Dunkin’ Donuts Franchise Costs $795K (2023 Profit Stats)

Are you a donut business enthusiast or an entrepreneur looking for an opportunity in the donut industry? Or are you thinking of applying for the Dunkin’ Donuts franchise, but you don’t know where to begin?

Then you’re in the right place. In this guide, we give you a detailed analysis of what Dunkin’ Donuts is and what it takes to make money as a franchisee.

We’ll look into how much it costs to open and run a Dunkin’ Donuts franchise and how much you can make with this business. Finally we’ll look into how profitable this franchise really is. Let’s dive in!

Key stats

Franchise fee	$65,000
Royalty fee	5.90%
Marketing fee	5.00%
Investment (mid-point)	$795,000
Average sales	$1,079,000
Sales to investment ratio	31.0x
Minimum net worth	$500,000
Minimum liquid capital	$250,000

About Dunkin’ Donuts

Dunkin’ Donuts (“Dunkin’”, “Dunkin’ Donuts” or “DD”), is one of the leading coffee and donut shop chains globally. Headquartered in Canton, Massachusetts, the brand offers over 70 doughnut varieties and cold coffee drinks, bagels, breakfast sandwiches, and other baked goods in over 12,000 locations globally.

It was originally founded by Bill Rosenberg in 1948 in Quincy, Massachusetts, then known as ‘Open Kettle’. In 1950, after deliberating with his executives, Bill renamed the store Dunkin’ Donuts. The flourishing eatery shop was selling donuts for 5 cents and coffee for 10 cents. 

The Dunkin’ Donuts franchise was born in 1955 with its first franchise Quick Service Restaurant (QSR). Later renamed Dunkin’ Donuts Franchising LLC, the franchisor company develops, operates, and franchises retail restaurants utilizing the Dunkin’ system.

Later, the brand changed to Dunkin’ in 2019 reflecting its growth and increasing emphasis on coffee and other drinks as well as sandwiches. Today, the Dunkin’ brand has more than 12,000 franchise stores in the US and over 42 countries.

Dunkin’ Donuts franchise pros and cons

Despite being a successful and profitable chain store, Dunkin’ has its share of pros and cons, just like any other business.

The Pros

The Dunkin’ Donuts franchise has some of the most amazing benefits you’ll ever get from a donut franchise such as:

• Quality support team: at your disposal, you will have a team of experienced and qualified professionals ready to help your franchise prosper (real estate professionals, field marketing managers, and operations managers). They provide new franchisees with site selection information, and marketing and management information to help them scale their sales.
• Recognized brand: Dunkin’ brand is well recognized in the US and worldwide. And with 98% brand recognition among consumers, the Dunkin’ brand is fast-moving. As a new franchisee, you have the advantage of selling to customers who understand your brand and what you offer. The better part is that Dunkin’, in a move to keep its brand strong, continues to market itself by partnering with global partners like Coca-Cola, JetBlue, and Saucony. 
• Plenty of available markets: Dunkin’ Donuts started its operations in the Northeast with much of its royal support found there. However, with time, it has grown to many restaurants found in the East. The brand continues to expand and plans to have over 1000 new stores in the US alone. 
• Proven business model: For more than 70 years now, the Dunkin’ brand has been in business. This gives them an upper hand in understanding the industry they operate in. They have mastered what works and how to operate for their business to succeed. 
• Franchisor’s solid financials: The franchisor Dunkin’ annual profits surpass the $1 billion mark, and the company is very profitable in its industry. What’s more is that new franchises can also break even in a relatively short period of time (see more on that later)

The Cons

Even with a basketful of advantages, running a Dunkin’ Donuts franchise has its share of drawbacks:

• A rigorous application process: As lucrative as the Dunkin’ Donuts franchise might look, applying and being accepted might not be easy. First, there are financial thresholds you must meet. To qualify as a DD franchise, you must have a net worth of $500,000 as well as meet the initial cost of $250,000
• Stiff competition: Another challenge that Dunkin’ franchise faces today is competition. With fast food demands, many popular multinationals occupy the space. To name a few: Starbucks, Tim Hortons, Krispy Kreme, etc. This can create pressure on prices and profits in the long run

Dunkin’ Donuts franchise costs

You would need to invest on average $795,000 to open a Dunkin’ Donuts franchise.

Yet, the investment depends on the type of restaurants you intend to open. For example, you would invest significantly more for a freestanding vs. a gas & convenience restaurant. Here’s the full list:

Type of restaurant	Investment amount
Freestanding	$526,900 to $1,809,500
Shopping Center / Storefront	$437,500 to $1,310,500
Gas & Convenience	$210,900 to $1,038,100
Non-traditional outlets	$121,400 to $904,600

Startup costs

The investment covers both build costs (site development, equipment, etc.) as well as operating expenses (travel, opening inventory, runway for the first 3 months of operations, etc.). Here’s a summary of the different costs you should pay for for the freestanding franchise:

Type of restaurant	Investment amount
Initial Franchise Fee	$40,000 to $90,000
Build costs	$462,500 to $1,442,500
Operating expenses	$24,400 to $277,000
Total	$526,900 to $1,809,500

Dunkin’ Donuts franchise fees

Dunkin’ Donuts franchise fees

In order to open a Dunkin’ Donuts franchise, you will need to pay a franchise fee between $40,000 to $90,000. This is on the higher side for quick-service restaurants (McDonalds for example has a $65,000 franchise fee).

In addition to the initial franchise fee, you must pay to the franchisor a 5.9% royalty fee (as a % of revenue), as well as a 5.0% marketing fee.

Dunkin’ Donuts franchise revenues

On average, a Dunkin’ Donuts franchise makes $1,056,000 in sales per year.

This amount represents the average median sales of all kinds of restaurants. It can change based on the type of restaurant or the restaurant’s location; for example, a drive-thru restaurant makes more revenue than a non-drive-thru restaurant.

Types of Restaurant	Average sales	Drive-Thru	Non Drive-Thru
Freestanding	$1,290,494	$1,449,514	$1,131,473
Shopping Center / Storefront:	$1,092,724	$1,285,840	$899,608
Gas & Convenience Restaurants	$909,609	$1,119,977	$699,240
Non-traditional Outlets	$1,024,393	–	$1,024,393
Average	$1,079,305	$1,285,110	$938,679

Dunkin’ Donuts franchise profits

We estimate that the average Dunkin’ Donuts franchise has a 23% EBITDA margin.

Dunkin’ Donuts are profitable franchises: indeed the 23% EBITDA margin is much higher vs. the average profits for a quick-service restaurant.

Using the average annual turnover of $1,056,000, the average Dunkin’ Donuts makes about $305,000 in profits per year (EBITDA).

Profit-and-loss	Amount	% Sales	Source
Sales	$1,079,305	13%	FDD
COGS	$(273,064)	25%	FDD
Gross Profit	$806,241	75%
Labor	$(264,430)	25%	FDD
Rent	$(64,758)	6%	industry average
Royalties	$(63,679)	6%	FDD
Other operating costs*	$(107,930)	15%	assumption
EBITDA	$305,443	23%

Disclaimer

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