Dunkin' Donuts Makes a Play for People Who Like Their Coffee Large, Not Grande

In announcing earlier this week that Dunkin' Donuts has opened 171 new stores in 2009, many of them in territory far beyond the company's home turf of New England, CEO Nigel Travis never mentioned the word "Starbucks." He didn't have to. It's no secret that the company's ambitious expansion plans are all about making Dunkin' Donuts as annoyingly ubiquitous as Starbucks (SBUX) is today. If anyone's got a shot at doing this, it's Dunkin', which currently has a total of 6,566 stores in U.S., a figure that's been growing rapidly over the last five years. In a year when people stopped leaving the house in the morning because they no longer had jobs, opening this many new coffee outlets is no small feat. Starbucks by comparison had a net loss of 367 stores, giving it a current tally of 6,871.

Unlike Starbucks, Dunkin' Donuts has lots of room to grow since it's virtually invisible west of the Mississippi. Plans call for further expansion westward and to points south, since the Boston company already has reliable regional models for how to achieve market dominance. In my home state of Rhode Island, for instance, that memorable pink and orange logo is everywhere -- there are nearly 500 Dunkin' Donuts outlets in the tiny state versus a mere 20 for Starbucks. It's a similar story in neighboring Massachusetts, though Starbucks is slightly better represented there.

And while other coffee chains are trying to mimic the success of Starbucks, Dunkin' Donuts' deliberate targeting of the no frills, cost-conscious coffee drinker who doesn't want to buy a CD on his way to work has been enormously effective. It's helped the chain weather both the recession and an escalation of the coffee wars, brought on by the entry of McDonald's (MCD), Canada's Tim Horton's (THI) and now Burger King.

What Dunkin' Donuts seems to have figured out is that there's a large segment of the population that doesn't care to figure out what a venti is. They're not ever going to order a skinny half-caf soy caramel Macchiato. Instead, they like consistent, decent tasting, old fashioned drip brew coffee that doesn't cost more than $2.

And if the picture in New England is any guide, there just may be more of these people than Starbucks would care to know.

Photo by Flckr user Mr. T in DC, CC 2.0