It’s no secret that the retail landscape is changing. Brick and mortar stores are popping up all over the place, but not necessarily in the ways they once did. Gone are the days when you’d cozy up to the counter at a Dunkin’ Donuts for a cup of hot coffee served in a cup on a saucer. And, you no longer have to visit a traditional Dunkin’ location to satisfy your hankering for an iced Cappuccino and a fancy donut. Dunkin’s forays into nontraditional locations, like a gas station, travel plaza or even at the Hard Rock Hotel in Las Vegas, have proven to be a successful retail strategy.
These types of nontraditional restaurant locations are growing by leaps and bounds, particularly in areas where traditional retail real estate locations are sparse. According to Franchising.com, nontraditional restaurant locations include airports, hotels, college campuses, stadiums, hospitals, military bases, highway rest stops and turnpike plazas. Think about any place where large numbers of people congregate, pass through or live. Retail experts say these locations provide an excellent opportunity for brands to effectively expand in new – as well as familiar – locations.Deeper expansion
Dunkin’ is still planning to open 1,000 new locations by the end of 2020, and more than 90 percent of those will be built outside the Northeast. Nontraditional locations are a natural fit because they allow the brand deeper expansion and a chance to be part of more customer experiences.
“We want to place our brands where our customers work, play, learn and make memories,” Chris Burr, Director of Nontraditional Development for Dunkin’ Brands said in an interview with Restaurant Development and Design Magazine. “Those tend to be nontraditional locations.”
Dunkin’ currently boasts more than 800 nontraditional locations, with airports as one of the most active segments. But, as Burr has pointed out, lodging and hospitality is a growing segment as are locations in hospitals and medical facilities.
“Airports are coveted locations,” Gary Shamis, an advisor in the Restaurant Group at BDO International accounting firm, told Restaurant Finance Monitor. He says airports are a great way for national concepts to try new types of products, but also cautioned that a poorly run location could reflect negatively on a brand as well.
Nontraditional, but powerful
Burr spends many of his days scouting nontraditional locations for Dunkin’ franchisees. He points out that the best locations can expose the brand to previous or lapsed customers who haven’t visited in a while—as well as to new customers. They may see a Dunkin’ in the airport as they walk to their gate and decide to grab a coffee.
It’s even better, he says, when you see a Dunkin’ in a place where you wouldn’t expect to see one.
“There is value in opening a unit where the primary purpose of a guest’s visit isn’t Dunkin’-focused,” says Burr. “For example, a Dunkin’ location in a waterpark can enhance the experience with its products and create a circular branding effect that benefits the entire system.”
As Dunkin’ expands and opens new locations, Burr says the split is about 50-50 between the development of its traditional franchisee base – stores on the streets and in shopping centers, for example – and nontraditional franchisees, which are operators who own and operate a facility and thus own the Dunkin’ inside.
As a franchised system, Dunkin’ first prioritizes finding a space and utilizing local franchisees, as is the case in the master development agreement between Dunkin’ and Walmart stores. In these deals, Dunkin’ controls the space, and local franchisees own it.
In other instances however, this model may not be possible. Many college campuses, for example, have exclusive foodservice agreements with companies like Aramark or Sodexo, so the commercial foodservice becomes the franchisee.
What to look for
As with any new location, many aspects go into assessing a new site.
“In airports, we look for passenger counts, and in hotels, we look at an average number of rooms and number of guests per room,” Burr told Restaurant Development and Design Magazine. “One of the things that’s great about Dunkin’ is our broad portfolio of concepts helps us scale the menu to the venue.”
He goes on to say that it’s important to look at each nontraditional location through a different lens than that of a street store. And while the quality and brand presence must be consistent, he concedes that the menu might be a bit different.
“Still, that cup of coffee has to be the same, regardless of where you are. The coffee a customer gets at Kauffman Stadium in Kansas City has got to have the same quality standards as the cup of coffee you’d get at a restaurant in Boston,” and maintaining the brand standards is always the goal,” Burr told the magazine.
“Nontraditional locations have the opportunity to introduce your concept to new customers or draw back an occasional or lapsed customer,” says Burr. “It’s vital these locations are credible and speak the brand standards to the customer.”
But, sometimes you have to bend a bit because, in the nontraditional world, you’re operating in someone else’s house.
“There may be some existing design requirements we have to adhere to,” says Burr. “This is very common in airports. Washington/Reagan airport in D.C., for one, is very strict about what colors you can use and what the sign has to look like.”
Weinberger, of Maui Wowie’s, adds that you need to understand that in nontraditional locations, every audience and every space is a little different. “So long as we can have our brand and product intact, we can go down the road of due diligence and see if the financials and operations make sense.”
In 2017, travel retail company, Hudson Group, which operates more than 20 Dunkin’ locations, opened Dunkin’ spots inside the Hard Rock Hotel & Casino in Las Vegas and Biloxi, Miss.
The Dunkin’ in the Las Vegas Hard Rock Hotel includes a few nods to the aesthetics of the hotel, including a mural of a hot pink skull devouring a donut.
Growing the nontraditional base
Along with its new locations in the Hard Rock Hotel, you can find Dunkin’ at many Great Wolf Lodges across the country. In 2018, Dunkin’ expanded its operating agreement with Great Wolf Lodge, opening its 12th restaurant at the chain, which boasts it is “North America's largest family of indoor waterpark resorts.”
Between 2017 and 2018, Dunkin’ also debuted more than 30 rest stop and travel center outposts – both full- and self-serve – with Pilot Flying J Travel Centers.
And, let’s not forget about college campuses. In 2017, Dunkin’ opened a nontraditional location at the University of Hawaii, as well as at George Mason University, Binghamton University, the Air Force Academy (its second), and several more.
Burr says these nontraditional locations help customers make emotional connections with the brand.
“When our customers engage with Dunkin’ where they work and where they enjoy life, it gives them a sense of place, and offers a spot in their daily lives where they can make memories with Dunkin’.”
And isn’t that what it’s all about?