Dunkin’ is headed south of the border, again.
The Canton coffee chain first entered Mexico in 1992 and opened as many as 100 restaurants before it pulled out in 2009. Dunkin’ blames the failure on a franchise partner that didn’t understand the brand, poor marketing, and a limited menu.
Now Dunkin’ is teaming up with one of its US franchisees to re-enter Mexico. Dunkin’ announced plans on Monday to open 100 stores in the country over the next decade with the first slated to pop up this year. The partner, restaurant management company Sizzling Platter of Utah, operates 25 Dunkin’ Donuts shops in Texas, New Mexico, Utah, Colorado, and California, as well as 20 Little Caesars Pizza restaurants in Mexico.
“It’s a big opportunity. There’s a growing middle class that has a little more to spend and coffee consumption is on the rise in Mexico,” said Scott Murphy, Dunkin Brands’ chief supply officer and vice president of operations in Latin America. “A lot of what makes Dunkin’, Dunkin’ -- fast friendly service, high quality products and friendly environment -- is going to resonate quite well with the Mexican consumer.”
Dunkin’ has made a habit of shuttering all of its stores in a market and then returning a few years later, which it recently did in California, Brazil and the United Kingdom.
Murphy said Dunkin’ will be more successful this time around because the menu now offers a wider variety of products, including more sandwiches and drinks. He said Dunkin’ chefs have already created a few items to appeal to local tastes and will travel to Mexico in the next few weeks to test them out. He declined to offer any details about the pastries and said the drink menu will include more espresso, flavored coffee and single-origin roasts.
Sizzling Platter is also a key part of Dunkin’s return strategy. Murphy said the company is an ideal partner because it operates Dunkin’ stores in the US and has experience in the Mexican market
“Having the right partner is probably 70 percent of the battle,” said Dennis Lombardi, a food service strategist at WD Partners in Ohio. “That local partner has so much influence on your brand.”
Lombardi said the supply chain is another important part of Dunkin’s Mexico expansion.
Before Dunkin’ exited Mexico, supplies were shipped in from a hub in Orlando, Murphy said. Now the stores will be stocked from a facility in Phoenix and Dunkin’ intends to open additional supply hubs in California over the next few months. Dunkin’ currently has eight stores in California and signed agreements to open 200 across the state by 2020.
Mary Chapman, a senior director of product innovation for Chicago-based food industry research firm Technomic, said the Mexican market attractive to companies like Dunkin’ because the economy has recovered from the recession and middle-class families can afford to splurge on small indulgences again.
But she said some consumers might hesitate to give Dunkin’ another shot.
“You have to work that much harder for them to come back into the store,” Chapman said. “When they do come back, the product and execution has to be flawless because you’ve already let them down.”
She said Dunkin’ will have to compete against several other US coffee chains that are already established in Mexico. Starbucks Corp., for example, has more than 400 restaurants in the country.
Sizzling Platter will open stores in Mexico’s Distrito Federal and the states of Hidalgo, México, Morelos, Jalisco, and Querétaro. Dunkin’, which currently has more than 11,000 restaurants in 33 countries, is seeking additional franchisees to develop additional Mexican markets.