Dunkin Brands: C-Suite with Jeffrey Hayzlett (10/8)

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Oct. 8 (Bloomberg) -- Bloomberg's Jeffrey Hayzlett visits the C-Suite at Dunkin Brands to discover how the 63 year old company is reinventing itself. (Source: Bloomberg)

The refresh was one of the most inclusive are jets we have ever run.

Are you stretching this beyond your core brand?

This is really the center of our global innovation.

You would be an idiot not to put this on the menu.

That is how powerful this brand is.

I'm jeffrey hayzlett.

I'm on a journey inside one of the biggest brands in america.

I have been a ceo and board room cowboy.

Now i'm visiting the executives in charge of the most powerful companies in the world to see how they tackle the challenges.

The challenges of the "c-suite." ready, guys question mark ok.

We're taking a look at dunkin donuts.

9 billion dollars.

That is a company that captures my attention.

They are killing it.

There are still a lot of questions.

How will be be more than a doughnut shop and a place in which you stop to get a quick cup of coffee?

They are updating their look.

Just casual.

-- dress casual.

It is a break from the blue- collar.

This new look accomplish -- you will does look accomplish what it is supposed to?

They're going back to california after they failed twice.

I have been a jet did -- rejected twice -- they have been rejected twice.

I will speak with the ceo and his new management.

How are they expecting to change within the company and their franchise network?

These guys are changing it all the way around.

You have got to ask -- will it work?

The dunkin donuts i grew up with had no frills.

I'm ready to see if this new refresh can attract new customers to the brand.

How are you doing?

Good morning.

Welcome to dunkin donuts and baskin-robbins.

How are you?

Walk us through this new store.

What we have done is create an environment that is welcoming.

When you look at dunkin donuts, i would think of the glaze in the boston cream and jelly donuts.

Now i'm getting smokehouse bacon, one of my favorites, by the way.

You have two the salad and chicken salad.

Are you stretching this beyond what would be your core brand?

I do not think so.

We have reduced the menu on one side.

Certain people always want to keep certain products.

The reason we have got damages -- beverages, it is a margin nearly as high.

We are thinking about franchise economics.

You are clearly starting to target some of the other folks.

When you look at this experience, it looks like maybe one of those companies from seattle.

Starbucks.

[laughter] it has got an average joe feel, but is that who you are targeting when you look at this?

We're not targeting anyone.

We are targeting our guests.

Friends don't let friends drink starbucks, that has been around for years.

We created the design that they guess wanted.

It is starbucks, panera -- you see it everywhere.

Everyone is following the guest direction.

This is a big change.

It is a heavy investment for the franchise.

It is a little bit of a departure.

Who came up with the idea?

How did you bring it forward?

One of the things we sought is to be forward-looking.

Where do consumers want to be in the future?

It is not easy when you have over 17,000 stores.

There are pluses and minuses.

One of the more difficult things is to get people on your side.

We have constantly thought about where the consumer will be.

I know a decision like a refresh can only come from the "c-suite." it's time to sit in with nival comment executive chief, to see how the leadership runs the company.

-- with nigel, the executive chief, to see how the leadership runs the money.

How many have been here for more than 10 years?

More than five years?

Less than five years?

I think that is interesting.

We feel that we are relatively senior and we have all melded together.

I feel extremely happy with this table.

How is the discussion about the refresh of the store and the decisions made in this room?

How do you do that?

The refresh is one of the most inclusive projects we have ever run.

This group got regular updates that perhaps even more important is that the team is reaching out to everybody and making it inclusive as opposed to exclusivity to -- as opposed to exclusive.

Interestingly enough, it this is a western expansion sure -- store.

D.phil.

That will be the key to your success?

Absolutely.

-- do you think that will be the key to your success?

Absolutely.

Are you guys not scripted?

This seems to be is -- more of a j neill, let's get together and have coffee.

More people have this prep, or the page presentation.

It is only part of the process.

These meetings to focus on the kinds of issues you are hearing now.

There is a disciplined rhythm to the business.

This aspect is more dealing with current issues and keeping everyone up to date.

They used to have a monthly meeting prior to my time.

His business moves too fast to move do it -- this business moves too fast to do it monthly.

We have got the best team on the market in the franchise.

Number one retailer in new york.

That is how powerful this brand is.

? dishes used like a refresh -- decisions like a refresh take place in the "c-suite." try to walk into a crowded meeting.

What does that mean?

This is the dunkin brands council meeting.

They're about 24 franchisees that have been elected by their regions.

They are elected by all of the franchisees.

They meet just about every quarter.

We are the number one retailer in new york.

The competitors are semi- competitors -- how strong is the voice of the franchise in a bigger group than this?

99% of all of the stores you see are owned by franchises.

We are deathly a partner at the table.

Our opinion and contribution really counts.

It is a true partnership.

We do not always agree, but when you walk out of the room, you know the game plan.

This is where we consult with him.

It is an important avenue for franchising.

We come right out them as a team.

We come at them about unit economics, image, pace that something that is being introduced, something going on underground, it is all open season when it comes to the conversation.

We want to have a successful brand.

It is a foxhole type mentality.

So the last time we had a bet, that you would wear a hockey jersey for whoever one and the is one.

[applause] thank you.

The relationships are outstanding.

I try to be authentic.

And very straightforward.

It is all about driving comparable store sales.

If this works, we have bigger store expansions.

We think we have got the best team on the market in the franchise we had the best team of franchisees.

In a good franchisor is key.

Whether it it is dunkin brands are somewhere else -- you need to be on game or you'll never accomplish what you want.

Have a seat.

You are the money man.

You are the guy who controls a lot of the flow that comes in and out of a company.

Yes.

What about the new store makeover?

That is a huge investment store by store.

When you sign the agreement, your group -- agree to do every modeling -- you agree to do remodeling.

It is less about 250 this year, but it is really $25,000 a year.

One of the things i have been noticing is that you're doing your expansion.

You look at the numbers.

Your u.s. numbers were in the -- you're moving back into and 4 -- in california and 4 -- in californian guys failed there.

The bad news is that we do not support the franchisees.

We do not have a operational mindset.

The kind of left them to do their own thing.

It has really changed.

It is a really operations focused all turnout.

Part of that was our own doing.

I think california loves dunkin brands.

20% responded that they get their morning coffee at dunkin and we have zero stores in los angeles.

That is how powerful the brand is.

The biggest thing for a franchise deliver things consistently, have everyone do things the same.

They have got to have great training and have a great system to be able to deliver quality products and service.

We are going to see how these people teach folks to be consistent day in and day out.

Hello.

Good morning.

How are you?

Doing great.

My name is suzanne.

Is this is -- is this what you would call doughnut u? yes.

This is hands-on, in the store.

In this case, you franchisees.

We have franchisees, the owners, managers.

We rely on them to take the training and to train the crewmembers.

Show me what i have got to do.

I feel like your old mascot, fred the baker.

New have got it.

Show me.

Our standard is due serve the best, delicious coffee every single time.

There we go.

A little bit more.

Poor to the line.

-- pour did the line.

That is good.

It loses its flavor once it is exposed to air.

After 18 minutes and that copies not utilize, we throw it out.

-- that coffee is not utilize, we throw it out.

1, 2, 3. i have disappointed you.

I would like to try it again.

[laughter] we are a very old brand.

People are extremely passionate about our baked goods and doughnuts and coffee.

Very excited to be a franchisee of dunkin brands.

Do things consistently and follow the process.

A delicious cup of coffee every single time.

If you follow that the seizures -- procedures ukraine on, you will be successful in the business.

-- procedures, you'll be successful in the business.

Absolutely.

What do you take away from this expense question mark -- what do you take away from this experience?

Have it be a sustainable approach coming forward.

Finally, you've dies do things in a very set way and get good at it and repeated it.

Are you doing that with your management?

We are a franchise branch.

Coach each other, how to talk about performance goals, that really helps.

Welcome to behind the locked doors of the dunkin brands kitchens.

Oh man.

You would be an idiot not to put this on the menu.

? there's a lot of change going on at dunkin.

Refresh change, they're going out west.

He has a key to the dunkin secret.

What is the core essence of the company?

It is more than just a tagline.

Our goal is to get you running in the morning and help keep you running all day long.

That really guides everything we do.

Product innovation is the key driver of our business.

Two years ago, we came up with heart-shaped doughnuts for valentine's day and that became a favorite item.

Food is interesting.

Global trends, national trends, regional trends.

Something in boston may not necessarily work in san francisco.

We serve biscuits in the east.

What we are learning is that there is appeal for chicken biscuit breakfast sandwiches beyond the southeast.

Fabulous biscuits, great chicken.

We are starting there to explore where we can sell it elsewhere.

I'm trying to go after some competitors.

It is important to understand competition.

It is more important to be open on the consumers.

We're doing it more development and latin inspired products.

We have the cuban flatbread that is off to a great start.

It'll go crazy every once in a while.

Exactly.

Dunkin is an authentic brand, but also a very fun brand.

Good to see the heart of the operation.

This is it, right?

This is it.

Welcome to behind the locked doors of the dunkin brands test kitchen.

This is the center of our innovation.

Some of the things folks will see are in the stores today, but they are also working on things literally two years out and not just in the u.s., but all around the world.

It looks like a real lab.

We're looking at innovation right here.

This is a combination of an r&d lab than replicating a store.

You have chefs here.

We have chefs.

We also have the food scientists and operations folks.

We have people who have operated their own restaurants, who have worked for big food companies come who have published cookbooks.

The combination of chefs, food scientists, and operations people generate real synergy.

I want you to meet jeff miller.

How are you?

And the director of r&d for dunkin brands.

Most people think of it as willy wonka and the chocolate factory.

[laughter] it's part of the job, i know.

Take me through the next stage of this.

Absolutely.

We are going to take it up a notch and show you how we put our own twist on it.

He will take you through that great steak prep.

We have had success with our stake a breakfast sandwich.

Dunkin is all about grab and go.

All of the products you are going to see taste delicious, but are portable.

Oh man.

You would be an idiot not to put that on the menu.

Ask a fact i come a big guy, what works and this works.

[laughter] we are thinking about everything -- profitability and operations in the restaurants.

All those things into consideration.

The innovation -- the culinary team is a great source of ideas.

Our marketing people are researching consumer trends and our franchisees are giving us ideas.

It is a 360 degree process.

Our name is dunkin brands, but coffee is a core of our business.

We have a range of london-based products.

We will let you taste a few unique items.

-- we have a range of plug-umpkin- based products.

We will let you taste a few unique items.

We added white chocolate.

What is interesting about pumpkin is we have guest to anticipate it.

We have moved pumpkin products into the stores a little earlier.

Bacon flavor aired coffee -- flavored coffee.

We will have to get you a job here.

Bacon flavored everything.

Here is what i have learned -- this new forward thinking executive team is rejuvenating the brand without losing its essential identity, a redesigned store, new menu items coming carefully measured franchise expansion is exposing the brand to growing demographic populations.

In a millennial culture, why fight.

-- wi-fi.

There taken the brand out west to california, a place where it has failed twice before.

He disabled move, but it takes guts to survive in the "c- suite." ?

This text has been automatically generated. It may not be 100% accurate.

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