Dive Brief:
- Dunkin' on Tuesday celebrated the grand opening of its first digital-only restaurant in Boston after opening the location to the public on Aug. 18, the company told Restaurant Dive in an email.
- The restaurant does not have a dining room and only services orders that are placed either in advance on Dunkin's mobile app or in-store at one of the location's two digital kiosks. Guests can still pay with cash, credit card or gift cards and collect their orders from a designated pickup area.
- The company joins a growing contingent of QSR chains developing digitally focused store designs with little or no diner seating, models that capitalize on steady diner demand for off-premise experiences. Earlier this year, rival Starbucks said it is exploring drive-thru only stores with no seating and very small units.
Dive Insight:
Many restaurants have eyed smaller unit designs as a way to expand their networks at lower cost. But at least for Dunkin', it seems this cost saving won't come from reduced labor, despite the fact that employees aren't needed to facilitate orders at the digital-only restaurant.
The number of Dunkin' employees at the location "is consistent with restaurants utilizing traditional order taking systems," and these workers focus on "fulfilling orders with heightened speed and accuracy," Dunkin' said in an email.
Even if Dunkin' doesn't shave down its payroll at potential future digital locations, the chain's savings from smaller footprint real estate and the opportunity to capture more on-the-go diner dollars would be a boon. This location is part of a larger expansion strategy for the coffee giant, which plans to launch several nontraditional units this year after opening 27 such restaurants in 2020. Dunkin' is targeting casinos, hotels, hospitals, convention centers and airports for this type of store growth in 2021.
In July, Dunkin' hired Philip Auerbach to fill the new chief digital and strategy officer position. The role focuses on mobile and digital technology transformation at the chain, as parent company Inspire Brands is "doubling down" on digital offerings, former Dunkin' CEO and current senior advisor at Inspire Brands Dave Hoffmann said in a statement.
These investments in digital-focused executives and store development should help the chain's digital performance, which was strong in Q3 2020, shortly before Inspire Brands bought the company and took it private in October. More than 21% of Dunkin's sales came from digital channels for that period, supported by the company's move to bring the intellectual property behind the Dunkin' app in-house, 8. On-the-go mobile orderings represented 8% of the chain's transactions during the period, and average weekly delivery sales also grew roughly 2.5 times over Q2 2020.
Starbucks has also worked to improve its mobile and off-premise offerings of late, and is exploring pickup-only restaurant opportunities, which could challenge Dunkin's digital-only format if it deploys more units . The Seattle-based chain opened its first pickup-only store in 2019.
