Dunkin' says its new espresso is so good, 'you don't have to go to Starbucks'

  • While Dunkin' has no plans to stray from its roots in drip coffee, its newly revamped espresso offers it a gateway to reach younger consumers.
  • The company created a new recipe for its espresso, making the shot thicker, richer and less bitter than the old espresso.
  • 2017 was the first year in history in which consumers under 35 years old drank more espresso beverages than hot drip coffee, which ultimately pushed Dunkin' in to reevaluating its espresso.
Dunkin' Brands

Dunkin' Brands is confident that its new espresso will lure coffee drinkers away from rival Starbucks.

"Our espresso is so good, you don't have to go to Starbucks," Tony Weisman, chief marketing officer, at Dunkin', told reporters during the company's annual media day outside of Boston on Tuesday.

While Dunkin' has no plans to stray from its roots in drip coffee, its newly revamped espresso, which hits stores next week, offers it a gateway to reach younger consumers. Weisman said 2017 was the first year in history in which consumers under 35 years old drank more espresso beverages than hot drip coffee, which ultimately pushed Dunkin' in to reevaluating its espresso.

Research shows that more than 50 percent of millennials are opting for espresso beverages when they order coffee, the first generation to do so, said Dan Wheeler, vice president of strategic initiatives.

"Espresso skews younger — I graduated from pop and soda to drip coffee, but my kids are graduating from Coolattas to lattes," Dunkin' CEO Dave Hoffmann told reporters Tuesday.

As the brand pushes out from its stronghold in the Northeast, there's demand for more specialty drinks. The company has said that 90 percent of its next 1,000 stores will be west of the Mississippi.

Hoffmann said he's hoping the combination of good flavor, cheap prices and fast service will be enough to lure — not only existing customers to try its espresso — but customers at other cafes.

The company created a new recipe for its espresso, increasing the amount of coffee used and decreasing the amount of water. The new shot is thicker, richer and less bitter than the old espresso, which launched in 2003 and was made with more water and brewed at a higher temperature.

This new espresso gives Dunkin's beverages a more premium taste, but it won't come at a premium cost, executives said.

Dunkin' will roll out its new espresso drinks at $2 during its initial promotion before rising to $3.39 for a medium drink, compared with $5 or $6 at Starbucks.

In addition to iced and hot espresso beverages, the company will also sell affogato, an Italian-style dessert in which a shot of hot espresso is poured over a scoop of ice cream, at locations that are both a Baskin Robbins and a Dunkin'.

So far, the company hasn't seen any cannibalization of its other beverages in offering these espresso drinks, executives said.

"We're going after market share," Parag Patel, a Dunkin' franchisee that owns 30 locations in California and Maryland. "But, we are not just trading consumers from hot or iced coffee, we are targeting different consumers and different day parts."

Patel, who was the franchisee that ran Dunkin's espresso test in Baltimore over the summer, said his stores sold a lot of espresso later in the day. Afternoon traffic is something that many restaurants have tried to cultivated with value offerings and new menu items. It is seen as an undervalued time of the day with the potential for boosting sales.

Patel also said that close to 90 percent of customers who tried the new espresso said they would return to buy it again.

And if the price isn't enticing enough, Dunkin' is promising to deliver its espresso beverages to consumers faster than its competitors.

"Dunkin' is a place to take five [minutes], not 50," Wheeler said to reporters.

Executives said they are rearranging and updating kitchen equipment so employees can make the new beverages fast.

"We may aspire to sit around and sip lattes," Meredith Morris, senior manager of consumer insights, said, alluding to rival Starbucks' reputation for being a destination location for coffee drinkers. "But espresso gives you energy while you are on the run. We have busy lifestyles."

On Tuesday, second-generation franchisees Victor and Octavio Carvalho, who own the first Dunkin' Donuts location as well as the first Next Gen store, praised the company's collaborative efforts and said the financial commitment they had to make to revamp the espresso was "the right thing to do."

"This is where it's heading," Octavio said. "That's what people enjoy drinking."

"The commitment is worth it in the long run," Victor added.

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