Can Duluth Support Seven Dunkin’ Donuts Locations?

Can Duluth Support Seven Dunkin’ Donuts Locations?

The stores will extend well beyond Duluth’s city limits, and there may be more area stores on the way; meanwhile, Dunkin’ Donuts is offering incentives to potential Twin Cities franchisees.

After a decade-long absence from Minnesota (and a previously failed attempt to reenter the market), Dunkin’ Donuts said earlier this year that it plans to add 50 Minnesota locations.

The Canton, Massachusetts-based chain, which has thousands of units across the country, has since debuted its first Minnesota shop, at the Kahler Grand Hotel in Rochester. A franchise group aims to add five freestanding locations there over the next several years.

And on Monday, it announced plans for seven more locations—to be located in Duluth and “the surrounding areas.” Dunkin’ Donuts said it struck a deal with franchisees Brian and Sharon Weidendorf to open the new locations, and the couple has three decades of real estate experience. Pat Messina, who has overseen other quick-service restaurants, has been tapped to oversee operations at each location.DonutsRFW.jpg

But can the Duluth area support seven Dunkin’ Donuts?

Steve Rafferty, senior director of U.S. franchising for Dunkin' Brands, told Twin Cities Business that the seven planned locations are not restricted to Duluth’s city limits. (Not by a long shot, actually.) He noted that they may include “further reaches away from Duluth that would still be geographically sensible and reachable by a franchisee based in the Duluth area.” He cited Brainerd or Baxter as examples.

Brian Weidendorf told the Star Tribune that the first location will be near Miller Hill Mall in Duluth, and it's set to open in mid-2015. He said he has plans for locations in Brainerd, Hibbing, and Superior, Wisconsin, as well as other undisclosed locations.

In terms of coffee chains within Duluth, Dunkin’ will compete with Caribou Coffee, which has about a dozen locations in the city and a handful of shops in the surrounding areas, including Hermantown and Superior, according to its website. Dunn Bros. also has a Duluth location.

“We looked really closely at the Duluth market and the metro market around it . . . and we think the opportunity’s there—we look at the population density, we look at the competitive set, and we have a lot of experience across the country introducing our brand to new markets,” Rafferty told TCB. “For us, it feels like seven is the right number of Dunkin’ Donuts to be developed in the Duluth market over the next few years,” he added.

But seven appears to be a minimum number: Weidendorf has his sights set on more.

“We have to open a minimum of seven in northeast Minnesota, that’s our agreement,” Weidendorf told the Duluth News Tribune. “But it’ll be a lot more. It could be 20 stores in the next five years.”

What About The Twin Cities?

When announcing the Duluth deal, Dunkin’ Donuts said that franchise opportunities “still remain available” in Minneapolis and Mankato, and the company is hosing a franchising seminar at Edina’s Marriott Residence Inn on Thursday.

Both consumers and potential franchise partners in Minnesota have exhibited a “high level of interest” about store opportunities in Minneapolis and Mankato, according to Rafferty. No deals have been finalized, although there are multiple discussions taking place, in various stages, he said.

The company is currently offering “special development incentives” such as reduced royalty fees and up to $10,000 in store marketing for stores that meet certain goals. And it pointed out that the franchise offers a variety of formats—including “free-standing restaurants, end caps, in-line sites, gas and convenience, travel plazas, universities, as well as other retail environments.”

Dunkin' explored making a major return to Minnesota in 2008, but the deal fell through due to what has been described as “a lack of supply-chain or training infrastructure to support the potential 100-store expansion into the state.”

Based on current interest, is Dunkin' still confident in its ability to add 50 Minnesota stores this time around?

“We’re still very confident in our plan that we’ll get to 50 locations over time,” Rafferty said. “The level of interest we’re seeing on the consumer and franchisee sides—everything we’re seeing about the various markets in Minnesota suggest we’re doing the right things and moving in the right direction.”