Adding supplementary products and doughnut varieties has helped drive demand.
New York, NY (PRWEB) June 06, 2014
The Doughnut Stores industry is running rings around its competition in the food service sector, mainly due to the dominance of the major doughnut chains and their success in expanding their menu offerings well beyond doughnuts. The industry is dominated by Dunkin' Brands, which commands an estimated 56.4% market share and has over 7,000 locations in the United States. Tim Hortons, Inc. (4.9% market share) and Krispy Kreme Doughnuts, Inc. (4.8%) also have significant operations. The industry has also been helped by a rebound in consumer spending over the past five years, driven by lower unemployment and rising per capita income. While the industry suffered during the recession this setback was temporary, as consumers have shown renewed interest in spending on small luxuries, such as coffee and doughnuts. As a result, industry revenue is expected to grow 4.5% per year on average over the five years to 2014 to $12.8 billion, including a 1.6% rise in 2014.
According to IBISWorld Industry Analyst Andy Brennan, “Contrary to the industry's name, over 50.0% of sales at doughnut stores come from items other than doughnuts, particularly coffee beverages.” By providing coffee and other products in addition to doughnuts, industry operators hope to attract consumers to their stores more frequently. Both Dunkin' Donuts and Tim Hortons have built brands around selling coffee. While doughnut sales still account for the lion's share of Krispy Kreme's revenue, the chain is making a concerted effort to shift its sales mix towards more beverages to increase visitation rates. Krispy Kreme has added specialty espresso drinks and a range of new drip coffee blends to its menu over the past five years.
Over the five years to 2019, as positive conditions in the broader economy place upward pressure on consumer spending, IBISWorld projects industry revenue to increase. In a sign that the industry still has room to grow, Dunkin' Donuts has announced plans to open more locations in 2014. “The company is planning a major push into states such as California, Colorado and Texas where it is less well known,” says Brennan. Furthermore, the major chains are likely to roll out new stores in smaller retail locations that require less capital investment. Overall, the number of doughnut stores is expected to steadily expand over the five years to 2019.
For more information, visit IBISWorld’s Doughnut Stores in the US industry report page.
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IBISWorld industry Report Key Topics
The Doughnut Stores in the US industry is comprised of establishments that primarily prepare or serve doughnuts, or donuts as they have come to be spelled in the United States. Purchases may be consumed on-site, taken out or delivered. A doughnut is usually sweet, deep-fried flour dough that has been shaped into a ring or sphere. Some contain fillings, such as jam or custard, and some have toppings, such as frosting or sprinkles.
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