IE 11 is not supported. For an optimal experience visit our site on another browser.

Dunkin' Donuts enters Starbucks' territory

Dunkin' Donuts, long a mainstay in the East, is launching 90 new outlets into the Midwest.  The chain hopes the aggressive push will make it the coffee stop of choice in head-to-head competition with the omnipresent Starbucks.
/ Source: The Associated Press

Dunkin' Donuts, long a mainstay in the East, is using Cleveland as a test market, launching 90 new outlets in a blue-collar region with a waistline ranked among the nation's heftiest.

Dunkin' Donuts hopes the push in northeast Ohio and selected other regions will make it the coffee stop of choice in head-to-head competition with the omnipresent Starbucks. But don't expect comfy leather couches in the Formica world of Dunkin' Donuts.

"We want to be Dunkin' Donuts, not Starbucks," said Jay Patel, who opened a showcase store in Fairview Park in February as the chain based in the Boston area began a high-powered expansion into the Midwest. He eventually hopes to own six with his brother.

The strategy could work with people like Daniel Griffith, 30, a bicycle courier who knows the coffee territory in Cleveland.

"I like Dunkin' Donuts better, but I drink Starbucks more often because they are everywhere," Griffith said during a delivery stop within one block of a Dunkin' Donuts and two blocks of a trio of Starbucks locations in downtown Cleveland.

Griffith has become weary of the image of lounging in Starbucks over a latte. "That's the thing that's annoying about Starbucks to me. It's become way too trendy to go to Starbucks. It's so cliche to go," he said.

Patel, 32, who immigrated from India at 17, said Dunkin' Donuts customers favor rush-hour drive-thru convenience over the yuppie ambiance of Starbucks.

"It's a good neighborhood, business is getting better," said Patel, surveying the store and its "go to work" location on the inbound lanes headed to Cleveland. That allows drivers to get into Dunkin' Donuts without turning against traffic, a time saver in the morning.

That kind of attention to detail along with attractive real estate prices and what the chain politely calls Cleveland's "high proliferation of coffee and bakery consumption" were critical in selecting the city to help boost its national profile, according to Will Kussell, chief operating officer of Dunkin' Brands Inc. in the U.S.

The chain, which sells 2.8 million cups of coffee daily, hopes to open 10 stores in the Cleveland area by August and 90 within three or four years. Other big pushes have begun in Cincinnati, Tampa and Jacksonville, Fla., Charlotte, N.C., and Nashville, Tenn., as Dunkin' Donuts moves beyond its traditional New England and New York home base.

The Dunkin' Donuts move comes as Americans increasingly look to specialty coffees. According to the Specialty Coffee Association of America trade group, gourmet coffee has grown into a $9 billion industry in the United States, up 20 percent in six years.

Room for competition
Starbucks, which has about 45 outlets in the Cleveland area, isn't worried. Spokesman Alan Hilowitz said there's plenty of room for competition. Nationwide, Starbucks has 6,668 locations to more than 4,400 for Dunkin' Donuts.

Others aren't so sure about the competitive environment.

Joan Pistone, co-owner of a small restaurant and catering service at the Shaker Square boutique shopping area, said chains like Dunkin' Donuts and Starbucks have the money to overwhelm family run operations.

The chains have the money to "to make it easier and more efficient for people to stop there," she said.

Arlene Spiegel, a restaurant-industry consultant in New York City, thinks Cleveland would be a good fit for Dunkin' Donuts.

"They are very user friendly and very democratic. They are very democratic in that they do not look for that 'upscale' look," she said.

That dressed-down Dunkin' Donuts decor will never rival the Internet-surfing environment that Starbucks offers, Spiegel said. Dunkin Donuts "is not cozy, it's not embracing. It's not inviting," she said.

But it does have its signature coffee made with arabica beans, known for making smooth-tasting coffee. As for the doughnuts at 250 calories or 300 calories each, "You can fit them in on occasion," said Mary Beth Kavanagh, a nutrition instructor at Case Western Reserve University.

Men's Fitness magazine ranked Cleveland as the ninth-fattest city in the nation last year based on factors including government obesity and nutrition studies. Kavanagh said the city probably doesn't rank much better or worse than elsewhere.

"All across the country, more and more people are overweight. We're right there with the rest of the states," she said.

The newest Dunkin' Donuts stores in Cleveland do 45 percent of their business in drinks and 55 percent in food, but expect those ratios to be reversed with time. Established stores make 60 percent or more of their money in drinks, and Dunkin' Donuts has upped the ante with lattes and specialty items like iced coffee with a shot of espresso.

Patel, who does most of his business before 10:30 a.m., is counting on sandwiches to help his midday business and Baskin-Robbins ice cream to draw customers later in the day, especially during summertime.

Patel deflects a question about bulging waist lines and instead weighs in with a pitch on jobs. "Opening up all these donut locations is going to bring in a ton of jobs," said Patel, who has about 25 employees at his new store.