There is abundant opportunity in the western U.S. that KKD has yet to address. Each aspect of the strategy plan is now addressed by functional area:
Over the next three years, KKD needs to first concentrate on competing more effectively in those regional markets where Dunkin' Donuts to this point has dominated the sale of donuts and related food and beverage items. This must begin with a build-out of the 22 Montana Mills stores in states where Dunkin' Donuts has the majority of market share, followed by selective expansion in western states including Arizona, Colorado, California, Nevada and Washington. The use of joint ventures, co-branding of retail locations, and private labeling needs to be aggressively used to penetrate the new markets in western states which have to date been unaddressed.
In terms of global market development, KKD needs to consider investments in Australia, Canada and Great Britain as opportunities to look for how to align their unique service and food business model to cultures comparable to the U.S. And still retain profitability. As KKD executes the best in the U.S., the company needs to expand domestically as much as possible before making further international investments.
Information Systems and e-Commerce
KKD has the beginnings of an Intranet for managing its many franchisees, dealers and retail locations, yet today this cannot be used for managing the supply chain for each specific location very well. In addition there isn't that much available in terms of coordinating marketing strategies using this Intranet. The information systems over the next three years need to concentrate on promoting and ensuring consistent execution of marketing strategies and pricing, and the consistent use of co-operative advertising as well. Over the next three years the Intranet needs to include many of the features needed by franchisees and dealer locations to be more competitive on special in-store promotions as well. Like any strong information systems strategy, these changes over the next three years must be based on solid marketing strategies first. On the issue of e-commerce, today KKD does not have online ordering or even delivery to business locations based on orders taken over the web. This is an area that KKD needs to concentrate on heavily in the next three years, giving each retail location the option of taking Internet-based orders for delivery in their specific area, this could become a major competitive advantage in those states where Dunkin' Donuts is today, as many of these competitors' locations do not support this service. Investing in online ordering at the retail level must be defined, executed and operational within three years or less for KKD to be successful in existing markets, those northeastern U.S. markets and the western states they need to expand into.
As KKD moves into multiple distribution agreements and arrangements, and looks to increase its share in the northeastern U.S., the company must continually look to the quality of their donut making and baking process as their core differentiator. Without consistent product quality, KKD will not survive. The concentration on quality management throughout the entire mixing and baking process is critical for their success.
As a result of how critical product quality is, KKD needs to start auditing its own processes and in effect create its own auditing division to make sure all aspects of donut production and delivery are consistently executed to the highest standards. Over the next three years KKD needs to make each of the production processes of their donuts abundantly clear to existing and new franchisees, retail locations, and joint venture partners so they can retain their uniqueness and differentiation.
Taken together these factors, when executed over three years, will give KKD the ability to not only expand into entirely new markets in the western U.S. where their main competitor, Dunkin' Donuts, does not have significant market share today, but will also make them more able to challenge Dunkin' Donuts in the northeastern U.S. As well. The concentration on the northeastern U.S. through the Montana Mills stores, the development of more effective information systems and e-commerce plans including online ordering, and the development of more comprehensive quality management programs can be combined over three years to give KKD strong competitive advantage against Dunkin' Donuts.