The busiest Dunkin’ Donuts in theUnited Statesis inWeymouth,Mass.Is this because the residents of the town are particularly fond of baked goods? Not quite. Instead, the Massachusetts franchisee simply has decided to keep making all its products in-house, and as a result, it sells more than 1000 doughnuts daily, compared with a national average of 700 per store.

Despite a 1980s ad campaign featuring the Dunkin’ Donuts guy, who arose at absurdly early hours with the tagline, “It’s time to make the donuts,” very few stores still bake their own doughnuts; instead they have them delivered from a central kitchen. Centralized bakeries send delivery trucks filled with prepared products to individual outlets, which enables the franchisees to share resources and generate economies of scale, as well as ensure consistent food, prices, and quality.

But by gaining economies of scale, these outlets lose a key competitive edge, especially if they are anywhere near Weymouth. The product lines in that store is deeply customized, featuring more than 35 varieties of doughnuts, compared with the typical 20. It will create flavors that customers request, which causes customers to consider it their a local doughnut shop, rather than just another outlet of a national chain.

And these customers go gooey for the variety, freshness, and jelly fillings theirWeymouthstore offers them. In a recent taste test, an expert panel of judges called the in-store baked products moister, fluffier, and more consistent. They also were larger and had more filling.

Discussion Questions:

1.Is the added expense of keeping a full-time, in-house baker worth selling a few extra doughnuts?

2.Why don’t other Dunkin’ Donuts outlets do the same thing?

Jenn Abelson, “Donuts the Old-Fashioned Way,” Boston Globe, October 6, 2009.