Dunkin’ Donuts Franchises: Revenue, Costs & Profits (2023)

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	5.9%
Marketing fee	5.0%
Investment (mid-point)	$795,000
Average sales	$1,056,000
Sales to investment ratio	1.4x
Payback period	5 years
Minimum net worth	$500,000
Minimum liquid capital	$250,000

Dunkin’ Donuts: a brief introduction

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

How much does it cost to open a Dunkin’ Donuts franchise?

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).

The franchise fee isn’t the only reason why prospective franchisees can be reluctant to open a Dunkin’ Donuts franchise. Indeed, in addition to the $40,000+ franchise fee, you will need to invest a substantial amount as well.

Whilst the investment can of course come from your own pocket, but also investors or a SBA loan, you will need to show you have $250,000 in liquid assets as well as a net worth of $500,000 minimum per restaurant.

How much you need to invest?

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

What is the turnover of a Dunkin’ Donuts franchise?

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

How profitable is a Dunkin’ Donuts franchise?

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%

Is a Dunkin’ Donuts franchise a good investment?

Now that we know Dunkin’ Donuts franchises have EBITDA margin of about 23% (estimated), it doesn’t tell us 2 things: what’s their net profit margin (after all expenses have been paid for) and whether they are good investment from a financial standpoint.

As per our analysis, Dunkin’ Donuts have net profit margins of about 15%, in line with the industry.

Now that we know how much you can make with this business, we must compare profits to the investment cost to figure out whether a Dunkin’ Donuts franchise is a good investment. This is what we call the payback period: how many years it takes for a franchisee to recoup her/his investment.

We estimate the payback for a Dunkin’ Donuts is about 5 years which is a great payback period.

In other words, it means that you would need to wait on average 5 years to recoup your original investment.

Of course, this is an average, and the payback period of your franchise may be different based on a number of factors. In other to know whether you should invest in a Dunkin’ Donuts franchise, download our financial plan and customise it with your assumptions.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.