East Coast staple Dunkin’ Donuts is starting its California expansion with five stores opening by year’s end.
Beginning this fall, the purveyor of everything breakfast will debut locations in Santa Monica, Long Beach, Whittier, Downey and Modesto.
Those new spots will kick off an aggressive push by the Canton, Mass., company into the Golden State. Dunkin’ plans to open nearly 200 stores in California through franchisees within a few years and eventually 1,000 locations throughout the state.
“We think California has the potential to be a very big market,” said John Costello, president of global marketing and innovation at Dunkin’ Brands Inc. “Our research shows that California residents love coffee.”
This is not the company’s first spin into California. It had about a dozen shops in the state before pulling out in the late 1990s. It staged a short-lived comeback in Sacramento in 2002.
The company has three nontraditional locations open in California: at Camp Pendleton, the Embassy Suites San Diego Bay Downtown and the Barstow Station railroad-theme stop next to Interstate 15.
Dunkin’ has focused its marketing to expand its name recognition and emphasize that the brand serves more than doughnuts, industry watchers say. That positions the company nicely for another go in California, despite the heavy presence of coffee and breakfast options already in the state.
The company will have to compete in the fast-growing breakfast category in a state already thick with competitors such as Starbucks Corp. and Coffee Bean & Tea Leaf. Fast-food rivals such as McDonald’s Corp. and Taco Bell Corp. have also been pushing early-morning offerings for workers and students on the go.
Visits for restaurant morning meals grew 3% in 2013, while traffic fell for the lunch and dinner categories, according to research firm NPD.
“Breakfast is the only segment within fast food that is really growing at the moment,” said Andy Brennan, an industry analyst at IBISWorld. “People are a lot busier, incomes are rising and people are willing to spend a bit more on breakfast.”
Experts say Dunkin’ is well poised to woo diners who want a grab-and-go option but want to spend less than they would at Starbucks or many independent cafes.
“It’s what I call more of an everyman brand, as opposed to perhaps Starbucks having a more aspirational brand concept around it,” said Sharon Zackfia, an analyst at William Blair & Co.
Costello described Dunkin’ diners as “authentic.”
Our customers are “down-to-earth, real people who are proud they have real things to do,” he said.