BUSINESS BLUNDERS
Why Dunkin’ Donuts Failed in India
What if people just don’t like sweets?
How would you react if someone told you that they don’t like donuts?
They’re the good, sweet things that just melt in your mouth and make you say, “Oh God, this is so good.”
It’s fair to assume that almost everyone will agree that donuts taste good — even the health-conscious people who only have one donut every year.
However, one of the most renowned donut shops in the world, Dunkin’ Donuts, couldn’t wow the Indian market.
In 2018, the Massachusetts-based coffeehouse and donut company had to close more than half of its outlets in India.
“We have shut our most unprofitable stores, cut back on restaurant operating costs and overheads, focused on core categories, and launched innovations including tea, to drive growth,” a Dunkin’ Donuts franchise’s spokesperson said.
So without further ado, let’s understand why this happened.
Dunkin’ Donuts Failed to Understand India’s Usual Breakfast Routine
“I like to eat donuts for breakfast,” said no Indian customer that I have ever met. Consuming heavy sweets first thing in the morning is not at all a part of the Indian culture. Dunkin’ Donuts is known to be a breakfast-focused fast-food joint, but the breakfast habits in India are totally different.
If you haven’t been to India, you need to realize that it’s a huge country with hundreds of languages and cultures. Also, the cuisine changes in every different region, drastically.
For example, North Indians like to eat a traditional Indian bread called Paratha (as shown in the image) for breakfast. A Paratha can be accompanied with some curry, pickles, or can be simply consumed with butter — just like bread and butter in the West.
Shown in the image below is a variety of South Indian breakfast food. Starting from left, Medu Vada, which is like an Indian fritter; Idli, a type of savory rice cake; and Dosa, a thin bread made from rice flour that looks like a crepe.
The bottom line — whether it’s the North or South, Indians have a huge variety of breakfast food that they’re used to eating for centuries. Not to mention the British colonialists brought the sandwich to India, and Indian customers love it to this day. However, they made some Indian changes to the recipe to better suit their taste.
Then, all of a sudden, Dunkin’ Donuts showed up in India in 2012. But Indians, who were used to their usual breakfast food, which happens to be savory in taste anywhere in the country, didn’t want to consume a big pile of fried, sugar-coated, spongy substance called a donut.
Chai, Not Coffee, Is the Beverage of Choice for Most Indians
Unlike the West, where customers love coffee, Indians prefer another beverage called chai.
You must have had a chai latte or even a vanilla chai latte, but the way Indians make chai is totally different. Also, the ingredients are different as well — there’s no almond milk, maple syrup, or cinnamon in an Indian chai.
It usually contains milk, sugar, and dried tea leaves. Ginger and cardamom are also added occasionally to create a unique flavor.
But Dunkin’ Donuts went to the Indian market with its espressos and iced teas, something that most Indian customers weren’t used to. This is kind of like what Starbucks did in Vietnam — they sold the wrong type of beverage and failed.
However, it seems like the company realized this mistake, and as of today, chai is available in the handful Dunkin’ Donuts outlets that are left in the South Asian country.
Most Indians Love Sweets — and That Turned Out to Be a Problem
Indian cuisine has more sweets than you can count on all your fingers. So a “donut” had to be something really, really special and different. Unfortunately, it isn’t. Even a dozen different varieties of donuts can’t compete with the local sweet snacks, which occur in hundreds.
Just because it’s not common to eat sweets for breakfast doesn’t mean there’s no room for such products in the market. In fact, the demand is huge.
In India, there are hundreds of family-owned businesses, known as the Mithaiwalas (sweet sellers), that have been selling sweet snacks for decades. Dunkin’ Donuts, an American brand in India, had to compete with these local outlets, who had a deeper rapport, cultural similarities, and a strong kinship with the local customers.
A donut was seen as a “once in a while” and “let’s try something different today” type of thing by the small number of Indian customers who were westernized enough to be open to visiting Dunkin’ Donuts.
Price Was an Issue
The average salary in India is around ₹30,000 (Indian Rupees) per month, which is equivalent to $420 in the United States.
According to Zomato, the average cost for two in Dunkin’ Donuts in India can be around ₹600 — which is a lot for most people who are earning a near-average or below-average salary.
The price itself alienates millions of people, and this is one of the reasons why Dunkin’ Donuts might never go mainstream in India.
Well, not all premium-priced Western chains fail in India. KFC, for instance, is doing good and has around 400–500 stores in the land of vegetarians. For one, KFC’s main items are savory, not sweet. Secondly, KFC’s recipe is really unique as compared to India’s chicken curry, which gives it a unique selling point.
Conclusion
Because of the product and premium pricing, Dunkin’ Donuts had, and is still having, a hard time growing their business.
Not saying the business will go extinct. The Indian market is huge, and there might always be someone who would want to try the company’s menu every once in a blue moon. However, long-term growth is expected to be slow.
What are your opinions on Dunkin’ Donuts? Let me know in the responses.
