Dunkin' Brands new CEO modernizes iconic coffee company to stay relevant to customers who don't want to pay more for their cup of Joe

  • The 68-year-old coffee and doughnut company to keep its iconic brand relevant amid stiff competition from national coffee chains.
  • Dunkin’ is on track to bring 50 next-generation stores to the U.S. this year, as well as a handful of modernized Baskin Robbins locations.
  • Dunkin' planned to promote David Hoffmann for some time, but his CEO job wasn’t a given.
A Dunkin Donuts worker hands cups of coffee and boxes of donuts to a customer.
Susana Gonzalez | Bloomberg | Getty Images
A Dunkin Donuts worker hands cups of coffee and boxes of donuts to a customer.

As David Hoffmann takes over as CEO of Dunkin’ Brands, he has one goal — continue modernizing the 68-year-old coffee and doughnut company to keep its iconic brand relevant amid stiff competition from other national chains and local coffee shops.

The trick, he said, is delivering high-quality coffee fast to customers who don't want to pay more for their cup of Joe.

“Relevance is at the heart of what we are trying to do. Brands that stay narrow in their lane do their best. On the Dunkin side, that is great coffee, fast. It’s our sweet spot,” Hoffmann told CNBC on the heels of the company’s announcement Wednesday that CEO Nigel Travis, who took the company public in 2011 and has been with the brand for nearly a decade, was stepping down effective immediately.

Travis will stay on board as executive chairman and will remain actively involved with a focus on expanding Dunkin's international business. Hoffmann, who joined Dunkin′ Donuts U.S. as president in 2016, will continue in that role as well. He was previously at McDonald's for 22 years, starting as a crew member in high school and eventually becoming president of the company’s high-growth international division. The two men have worked closely together over the past two years, meeting weekly at Travis’ home, with Hoffmann looking to Travis as a “partner and mentor.”

Hoffmann says his focus will continue to be on the Dunkin’ Blueprint for Growth, a strategy designed to make the company the “leading beverage-led, on the go brand.” The plan so far has seen a slimmer menu, new value promotions and menu items, as well as a next-generation concept store in that debuted in Quincy, Mass. earlier this year. The new design gives the stores a modern look and features drive-thru lanes for mobile orders and kiosks for ordering, among other changes.

First quarter results in April were mixed with a strong bottom line that missed revenue projections and showed lagging same-store sales.

However, the company improved its afternoon foot traffic, an area of concern for coffee competitors, including Starbucks.

“The next-generation concept store is the embodiment of the blueprint — it shouts great coffee, fast,” Hoffmann says.

Dunkin’ is on track to bring 50 next-generation stores to the U.S. this year, as well as a handful of modernized Baskin Robbins locations, Hoffmann said.

Beyond that, Hoffmann says like many restaurants, Dunkin’ is looking to reduce its envir onmental footprint, having previously committed to ditching its famous foam hot cups by the year 2020. Starbucks on Monday announced its plans to eliminate plastic straws from its stores globally by the year 2020. Hoffmann says Dunkin’ is currently “studying straws,” but noting that the company is 100-percent franchised and major changes can take longer to bring to fruition.

While the plan has been in place to have Hoffmann succeed Travis for some time, the former CEO says Hoffmann's promotion wasn’t a given.

“Dave had to demonstrate what he had to lead this great company. He did that in three ways — he gave franchisees leadership, he pulled together the blueprint for growth and he has the franchisees’ respect. He earned this in every way,” Travis says. He said they wanted to announce the change before the company's Independent Franchise Owners conference in September.

In addition to working on the company’s international business, Travis says he will continue to work as an advocate on behalf of the franchise and small business community in Washington, D.C. on issues from taxes to skilled labor.

“The issue I have talked continually about is the labor shortage, not just in our industry, it’s in about every industry,” Travis said. “We rely on people and that is the biggest issue. We are working very hard to overcome it.”

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