Dunkin' Donuts procurement goes national

5 January 2012

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5 January 2012 | Adam Leach

A deal between Dunkin' Brands – owner of Dunkin’ Donuts – and its franchisees to centralise procurement will see the cost for products and services standardise across the US.

Under the agreement, which came into effect 1 January and was announced by the company yesterday, the National DCP (NDCP), a co-operative wholly owned by franchisees of the coffee and doughnut outlet which carries out deliveries and purchasing, will become the exclusive supply chain provider for all US Dunkin’ Donuts outlets.

The deal, which is described as “long-term” and “performance-based”, follows the move by the NDCP to merge its four regional NDCP branches into a single nationwide entity. As a result, the prices paid for products and services by franchisees will be the same, irrespective of geography and outlet frequency.

Currently, prices vary in relation to market activity; with franchisees in less popular markets having to pay a premium as a result of factors such as longer distribution routes.

“This agreement is a momentous one for Dunkin’ Brands and for existing, new and future Dunkin’ Donuts franchisees,” said CFO Neil Moses. “In addition to securing our franchisees’ role in the Dunkin’ Donuts supply chain, it will result in significant cost savings a higher level of service, and, in the near term, uniform product costs for franchisees across our domestic restaurant network.”

The company explained that the agreement, and the fact that it will even the playing field between franchisees, is central to its ambition to more than double the number of stores over the next 20 years.

Through the agreement, the franchisees will be able to maximise their buying power and also take on more of a strategic role in supply chain operations, as they will be wholly run by NDCP.

Kevin Bruce, NDCP CEO, said: “We are excited to announce the formation of this new national entity and our long-term agreement with Dunkin’ Brands to be exclusive supply chain provider for all Dunkin’ Donuts restaurants in the US. Our mission is to provide our members with the very best purchasing and distribution service in the QSR [quick-service restaurant] industry.”

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