Dunkin’ just added popping bubbles to menus, and it’s the latest entry into Dunkin’s experimentation with trendy food items.
Bubble tea, the Taiwanese milk tea drink with tapioca pearls, has surged in popularity in the last few years, even leading to a nationwide shortage this spring. Variations on the drink, including popping bubbles like the ones at Dunkin’, are riding the wave of popularity. They’re also now on the menu at Sonic, which is owned by Dunkin’ parent company Inspire Brands.
“Dunkin’ has been working hard to bring in a younger demographic,” Mark Kalinowski of Kalinowski Equity Research told Insider. “Part of that is putting things on menu that appeal to younger customers.”
Kalinowski says that Dunkin’ looks to be making a conscious effort to draw in younger customers, who will ideally be loyal to the brand for years to come. Some competing brands have less of a need to concentrate on attracting young customers because they’ve grown that market over years, he said.
“Dunkin’ is always being inspired by different trends to create new and delicious ways to bring Dunkin’ to our fans. Offering innovative choices to our guests is a key part of our efforts to transform and modernize the brand, and we are proud to stand apart as the brand that democratizes trends and finds new ways to keep Americans running,” Jill Nelson, Vice President of Marketing & Culinary for Dunkin’ told Insider.
“When considering potential new menu items, our focus is on offering our guests authentic, high-quality options that first and foremost taste great. Our guests have made it clear that they appreciate that we offer such a wide variety of choices for customizing their beverages, which has encouraged us to continue to introduce ways to personalize and plus-up their favorite drinks. For example, we have introduced dairy alternatives like oat milk, and a non-coffee product Popping Bubbles, small flavored bubbles that can be added to any Dunkin’ iced or frozen beverage,” Nelson told Insider about the chain’s process for updating menus.
Dunkin’ is privately held and does not release quarterly financial results, but Kalinowski says he believe Dunkin’ is likely benefitting from the resurgence in sales across the restaurant industry right now.
Analysts looked at 24 restaurant chains over the span of a year and found 17 of them are currently running price increases, and price increases, on the whole, are growing in both size and frequency. Quick service restaurants have seen the largest increases, averaging 6% compared to 3% at fast-casual and 1% in casual chains. Most of these increases have been implemented since March 2021.
Based on Gordon Haskett analysis, the greatest price increases have been 10% at Taco Bell, 8% at McDonald’s, and 8% at Dunkin’, follow by Chipotle and The Cheesecake Factory. Exact prices vary by market. Applebee’s, Papa John’s, Red Robin, and a few others have not adopted any price increases over the past year.
Labor costs might have increased for restaurants over the last year, but so did the price of ingredients. US consumer prices hit their highest level in 13 years in May, increasing 5% over the previous year. Staple Chipotle items, like corn and avocados, grew more expensive this year as demand rose and shipping delays drove prices further up. Experts say rising food costs are a combination of growing demand as consumers increase spending and supply chain struggles. Shipping delays and severe weather events have made crucial commodities more expensive and difficult to obtain.
Dunkin says it has not discontinued the Beyond Breakfast Sandwich, despite a report from JP Morgan analysts.
The analyst note says that the offering is no longer on menus at stores analysts called. It no longer appears on the website or in-app menus. At least 9,000 Dunkin’ locations were previously carrying the sandwich, analysts said.
Dunkin’ says it is continuing to work with Beyond Meat, though the sandwich is not available in many parts of the US.
“We maintain a strong relationship with Beyond Meat and will continue to work together to explore innovative plant-based options to meet consumer demand for plant-based menu items,” Michelle King, Dunkin’s head of corporate communications, told Insider. “The Beyond Sausage Breakfast Sandwich continues to be available at several hundred Dunkin’ restaurants throughout the country including in California, Arizona, New Mexico, Colorado, Missouri, Nebraska, Hawaii, Utah, Kansas, and Wyoming.”
Dunkin’ first launched the sandwich in 2019, and at the time it was the biggest ever launch of a plant-based meat product by a major restaurant chain. The sandwich consisted of a Beyond Meat breakfast patty, American cheese, and an egg on an English muffin.
Fans of the sandwich are expressing their anger and sadness at not being able to get the sandwich.
Both Dunkin’ and Beyond heavily promoted the partnership when it launched.
“We are extremely proud of our partnership with Beyond Meat and thrilled to be the first U.S. quick-service restaurant to offer Beyond Breakfast Sausage nationwide. Dunkin’ is the brand that democratizes trends for America, and this latest addition to our menu gives consumers more choice to meet their evolving needs,” Dunkin’ CEO Dave Hoffmann said at the time.
Early sales looked promising. Testing went so well that Dunkin’ moved the launch from January 2020 to November 2019. During a trial run in Manhattan, the sandwich quickly became the second best selling from the menu, Irene Jiang reported for Insider.
“The start of the summer season is the perfect time to expand our menu with coconut milk, another exciting non-dairy choice for our guests. From our colorful Dunkin’ Coconut Refreshers to our creamy Coconutmilk Iced Latte, Dunkin’ is crafting the coolest coconut milk beverages to keep our guests refreshed and running, throughout summer and all year-long” VP of marketing and culinary Jill Nelson said in a statement.
The new coconut refreshers will come in pink strawberry, golden peach, and blueberry pomegranate flavors. Beginning April 28, Dunkin’ will sell medium coconut refreshers for a discounted price of $3 through May 25.
Non-dairy milk has exploded in recent years. Oat milk in particular has boomed at coffee chains. Dunkin’s started serving Planet Oat oat milk at some California locations in January 2020 and expanded to stores across the US in August.
Starbucks has carried coconut milk since 2016, five years before Dunkin’s launch, which is used to make Starbucks’ famous “pink drink” when combined with the chain’s own fruit refreshers line. Both chains sell almond milk, and Starbucks also has soy milk.
Companies are struggling to hire, and some say the stimulus package is to blame.
In March, Congress passed a stimulus package that included up to $1,400 in direct payments for individuals. The package also included weekly payments of $300 in federal unemployment aid through September, in addition to unemployment benefits paid out by states.
“The biggest challenge out there is the federal government and the state government are going to continue with this unemployment,” Blake Casper, who owns 60 McDonald’s locations in Florida, recently told Insider.
Jake Abramson, a chef in Brookline, Massachusetts, told Insider that unemployment benefits paid him roughly $400 more per paycheck than his job after he was laid off in March 2020.
He said he took a significant pay cut when he lost his unemployment benefits several months later because he returned to work to avoid a career setback.
If he was working in another job where he was simply clocking the hours, Abramson said, his calculus would be different.
“I would definitely take the unemployment over that,” Abramson said.
Companies are struggling to hire, and some blame stimulus benefits
John Motta, a Dunkin’ franchisee who serves as chairman of the Coalition of Franchisee Association, said the math just doesn’t add up for many people deciding between unemployment benefits and working at a fast-food chain.
“There is an insatiable appetite in America for unskilled labor,” said Marc Wulfraat, the president of logistics consulting firm MWPVL.
Ryan Alovis, the CEO of LensDirect, told Insider that the eye contacts company is struggling to hire employees, particularly for shipping, inventory, and distribution positions. The company is facing “chronic no-shows,” with only 50 percent of candidates showing up for scheduled interviews. Only half of those who are hired ultimately show up on their first day.
“It’s ghosting,” Alovis said. “It’s very rare that we’ll get a reason.”
Alovis said that a number of factors are making hiring difficult. He said he supports federal benefits, but believes that the higher unemployment payments and stimulus checks are playing a role.
“I think that the government needs to be more methodical with how they’re offering these benefits and to whom they’re offering these benefits,” Alovis said. “I think that the government needs to incentivize people to get back to work.”
Critics say that employers are too quick to blame benefits
Last week, an Outback Steakhouse in Memphis sparked backlash online over a sign that said “people just do not want to work,” due to “stimulus money and tax time.” Tami Sawyer, a local county commissioner, posted a photo of the sign to Twitter.
“For the Outbackers that do show up for work, we ask for your understanding and patience,” the sign read.
Sawyer told Insider that she was disappointed by the sign. (A representative for Outback told Insider the sign was posted by an employee without approval from the restaurant or company, and was quickly removed.)
“I’ve been very involved with COVID-19 public health and economic recovery as a commissioner,” Sawyer said. “People who were working low wage jobs before the pandemic struggled as their places of employment closed. They had to pivot to other work like Amazon.”
Sawyer said that assumptions about why people do not return to the same job or industry as businesses reopen make her bristle, especially when there are accusations of laziness.
“It’s racially and economically coded,” Sawyer said. “Misperceptions and prejudice assumes working class people are just sitting around buying beer with their $1,400 and that’s just not the story.”
Credit Suisse analyst Lauren Silberman told Insider that, while the stimulus is a factor in why it’s difficult for companies to hire, it is not the root cause. Many industries were facing labor shortages before the pandemic.
“People want to work, if they have the opportunity,” Silberman said.
Pre-pandemic, the unemployment rate dropped to less than 3% in some states, a figure that would be typical for a labor shortage. Unemployment is currently 6%, which would historically indicate plenty of people are looking for jobs. But, pandemic-era childcare concerns and fears of catching coronavirus have made returning to work less enticing for some employees.
“I think there’s a fear element,” Silberman said.
A fundamental shift in American labor could be brewing
Some employers are considering raising wages to entice people to return to work.
Casper, the McDonald’s franchisee, said that he is considering raising starting wages from $12, which is more than $3 above Florida’s minimum wage, to $13 per hour. Motta said that companies are going to be forced to raise pay to compete, rendering higher minimum wage regulation obsolete.
“It’ll put people out of business, that’s for sure,” Motta said. “Will people pay $5 for a cup of coffee at Dunkin’ Donuts? I don’t know. I really doubt if they would. Would you pay six bucks for a hamburger at McDonald’s?”
Some employers will likely try to hold out on raising pay in hopes that more people will apply for lower-paying jobs as federal enhanced unemployment benefits expire in September. But Wulfraat said he expects hiring unskilled, inexpensive labor to only get worse in the coming years.
The percentage of the US that is 65 or older is swiftly growing as Baby Boomers enter retirement age, cutting into the labor force. Younger workers are more likely to be tech savvy, Wulfraat said, making them more prepared to apply for skilled jobs that do not involve the manual labor of a warehouse or restaurant.
“Think about all of the the trades where it’s heavy, dirty, smelly – all those nasty jobs that have to get done,” Wulfraat said. “Nobody wants to do that work anymore, cause there’s other things they want to do. Their priorities are different.”
Drive-thrus have become increasingly important for fast food and quick-service restaurants over the last year.
Drive-thrus have been up industry-wide because they are perceived as a “safe way to use the brand” Kalinowski Equity Research founder Mark Kalinowski told Insider.
Fast-food chains have invested in drive-thru technology over the last few years, especially as customers showed that they prefer drive-thrus to other ways of ordering.
According to an Allegra Survey, 63% of respondents prefer to get their coffee through a drive-thru over going inside.
On-the-go orders, meaning drive-thru and pickup orders, made up 80% of Starbucks orders prior to the pandemic, Starbucks told Insider, and increased more than 10% over pre-pandemic levels in the first quarter of 2021.
I decided to visit both drive-thrus to better understand the chains’ strategies.
I frequently buy drinks from both Starbucks and Dunkin’, although I don’t really directly compare them in my mind.
I went to a Dunkin drive-thru in a building that was once a car wash.
Dunkin’ has more drive-thrus than any other coffee chain in the US, with nearly 6,400 according to Allegra World Coffee Portal. About two-thirds of all US locations include a drive-thru.
This location has a typical drive-thru setup, with a menu board and speaker where customers can order.
I ordered ahead on the Dunkin’ app for convenience, and because I wanted to compare the experience between the two.
I visit this location frequently, and there usually a few cars in line at any given time.
Most of the building area is devoted to the drive-thru, while the actually Dunkin’ itself is fairly small. It seems like most people go through the drive-thru, and fewer actually go inside.
After ordering and giving my name at the speaker, the line moves through the covered waiting area.
Dunkin’ has some of the fastest drive-thru times in the industry, coming in second place in 2016 and 2018, and winning the category in 2019.
Despite winning the top spot, Dunkin’ wait times were up 20 seconds over the previous year. The chain says it is adding On-the-Go drive-thru lanes to let customers with mobile orders bypass the rest of the drive-thru line.
My coffee, sandwich, and donut were all ready quickly. Within only a few minutes I was leaving Dunkin.
Dunkin’ doesn’t have the drink specification options that Starbucks does, and it pays off in wait time. Lines are consistently shorter and I spend much less time waiting at Dunkin’ compared to Starbucks.
Dunkin’s food is also more appealing and served faster.
Dunkin’ has the advantage in food variety over Starbucks, with a wider selection of sandwiches, pastries, and bagels.
A Starbucks drive-thru is a very different experience compared to Dunkin’.
The chain is working on updates, though, including taking orders through digital drive-thru screens and handheld devices for baristas to input orders on.
Kalinowski points to how these newer drive-thru technologies can minimize wait times in drive-thrus. “In a traditional drive-thru, there’s only one place an order can be taken,” he told Insider. “That creates huge bottlenecks,” compared to having mobile stations where customers can place orders.
Like Dunkin, this drive-thru only had one lane that every car had to go through, but that could change in the future.
Starbucks sandwiches are always disappointing for the time and money.
For comparison, Dunkin’ sandwiches are $3.69 at my location, while Starbucks sandwiches are over $5. Dunkin’ also sometimes does two for $5 promotions, making a Starbucks sandwich hard to justify even if I preferred it.
Starbucks is more expensive and the waits are longer, but all the customization options make up for the difference.
While Starbucks is working to make drive-thrus more efficient, it isn’t trying to be the fastest drive-thru around, Kalinowski says. “Customization is much more meaningful for Starbucks,” he says.
Starbucks and Dunkin’ each succeed at their goals to reach target customers, but they’re doing very different things.
It’s hard to compare one-to-one because these two chains serve coffee, but they’re ultimately after different experiences.
Starbucks is a coffee destination, while Dunkin’ seems to prioritize food at least on par with coffee.
I’ll continue going to both, although Dunkin’ is for days when I need to grab an iced coffee quickly, and Starbucks is more of a treat on its own.
“We are struggling to get people,” one McDonald’s franchisee told Insider.
“I don’t have enough,” added the franchisee. “Can’t get enough. Wish I had enough.”
The franchisee and others who spoke with Insider – some of whom were granted anonymity because they were not authorized to speak about the topic – said that chains are being forced to change practices due to a lack of workers. Some restaurants are shortening hours, while others are reluctant to reopen indoor dining.
“It’s just craziness out there,” said John Motta, a Dunkin’ franchisee who serves as chairman of the Coalition of Franchisee Association. “People are closing early, people are not opening lobbies.”
“This is the COVID of 2021,” Motta added. “This is the pandemic of 2021 – lack of people to work.”
“I think everyone in the industry – it’s not unique to Subway – is struggling to keep stores open from lack of staff,” a Subway franchisee told Insider.
Fast-food chains with drive-thrus relied heavily on a to-go-centric model to boost sales during the pandemic, as they shuttered indoor dining. Now, franchisees at McDonald’s and Dunkin’ said they have refrained from reopening dining rooms in part because it’s difficult to find enough employees to staff their restaurants. (McDonald’s said it is taking a judicious approach to reopening, informed by local COVID-19 case rates.)
“Stimulus and unemployment are killing the workforce,” said the McDonald’s franchisee, who said labor shortages stopped him from reopening his dining room.
Some fast-food franchisees that stopped breakfast and late night service during the pandemic are unable to open for longer hours because they can’t find enough workers.
At Subway, many franchisees pushed back against corporate demands to return to pre-pandemic hours – following a period of flexibility – in the fall. A McDonald’s manager said that, while his location has not brought back 24-hour service, it is still difficult to staff the first and last shifts of the day.
“We’re kind of struggling to hire because the only people who are applying are teenagers,” the McDonald’s manager said.
The labor shorting is putting more pressure on workers
The labor shortage is making existing workers’ jobs more difficult, contributing to burnout and the vicious cycle that has helped drive away some potential employees.
The McDonald’s manager told Insider he and other managers have been forced to cover more and more shifts as their employer scrambles to hire people. As a result, he said, his sleep schedule is “completely out of wack.”
“There’s been days I’ve worked 16 hours because we just couldn’t get coverage for it,” the manager said.
Fewer, over-stretched employees also results in longer wait times and more mistakes, according to Motto. This yields more angry customers, filing complaints and taking out their ire on employees.
One person took matters into their own hands at an Outback Steakhouse in Memphis, putting up a sign that asked for understanding from customers and claimed that some “people just do not want to work.”
“For the Outbackers that do show up for work, we ask for your understanding and patience,” reads the sign, according to a photo posted on Twitter. “They are doing the very best to ensure your dining experience is what you have come to expect from Outback Mid-town.”
Elizabeth Watts, a representative for Outback Steakhouse, told Insider that the sign was posted by an employee and not approved by the restaurant or company. The sign was removed soon after it was posted, Watts said, and does not reflect Outback’s position or perspective.
The person who posted the Outback Steakhouse sign and franchisees who spoke with Insider argue that the stimulus package and enhanced unemployment benefits have made it harder to hire workers. However, Credit Suisse analyst Lauren Silberman told Insider that the industry struggled to find enough employees for years before the latest stimulus package.
Restaurants are an “exceptionally difficult business” to work in, Silberman said. Employees face a high rate of sexual harassment and assault on the job, while Bureau of Labor and Statistics data shows that the median pay is $11.63 per hour. Workers increasingly have more options outside the restaurant industry that offer a guaranteed $15 per hour, such as Amazon or Target, or more flexibility, like Uber or DoorDash.
And working in restaurants has only become more dangerous and difficult over the last year.
“I think there’s a fear element,” Silberman said. “Because these are frontline workers, and we’re still in the midst of a pandemic.”
Fast-food chains will ultimately be forced to pay workers more
Fast-food chains are going to have to do more than close dining rooms and end late-night service if they want to win back employees.
“It’s no secret that the labor market is tight, which is why we are thrilled to host our fourth round of Hiring Parties in partnership with our franchisees,” Taco Bell’s chief people officer Kelly McCulloch said.
But, perks can only go so far. Chains will have to pay workers higher wages to compete with companies that have already established a starting wage of $15 per hour.
“There’s no reason that the government has to mandate minimum wage,” Motto said. “Because the market is making it grow on its own.”
“I don’t know if anyone could pay minimum wage and keep their doors open today,” the Dunkin’ franchisee added.
10% of all restaurants have closed since the beginning of the pandemic in 2020, including hundreds of locations of major chains, according to food industry research firm Dataessential’s new report.
No sector of the industry was safe. Closures affected fast food, fast casual, casual, and fine dining. Subway closed more stores than any other large chain examined by Dataessential, closing out the period with 1,557 fewer stores, a 6.6% loss. Dunkin’ lost a net 559 stores, the report said.
Even fast food staples were hit by the pandemic. Burger King closed 319 locations, while McDonald’s closed 173. However, that only amounts to a 1.2% loss for McDonald’s, which still has well over 13,000 locations. Baskin Robbin’s, Hardees, and Steak N Shake each closed restaurants, while Little Caesar’s bucked the positive trend for pizza chains this year, closing 120 locations.
Some restaurants did manage to open new locations. Domino’s came out on top, opening 358 new stores. This isn’t necessarily surprising: pizza and wings were hailed as early winners in the pandemic as Americans increasingly ordered from brands that were already set up to accommodate delivery, like Papa John’s and Wingstop.
The rest of the pizza industry saw huge losses, up to $30 billion in March and $50 billion in April. The trend doesn’t apply to all pizza chains, though, as Little Caesar’s shows.
Starbucks, Taco Bell, and Chipotle all also all ended the year with over 200 additional stores apiece. Each of these chains has invested in drive-thrus throughout the pandemic.
Starbucks is making efforts to improve drive-thru efficiency with digital drive-thru screens for ordering and handheld devices for baristas to input orders on. Taco Bell cut more than a dozen items in 2020 to make drive-thru lines move more quickly, and sales grew as a result. Chipotle is opening hundreds of Chipotlane drive-thru lanes, with plans to more than double locations.
Most restaurants that added locations have embraced drive-thrus and mobile ordering, while chains that didn’t suffered, though this doesn’t explain every chain.
You might have seen them on your most recent trip through the Chick-fil-A drive-thru, on a plane, or at a kid’s sporting event. Under the Weather Pods are weather-resistant, screened-in structure that can be worn or sat in.
Rick Pescovitz designed the first pod in 2010 after he got the idea from an experience he had sheltering in a Porta Potty from bad weather during his daughter’s soccer game. The Porta Potty inspired the shape of the original pod, which was made based on a laundry basket with a steel wire structure, Pescovitz told Insider.
The pods, which now come in more than 30 variations, were originally a big hit with parents like Pescovitz, and tailgaters, he said. Under the Weather began reaching out to crossing guards and ticket takers too, and business picked up in 2014. Since those early days, the company has sold a few hundred thousand pods according to Pescovitz
When COVID hit the US in March 2020, it could have been disastrous for the niche company. Before the pandemic, 90% of customers were sports fans and music festival attendees, Pescovitz, said, and February through May was the busiest season. COVID essentially shut down all of the company’s usual business, and they were forced to pivot.
Peskovitz saw the need for PPE on the news and he thought, “we could do something like that.” Within four weeks Under the Weather had come up with a concept, samples, and the final product of the intubation pod, which provides extra protection for healthcare workers during one of the most potentially contagious procedures. Under the Weather donated and sold these pods to hospitals and EMTs.
The wearable line has been the most popular since the start of the pandemic due to the rise of curbside pickup, Peskovitz told Insider. He says 25 to 30,000 sales can be directly attributed to COVID. Some Chick-fil-a locations use the walking pods for drive-thru and curbside employees, a deal that Peskovitz says has been “really good for us.”
Many people are “uncomfortable or too prideful,” to wear the pods, one Indiana Chick-fil-A employee told Insider. However, he likes them, saying “it keeps us dry, keeps iPads dry, blocks out the wind, and makes it more tolerable.”
In the future, Peskovitz says he wants Under the Weather to grow sales to businesses and work with corporate chains directly, rather than finding interested franchisees to sell to separately. Private buyers can purchase pods directly from Under the Weather, or from Amazon, Dick’s Sporting Goods, or Walmart.