Dunkin' no more
U.S. coffee shop franchise Dunkin' Donuts ceased trading in Poland as a failure to attract investment capital saw its outlets superceded by swankier rivals and customers voted with their feet, the franchise's former managing director said. The company's marketing strategy did not focus on initiating younger clients into coffee shop culture, market observers said. The franchise survived for seven years on the Polish market since the opening of its first outlet in 1995, serving the brand's characteristic range of specialty doughnuts and coffee in Warsaw, Kraków and Katowice. The coffee shops began the conversion into other franchises or private doughnut shops at the start of this year. "There was only one reason - it was a shortage of capital," said Paweł Wasilias, former managing director of Dunkin' Donuts in Poland. "The company is a franchise. It is often the case that a group starts out with the capital needed to run a business and counts on obtaining more later, but this is not always successful. That was the reason." Wasilias said the closure of the franchise, which will affect all of the chain's 15 shops nationwide, came after Central European Foods Polska, the U.S.-based exclusive owner of Dunkin' Donuts franchises in Poland, the Czech Republic and Slovakia, failed to secure financing to modernize its stores. He would not comment on the fate of the company's two doughnut factories in Warsaw and Olkusz.
"The (Dunkin' Donuts) concept proved itself, but it needed to evolve, just like our fast-changing market," Wasilias said. "The later stores were designed completely differently from the first ones ... but unfortunately the shortage of capital halted this evolution. We were the precursors of that type of business in ... Poland and with the right finance it would have had positive effects." Wasilias was hesitant to provide details since the closure is still being finalized and the sale of outlets is currently under way. The demise of Dunkin' Donuts resulted from inadequate marketing expenditure in a culture where coffee drinking remains a poorly established social activity and a business strategy that privileged high-profile locations near major tourist attractions over customer access, said Marek Widomski, chairman of the Polish Association of Chefs and Confectioners (SPKIC).
"They didn't have a very strong presence in supermarkets," Widomski said. "They should have started in supermarkets, advertised or promoted themselves in schools and supported school foundations, pushing the idea (of the donut) as a tasty treat, to get the kids hooked the way McDonald's do, and it may have turned out differently." Dunkin' Donuts is the second major U.S. franchise brand to leave the Polish market after International Fast Foods Polska handed over control of its 23 Burger King restaurants to Poznań-based American Restaurants (AmRest) in March 2001. The transaction resulted in the conversion of 14 restaurants into AmRest's Kentucky Fried Chicken franchise and the closure of all but one Burger King outlet in Poland. The latest closures fit the current trend in the restaurant industry, which has seen sales and turnover plummet through growing competition and as Poles weather the current economic gloom by staying at home, Widomski said. "We simply don't have as many customers as two or three years ago," he said.
