Dunkin’ Donuts has failed in the British market twice. Will it succeed on its third attempt?
1965 – 1968
Dunkin’ Donuts announced plans to establish a chain of 250 shops across Britain in 1965. The first outlet was opened at Ludgate Circus, London in October 1965. The venture was a “flop” according to The Economist, and the operation entered into liquidation in 1968.
1988 – 1999
The second attempt began in 1988. Somewhat frivolously, its British head office was at 48 Carnaby Street, London. Four outlets were opened in the Birmingham area, with a bakery at Leamington Spa. Six Dunkin’ Donuts (including a 24-hour branch in Glasgow) and a bakery in Livingston were established in Scotland. The plan was to open 100 outlets, with a focus on the London area. The outlets and bakeries were all closed down in 1999, after continuously losing money.
During its second attempt, Dunkin’ Donuts was actually owned by a British company, Allied Domecq, which has substantial knowledge of the local property and catering markets, as the owner of J Lyons (including the Wimpy burger chain) and 3,500 pubs.
2013 to present
Dunkin’ Donuts returned to Britain in 2013. Management may have been encouraged by the success of rival doughnut retailer Krispy Kreme. The chairman and chief executive of Dunkin’ Donuts in America is also a Brit. But Krispy Kreme clearly presents itself as a premium priced “treat”, whereas the Dunkin’ Donuts model is more of a value proposition akin to Greggs.
So Dunkin’ Donuts has entered the UK market, with two locations so far, and plans for expansion to 100 outlets in five years. The locations of the first two outlets, Harrow and Chelmsford (with plans for a third in Cambridge) make me feel confident about the chances for the chain’s future success in the UK. Not too flashy, with low rents. The mistake of many US food chains has been to occupy high profile central London outlets, with very high rents, and this rarely works out. This lack of arrogance on the part of DD may seem refreshing, but their humility stems from the fact that this is their third attempt to crack the UK market.
The first Dunkin’ Donuts site in the UK, in Harrow
Despite media claims about the “battle of the donuts”, Krispy Kreme will not be DD’s major rival in the UK. DD will compete primarily with Greggs, supermarkets, McDonald’s, and to a lesser extent the likes of Costa and Starbucks. Greggs is the company that has the most to fear from DD’s expansion, although Greggs is a wily competitor. Greggs did not emerge as the sole national bakery chain by falling asleep at the helm.
DD’s main customer base will be commuters, particularly during the lunchtime period. I haven’t been a DD either in the UK or elsewhere, so I can’t comment specifically on the food quality, but as it looks to be similar to McDonald’s and Greggs standard. If this is a case, it will be difficult for DD to succeed without matching their competitor’s prices. Due to its obvious initial cost disadvantage to its competitors due to its lack of scale, DD’s American parent company will have to be prepared to absorb sustained losses for at least a few years before the chain becomes profitable. The question is, how badly to DD want to gain a slice of the UK market?
Cadbury is the second highest selling confectionery brand in the world after Wrigley’s chewing gum. Similar to the Coca-Cola Company, much of Cadbury’s success has been driven by a single product, the Dairy Milk bar. When someone says Cadbury, you instantly think of Dairy Milk, it’s purple packaging, and the famous “glass of milk and a half” slogan.
The Cadbury Dairy Milk chocolate bar was introduced in 1905. Developed by George Cadbury Jr, it was the first milk chocolate bar to be mass produced in the UK. By 1914, it was the highest selling Cadbury line. The economies of mass production combined with rising incomes meant that the working classes could afford chocolate for the first time.
However, other manufacturers such as Fry and Rowntree soon caught up with Cadbury’s mass production methods. So why were none of their own product lines as successful as Dairy Milk? There is first mover advantage, yet it took seventy years for a product to seriously challenge Dairy Milk in the UK market. The Rowntree Yorkie bar made inroads in the 1970s, but has since faded somewhat. The Mars Bar built market share throughout the 1970 and 80s, largely because it retailed for half the price of Dairy Milk, so it was hardly battling on equal terms.
Why has Dairy Milk been so successful? There are two consistent brand selling points: Quality/Healthfulness and Luxury.
The brand has always been advertised as affordable luxury. Purple has been the dominant colour in the packaging since 1920. When you see purple on the shelf of the supermarket, you can be almost certain that it’s a Cadbury product. Purple reinforces the brand image: purple is regal and elegant and represents luxury. By dressing their product in purple regalia, Cadbury are expressing their confidence in the quality of their product. The packaging implies “Fit for Kings”, without the arrogance of explicitly saying so.
There is also an implicit ego boost associated with consuming a product that is “fit for royalty”. “You are good enough to consume this regal product”. The brand is egalitarian, which ties into the egalitarian nature of the Quakers, of which the Cadbury family were members.
This ties in with the original context of the product, which was offering the once luxury product, only affordable for the few, to the masses.
The luxury connotations of Dairy Milk reinforce the notion of a chocolate bar as a form of self-treating. The idea of chocolate as a reward, which is a powerful one, as consuming chocolate triggers the release of endorphins into the brain, which are the body’s “reward mechanisms”.
Since 1928, the product has been represented by the famous slogan, “A glass and a half”. This refers to the amount of milk (426ml) that a half pound (227g) bar of Dairy Milk contains. The slogan represents quality: no other competitor claims to contain as much milk, and milk is a simple, pure, quality ingredient.
Milk also suggests a certain amount of healthfulness. Milk grows bones and is/was given to schoolchildren. Milk is also a natural product, which counteracts the natural suspicions the individual may have regarding processed food.
Meanwhile, the name “Dairy” conjures up wholesome, rural imagery. The countryside has healthy and natural connotations. Interestingly, the second most successful Cadbury product after Dairy Milk is the Creme Egg, which also uses the double “dairy” imagery.
Dairy Milk line extensions continue to reinforce this image. To the modern consumer, “Fruit and Nut” and “Whole Nut” sound more like health bars or healthy cereals than high calorie confections. Again, fruits and nuts are products with healthy and natural connotations that professionals are always recommending we eat more of.
This healthfulness connotations help to allay the individual’s principal reason for not buying chocolate: it’s not good for you as it has a high sugar and fat content.
The origins of the full English breakfast are more recent than you might expect.
Historically, the classic English breakfast pairing was bacon and eggs. Bacon was the staple meat for the agricultural class for hundreds of years, and eggs were available in most homes each morning. As late as the 1950s, an “English breakfast” was shorthand for bacon and eggs.
Seemingly beginning around 1915, as wartime economy and rationing began to bite, the cold remains of the previous evening meal began to be added to bacon and eggs. As bacon and eggs became scarcer (and more expensive), the additions of these items bulked out the meal and prevented waste. Fried bread and potatoes were popular starchy additions. Sausages were not subject to rationing, and began to be introduced as a bacon substitute.
The earliest reference I can find to the phrase “full English breakfast” is in a 1930 edition of the Daily Mail.
A 1978 edition of The Globe and Mail of Canada lists the meal as comprising “eggs and bacon, tomatoes, sausages, kippers and heaven knows what else”.
The phrase was first shortened to “full English” (minus breakfast) in the mid-1990s.
Today, a full English comprises of, more or less, sausage, bacon, eggs, some starch such as fried bread, toast, hash browns or sauté potatoes, and some vegetables such as tomatoes, mushrooms and baked beans. Black pudding is popular. Regional variations include white pudding and oatcakes.
Gregg’s is nationwide British bakery chain. Why are there so few Greggs outlets in central London?
There’s certainly no shortage of commuters looking for lunch, or tourists looking for a quick snack. McDonald’s, EAT, Pret and Starbucks all maintain a strong presence.
Living in the provinces, I have always been impressed by the sheer quantity of Greggs outlets. In central Leeds and Newcastle, large cities, one never need be more than one minute’s walk away from a steak bake or sausage roll.
So why so few outlets in central London? Yes, the chain has northern origins, but that didn’t hinder McDonald’s or Starbucks, with origins even further afield.
The chain is essentially a fast food retailer: largely calorific products served quickly and cheaply. And Burger King, KFC and McDonald’s are very successful in the capital. People clearly aren’t afraid of unhealthy food.
Is the rent too high to make the low cost retailer profitable? Greggs outlets have very limited seating, so I hardly see how this could be an insurmountable problem. In Bread: The Story of Greggs, Ian Gregg, the former chairman of the company, states that before the 2008 economic crash, rivals were overpaying for sites in central London. But if that is indeed the case, then what has prevented the chain from expanding in the area since the economic crash, now that rents are lower?
Lets look at the individual USPs of its rivals. McDonald’s offers seating, Starbucks offers comfortable surroundings, Pret offers speciality coffee. The Greggs proposition can actually be fulfilled through small supermarket concessions. In actuality, many small supermarkets in central London already offer a hot pasty/sausage roll selection. How does Greggs improve on their rival? Well the Greggs product will be fresher, as they bake their food throughout the day. So freshness, convenience and price are the USPs that need to be drawn upon. Greggs also needs to smarten up its existing central London outlets in order to place distance between itself and its reputation as downmarket junk food.
There are two key marketing strategies at work behind the almost mythic reputation of Lea & Perrins’ Worcestershire sauce.
1.) the “secret” recipe The website states that there is a secret recipe, known only to a “privileged few”. Heck, if the secret recipe tactic works for Coca-Cola and KFC, why not us? But the truth is, *every* corporate recipe is a secret. You don’t know the recipe for Walker’s Roast Beef crisps or Knorr’s Chicken Seasoning, do you?
So one of the products major differentials is hardly a differential at all. Okay, I hear you say, we don’t know what Worcestershire sauce is! Well that’s hardly a secret. In fact, the company have been quite open that the sauce is principally vinegar and a soy sauce substitute (acid-hydrolyzed vegetable protein). Also included are salted anchovies, tamarinds, chillies, shallots, garlic, onions, ginger, molasses, sugar, cloves and “various fruits”.
2.) the idea of “craft”, small-scale, “vintage” traditional production. There is no reason to assume that the methods are more traditional than anywhere else. For example, the ingredients are no longer matured in wooden barrels: plastic and metal containers have taken over. It’s hard to see it as a craft product when it’s just vinegar and soy sauce with some crazy ingredients thrown in for good measure. Although I do love it with chilli con carne… And in the US, it still comes wrapped in paper, as it has been since the 1850s. Although the paper is no longer necessary to avoid bottle breakages, the tradition has endured. It gives the original Worcestershire Sauce a USP. Understand that I don’t mean to do down the marketing tactics behind Lea & Perrins’ famous product. In fact, I think it’s all the more impressive that tried and tested marketing techniques have been utilised so effectively without losing its sense of authenticity or becoming a “me too” brand.
The notion of craft and premium quality food and drink did not arise from the ether. In this post I attempt to trace its roots in recent history.
With the end of post-war rationing in Britain, a range of super-premium restaurants with a focus on local provenance opened in the North West of England. Beginning with Sharrow Bay in 1960, they catered to a very small segment of the population, but their growth indicated a desire for authentic, quality food.
In the 1970s the British public were enamoured with the wave of packaged and processed products: Watney’s Red Barrel ale, yoghurt, frozen food etc. They were expensive, but people were prepared to pay a premium for it because it was new, and perceived as “better”.
The late 1970s and 1980s saw the growth of the real ale movement, which advocated small scale production, locality and traditional production methods. But the provenance doesn’t even have to be your localness: just provenance in general seems to suffice. One had only to witness the growth of Whitbread’s Stella Artois in the 1980s and 90s, a beer marketed with French language advertisements, despite being brewed in the UK, and with origins in Flemish speaking Belgium.
Another interesting example is Jack Daniel’s whisky. With a monochrome label and adverts, the product was able to successfully foster a small scale image, “craft” image. This consumer “backlash”, as it were, stems from a new-found consumer cynicism. The consumer knows that most products they buy in their supermarket are owned by multi-national conglomerates. Many people do not like giving their money to perceived faceless corporate entities. Any product that seems to defeat or circumnavigate this system, and treat the consumer like an adult, seems to be on to a winner. People will pay far more than net worth for a perceived craft product because it makes them feel good for two reasons: supporting local or craft production, and avoiding the multinationals. I don’t think this applies to the whole population, but I think it applies to a good number.
The examples are endless, but I will give just one more: Yorkshire Tea. The name “Yorkshire” implies traditional craft methods and localness. The name isn’t faceless and bland like competitor brands PG Tips and Tetley Tea. The brand wears its provenance proudly, and isn’t ashamed of its local origins. The brand came from nowhere in the 1990s to becoming the third highest selling tea brand in the country by 2007. It wasn’t until 2000 that it became a nationwide supermarket staple. The brand has a surprisingly modern heritage: I doubt that many of its consumer base would estimate that the brand was only launched in 1977. Meanwhile rival brands such as PG and Tetley patronised the audience with television adverts that starred cartoon characters, chimpanzees and monkey hand puppets. The consumer goods advertising market has matured. Treating consumers like idiots works far less well than it used to. Consumers appreciate being treated like human beings.
The premium/provenance market shows little sign of slowing. Borough Market in London is now firmly established as a destination for quality food with provenance. The celebrity chefs have long promoted locality and quality. Farm shops are now ubiquitous in many English villages.
Craft brands need to be careful to maintain their image. Stella Artois sold for the same price as other premium lagers, despite its slogan of “Reassuringly expensive”. Consumers get wise to a brand that seems inauthentic, and it irritates them as an insult to their intelligence. Stella is now, frankly, a commodity lager, and its premium positioning has largely been given over to the Italian Peroni brand, which had spread largely through word of mouth.
