts continued

to be Dunkin's focus through the nineties

when trends began to shift.

In the 1990s, 2000s, America was generally becoming

more health conscious.

And donuts for all their tasty goodness

is not really known

as a very healthy breakfast alternative.

So companies like "Dunkin' Donuts" need to think

about what else could they serve.

Meanwhile, "Starbucks" really was starting

to take on the US at that time

and was expanding a lot.

And what they were doing was inventing new kinds

of drinks.

- [Narrator] Customers were looking

for caffeine and a lot of it.

The number of US coffee houses doubled

between 1996 and 2001.

So after decades of focusing on donuts,

in 2006, "Dunkin'" made one

of its first moves away

from the pastries when it introduced the slogan,

"America runs on Dunkin'".

Coffee and beverage sales were popular

for quick service restaurants

since they have better profit margins

than most offerings, like food.

- When you think of a breakfast sandwich

or a baked good that involves labor,

it often involves many different types

of ingredients.

It might involve some kind of packaging,

whereas coffee at its simplest is just coffee

in a cup.

The labor tends to be less

and that does make it more profitable generally

for these drinks.

- [Narrator] By 2011, "Dunkin'" was selling

more hot and iced coffee

than any other fast food chain in the US,

including "Starbucks".

In New England and New York,

it hit 57% of the fast food coffee market.

At the time, "Dunkin'" had 6,800 locations,

around half the amount it has now

and bigger changes lay ahead.

In 2018, Dunkin's rebrand and name change to go

by just "Dunkin'" was a big step.

That year, beverages made up 60%

of Dunkin's sales.

- I think one of the important things

to recognize is caffeine is addictive

and everyone likes their morning coffee

and that is a ritual.

So people often go to get coffee every morning

where they might not necessarily

get a donut every morning or some kind of food.

- [Narrator] To give customers more options

for their caffeine fix, "Dunkin'" continued

to expand their drink menu releasing espressos,

cappuccinos, lattes and Americanos.

- [Artist] Take a sip of "You've got this,"

with Dunkin' Espresso drinks.

- [Narrator] And in doing so,

it went toe to toe with "Starbucks".

- "Dunkin'" is really trying to

in some ways get into Starbucks's lane.

They've offered a lot

of different new kinds of beverages.

They invested in machines to offer espresso.

They offer cold drinks, they offer blended drinks

and they really are trying to,

I would say, compete more with "Starbucks",

whereas "Starbucks" probably still thinks

of itself as singular.

- [Narrator] After the push for more drink sales,

in 2019, "Dunkin'" was one

of the top coffee sellers

of quick service restaurants selling

around 1.6 billion hot and iced coffees.

In 2021, "Dunkin'" sold over 4.4 billion cups.

While caffeine is a big seller,

Dunkin's drink focus isn't just on drip.

The company said that highly visual beverages

are a focal point of its menu.

They've also launched more specialty drinks

like Matcha and Chai.

Between all the flavors and coffee blends,

they've added nearly 50 new menu items

in the last four years.

But on the food side of the menu,

the brand struggled during the pandemic

when the breakfast category was hit hard

by commuting changes caused by lockdowns.

Dunkin's decline in sales would've

been nearly 5% points larger

if temporarily closed stores were included

in those numbers.

But once again, hot and cold drinks

with their high profit margins continued

to be top sellers on the menu.

- Earlier in the pandemic,

these cold drinks actually

were a real saving grace for a lot of coffee chains,

in part because people would order them

in the afternoon.

It's really created a new day part

for them where they didn't have it before.

And so that's been really helpful for them

when breakfast really took a hit early

in the pandemic.

Around that time,

"Dunkin'" was releasing new drinks.

For example, in 2020

"Dunkin'" announced the new--

- [Actor] Dunkin' Refresher.

- [Narrator] And this summer they came out

with three iced pumpkin drinks

and a new flavor of refresher.

- Cold drinks really have exploded in popularity

including during the pandemic, and a lot

of it has to do with social media, with TikTok.

70% of sales for a lot of these chains now

is these cold beverages

which is a huge amount of growth

in a very short amount of time.

- [Narrator] As beverages continue

to grow more popular,

Dunkin's experience in developing buzzy drinks

may help it create more in the future.

- "Dunkin'" certainly has changed from the 1950s

when it was just known

as a coffee and donut company.

They've expanded their drinks,

they've expanded their food

and thanks to franchising,

they've expanded their locations.

So I do think they've evolved a lot

from their roots in Massachusetts.

- [Narrator] As obstacles caused

by the pandemic continue

to challenge companies across the board,

it remains to be seen if Dunkin's history

of evolution will continue.

(upbeat music)