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Why Dunkin’ Brands is a unique player in a maturing industry (Part 7)

Dunkin’ Donuts’ main competitor on the coffee sales front is Starbucks, which sells coffee from its company-owned fleet of retail locations. Starbucks targets the market, seeking premium coffee products and gourmet pastries, courtesy of its partnership with California-based French-style bakery La Boulange. Dunkin’ Donuts appeals to the working-class American, offering value-oriented goods and an advertising scheme that suggests “America runs on Dunkin.”

Despite its current size differences, Dunkin’ Donuts is the older of the two chains. Its origins trace back to the opposite coasts of the United States. Starbucks was founded during 1971 and was a single coffee shop in Seattle until the 1980s expansion efforts driven by Howard Schultz. Dunkin’ Donuts was founded in 1950 by Bill Rosenberg. It focused its franchising efforts in the northeastern United States, starting with its first franchise in Worcester, Massachusetts, in 1955. By 1963, 100 franchises were operational, with Dunkin’ Donuts University (the employee training center) educating large numbers of prospective franchisees by 1966. Shortly afterward, investing guru Peter Lynch made a ten-fold profit on the old Dunkin’ Donuts stock after noticing the growth potential it had close to what he called home.

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