The sugar packets, hot cups, cold cups, brown paper bags, employee uniforms, digital credit card reader graphics, sacks of coffee beans, boxes of K-cups, and those posts with the retractable belts that designate how the line should form — it’s all going to have to go when Dunkin’ Donuts officially changes its name to Dunkin’ early next year.
And signage. So much signage. The plastic pink and orange signs atop the chain’s storefronts, the cardboard signs outside the door, even the “hours of operation” sign posted in the window. Everything that has a “DD” or “Dunkin’ Donuts” printed on it: gone. Replaced.
Corporate rebrands are expensive. They’re also risky, because while you can calculate how much it will cost to revamp every single one of the store’s stores and digital arms, it’s nearly impossible to accurately predict the long-term positive effects of doing so.
Their rationales are pretty clear. Weight Watchers wanted to distance itself from diet culture and align itself with wellness and body positivity. Dunkin’ Donuts and Jo-Ann Fabrics took on less category-specific names as a way of telling customers that they sell much more than donuts and fabric, while giving themselves the latitude to expand their product offerings in the future. That’s a classic move: Kentucky Fried Chicken and Boston Chicken were after the same thing when they became KFC and Boston Market in 1991 and 1995, respectively.
To better understand the risks and costs associated with a corporate rebrand, I called up Timothy Calkins, a professor of marketing at Northwestern University’s Kellogg School of Management and the co-director of the school’s executive education program on branding. Our interview has been lightly edited for length and clarity.
What are the reasons that a big company might undertake a rebranding?
There are a variety of reasons. On occasion you have a trademark issue that might force a rebrand. But in these cases, it seems to be primarily because of brand equity. In most of the high-profile cases this year, there’s a desire to shift the brand image to make sure that it is contemporary and relevant for consumers, and that going into the future it’s positioned optimally for growth.
The Dunkin’ Donuts transition is a really interesting one. Clearly what’s driving that is the desire to separate the brand a little bit from the donut imagery, partly to open up more growth opportunity and partly to avoid the negative stigma that might come with donuts. Nobody would say they’re high on the health profile.
What goes into the cost benefit analysis for whether or not a company should rebrand?
Deciding to rebrand is not easy. The problem is that there are a lot of costs in a rebranding, and the benefit is sometimes much less certain.
There is a whole range of costs. There’s the executional expense of rebranding a company, especially a retail establishment. When you rebrand Dunkin’ Donuts you now need new signage, cups, napkins, uniforms. All of the different brand touchpoints have to change, and all of that is going to require meaningful cash. Creating, building, and manufacturing a sign for a Dunkin’ location isn’t inexpensive.
The second problem is that rebranding can be very messy. During the transition, you have this phase when both logos are floating around. So there will be a time — and it could be an extended period of time — when you’re going to see the old and new logo. That will look a little bit haphazard and a little half-baked from a consumer perspective.
The third problem is that there always is this risk that there will be customer confusion as the transition unfolds. I expect in the case of Dunkin’ Donuts you might not see it. But as Weight Watchers goes to “WW,” some people could easily be confused. What does that even mean? Is it “WWW,” like a website?
It seems like most of the recent rebrands have to do with creating the space to sell a wider range of products.
Boston Chicken to Boston Market was another one. You clearly can see the thinking: We want to sell more than chicken. I guess that makes all the sense in the world, but as soon as you go to Boston Market, you’re no longer as special or unique.
There’s this delicate tradeoff that brands navigate between being distinctive and unique, and being broadly relevant and appealing.
What are the other costs associated with a rebranding?
During a transition there are so many different things that have to change. All the digital assets have to change, the uniforms have to change, contracts will have to change. You go down the list and there is an amazing number of brand touchpoints. The issue is that at some point you just start writing off all the old materials because at some point you don’t want the old logo out there.
It gets very complicated when you’re dealing with franchisees. In a lot of cases, the expense will fall to them. There’s a delicate relationship between the corporation and the franchisees.
The flip side is that [a rebranding] doesn’t immediately lead to an upsurge in [sales] volume. People aren’t going to go running into Dunkin’ Donuts now that it’s Dunkin’. The short-term ROI [return on investment] on a rebranding is often quite negative because all of the expenses hits you right away. The long-term benefits only materialize much farther in the future.
Can you put a number on how much a rebranding can cost?
That’s going to range so widely. I don’t even think I could put an average number on it. Rebranding Dunkin’ Donuts is different from rebranding Weight Watchers because Dunkin’ has, I think, more locations and more collateral material to be reprinted.
But the quicker the rebranding, the more expensive it becomes. It’s a real tradeoff. The slower the transition, the more likely the brand will seem a bit sloppy and half-baked. The quicker it is, the more expensive and disruptive it is.
Because if you decide to move quickly, you can’t work through, say, the remaining coffee cups with the old branding. You have to eat that cost.
You have to cut it. Even uniforms: What do you want employees wearing in the stores? Say you have a new employee — what do you put them in? Presumably the new design, but then what happens to everyone who has the old uniform? Usually it seems that brands try to move quickly. Nobody tries to drag [a rebranding] out.
But there’s also a bigger risk of disconnect the quicker you go. The faster Weight Watchers goes to WW, the more likely it is that people will say, “What is that?” It’s really a tradeoff.
You mentioned that the sales gains associated with a rebranding are going to take a while to materialize. Is it possible to calculate in advance the revenue growth that will come with an image overhaul?
You can absolutely calculate the potential upside, but you have to make some enormous assumptions. You look at the transition from Dunkin’ Donuts to Dunkin’ — it’s so hard to figure out the value of that transition. How much incremental revenue will it give you? You can calculate whatever you want, but you’re going to do it with a level of imprecision. Those numbers aren’t really worth anything because they’re based on assumptions.
You can test reactions to a logo or name change to minimize the risk. I’m sure that Dunkin’ Donuts has done that — the risk is too big to not have done that — but that’s not going to tell you how much incremental revenue you’re going to get.
It really seems like rebranding is an art, not a science.
This is very much on the art side the ledger. Companies will rebrand in two scenarios: when the company is doing well and they have money to work with and they have resources available, or when they’re really struggling. They’ll look to a rebranding to stabilize the firm.
If you don’t have a lot of resources, you’re going to end up with a slow transition, which will make the experience very disjointed. If you’re not doing well, it’s hard to imagine that a big rebranding will be a good move. If anything, it might make you look disjointed and use up a lot of your cash and not give you a ton of return in the short run. It’s a little bit like repainting the Titanic.
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