Cover Society: Dunkin’s Jon Luther on the Best of Times

Now that the buying and selling are over, Jon Luther sees only good things ahead for Dunkin’ Brands.

By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 5/1/2006

Jon Luther graced Chain Leader’s cover in November 2003, 10 months after he joined Allied Domecq QSR, then-owner of Dunkin’ Donuts, Baskin-Robbins and Togo’s. Since then, Dunkin’ Brands, as the trio is now called, traded hands a few times before finding a home with a group of private-equity firms: Bain Capital Partners, The Carlyle Group and Thomas H. Lee Partners. Chain Leader checked in to see what’s new and what’s next for Dunkin’ Brands.

How’s business?

Things couldn’t be better. We ended last year ahead of our plan. And we have exceeded everyone’s expectations both from a leadership standpoint as well as from the financial standpoint. With the transfer from Allied to Pernod Ricard and then to the new ownership of our new three major private-equity firms, it’s been exciting around here.

Let’s look at some of the things that you talked about in November 2003. Upgrading coffee at Dunkin’ Donuts…

Our coffee platform is expanding constantly. We have introduced a product called Turbo Ice, which is our iced coffee with a shot of espresso. And just recently we launched our Turbo Hot, which is an espresso shot into our hot coffee, and it’s been resonating very, very well. We’re close to launching a new product for the summer. Right now, coffee and coffee-related products represent over 65 percent of our store sales.

You also were talking about Dunkin’ Donuts’ lunch daypart.

We have a new prototype. It’s a reconcept pointing more toward our coffee credentials, a little warmer environment. We’ve exploded the PM platform. Our first two prototypes are up with the full menu. In those two locations, about 40 percent of the overall sales are now coming in after 11 o’clock. And it’s a mix of our good coffee platform…and people are then coming in enjoying a snack in our PM platform.

We’re going to introduce between all three of our brands 38 new products that will be put on the menu over the next two or three years.

Tell me about the new Baskin-Robbins.

It’s a lot of energy, a lot of fun. We’ve created a sundae bar where we have the old-style soda jerk making sundaes for you. We’ve added a Bold Breeze beverage platform to Baskin, which is a fruit-based iced drink with natural fruit. And we’re experimenting with frozen custard. We now have a freestanding franchise model in Baskin, which is not dependent on combo growth.

What’s the status of the all-day concept?

The all-day concept is gone. It’s day is over. We have taken Togo’s out of most of the all-day stores and replaced it what we call the Dunkin’ Deli, which is a wonderful sandwich platform under the Dunkin’ Donuts umbrella.

So what is the future of Togo’s?

We’ve closed stores that weren’t profitable. And as a result, we have a very, very strong Northern California and a rebounding Southern California market. We’ll probably open 15 to 20 stores next year in Togo’s single stores out on the West Coast.

We’re now pointing it to be compared with a Panera Bread quality or a Firehouse Subs quality or Potbelly quality. And we’ve also elevated it more toward fast casual.

How have you improved franchisee relationships?

Well the first was the commitment to the Brand Advisory Councils, the Regional Advisory Councils and the Enterprise Advisory Council. The other thing is that we as a leadership team are always out in the field with the franchisees, making sure that the message that we deliver is consistent, that we’re always working with our franchisees in a fair and firm way.

You’ve been named chairman since your most recent purchase. How’s your role changing?

I think my role changes a bit away from the day-to-day, which I love. But you know what? At the end of the day, I’m just a kid that loves to operate the business. So I’m probably going to find myself dabbling in the weeds once in a while.

Download the complete transcript of the Jon Luther interview.