Published May 9, 2015
Stepping out onto the main street of most European capitals these days, it would be plain odd not to see a Starbucks or a McDonald’s. American food chains have become widespread to the point of ubiquity over the last few decades by offering the popular combination of convenient locations, familiar recipes, standardised quality and cheap prices. Starbucks, once something Europeans only saw in American TV shows, now has 1,527 locations in Europe, and McDonald’s has 7,860 restaurants in Europe alone.
But Reykjavík has a noticeable scarcity of international food chains. McDonald’s famously canned their sole Icelandic location after the financial crash—Iceland’s biggest hamburger chain is the home-grown Hamborgarabúllan, which has a whopping seven locations, just one fewer than KFC. But now, American coffee house Dunkin’ Donuts is poised to enter the fray.
Árni Pétur Jónsson, the CEO of 10-11, is the man in charge of Dunkin’ Donuts’ Icelandic incursion. “I got the news that Dunkin’ was looking at Iceland as a potential market in 2013,” says Árni. “I got in contact with them and found out they’d been looking for potential partners. We talked and immediately clicked, and so they joined with 10-11. There was a question of feasibility in coming into a small market like Iceland, of course. But after having looked at it, they decided it had potential.”
American expats’ burning questions answered
Dunkin’ Donuts will reportedly open 16 Icelandic branches in total, from a flagship store down to smaller concessions in 10-11 branches. The announcement proved exciting news for donut-loving US expatriates who commented on the news with questions about whether their breakfast menu would be available, and if the various ingredients of their favourites would be imported especially.
“Yes, they can relax!” smiles Árni. “The stand-alone flagship store more or less has the full menu. If we can find the right location, it’ll be a large coffee house with seating and a full menu. In Dunkin’ we have branches from 50 square metres to 250 square metres. The smallest is more or less self-service, so some of them will be that size.”
Dunkin’ Donuts will be using their regular ingredients, and only Fair Trade coffee beans, as they have done since 2004. “The dough will be imported,” says Árni. “Some stuff will possibly come from the States, but Dunkin’ has factories in Spain and Germany, so some things will come from Europe, too.”
Local coffee chains find the competition healthy
The majority of Reykjavík’s current coffee house culture is made up of independently owned small businesses, perhaps appealingly to tourists in search of something different from home. Te og Kaffi, with its twelve locations in Iceland, including six in downtown Reykjavík, could soon be surpassed as the country’s largest homegrown coffee house chain. Manager Halldór Guðmundsson doesn’t seem worried, though.
“There has always a lot of competition in downtown Reykjavík,” he says. “We see it as a good thing. It keeps us on our toes, and we have to be ready for anything. First and foremost we think about ourselves and our own business. It’s more competition of course, but we just have to be ready, and do what we do, better than ever.”
Nevertheless, Halldór was surprised that Dunkin’ Donuts would come to Iceland. “I wouldn’t have expected a big American chain to look here, as the market is so small,” he says. ”We’ve had franchises here in the past, of course. Some work, and some don’t. So it’s all about who is running the company, that’s the most important thing.”
Tourists to thank for Dunkin’ Donuts?
Iceland’s single Taco Bell and its handful of KFCs and Ruby Tuesdays are all outside of 101 Reykjavík, suggesting that they’re aimed more at locals than incomers. And yet tourist foot traffic was an important factor for Dunkin’ Donuts.
“Tourism made the decision easier for them,” says Árni. “It helped a lot. But we did some market research, and of course Dunkin’ did as well. Having been selling coffee-to-go, baked goods and light meals at 10-11, we knew a lot about the market, so we are quite well prepared.”
With the ball now rolling on the Icelandic Dunkin’ Donuts franchise, Árni will be hoping to pick up regulars. “We’ll start by opening our flagship,” he says, “and then we might open up to two more this year. We’ll see how the Icelandic market receives the concept, and go from there.”