Dunkin' Donuts has relished painting itself as the direct opposite of fancy Starbucks' — as the coffee chain founded by a food-cart vendor who wanted to serve cheap, hot coffee to factory workers.
In a third-quarter earnings call Tuesday, Goldman Sachs analyst Michael Kelter asked execs of parent company Dunkin' Brands Group Inc. about competition from that other coffee chain. The Dunkin' Brands folks had highlighted the success of the new single-serve Keurig cups introduced in August, but Kelter pointed out that Starbucks Corp. is also about to introduce its own K-cups.
John Costello, chief global marketing and innovation officer, replied that Dunkin' Donuts wouldn't just react to the competition.
COSTELLO: "Obviously we study all of our competitors very closely, and we compete in a very competitive market. That said, we and our franchisees believe that the best defense is a strong offense. So, while we study our competitors, we don't overreact to them. And the strong comp.-store sales growth (at stores open at least a year) you've seen in the most recent quarter and prior to that is really a function of our franchisees executing our offensive strategy. Our marketing is a very consistent 5 percent of sales as part of our ad fund."