You can now add Dunkin’ Donuts K-Cups to your grocery list.
Consumers have been able to buy Dunkin’s single-serve coffee made for the Keurig brewing system only at the brand’s restaurants since its cups were introduced in 2011. The company said that will change this summer, when K-Cups appear on the shelves of grocery stores and other retail outlets as well as online.
“More and more people are using K-Cups,” said Nigel Travis, chief executive of Dunkin’ Brands Group. “Instead of making this available on a limited basis, the widespread distribution will only help that brand relevance.”
The move will expand Dunkin’s K-Cup distribution to thousands of additional retail outlets across the country, he said. But it wasn’t easy to persuade franchisees to get on board.
For years, franchisees exclusively sold the brand’s K-Cups and were afraid that sales would decline if distribution expanded to other retailers.
Once the popularity of the K-Cups grew, the company approached franchisees to negotiate a deal to sell in other stores and split the profits, Travis said. That was 15 months ago.
“The franchisees were delighted with the idea of a new revenue stream and worried about potential cannibalization,” Travis said.
Franchisees hired a consultant and later agreed to share the profits 50-50.
Travis estimated that each restaurant will receive $2,500 to $3,000 a year for the first five years of the program. As part of the agreement, franchisees also will split the profits on packaged coffee, up from one-third of the profits under a previous deal.
J.M. Smucker Co. will handle distribution and marketing to grocery chains, mass merchandisers, club stores, drugstores, dollar stores, and home improvement stores. Keurig Green Mountain Inc. will work with speciality stores and office superstores.