Charlebois: Return of Dunkin’ exposes a hole in the market

For years, Dunkin’ Donuts’ collapse in Canada was viewed as one of the great business failures in the country’s food service sector. Once a formidable rival to Tim Hortons, especially in Quebec, Dunkin’ gradually disappeared from the Canadian landscape before officially exiting in 2018. 

Now it’s coming back. And the reason matters.

The decision by Foodtastic to revive Dunkin’ in Canada is about identifying weakness in a market that, for decades, looked untouchable.

For years, Tim Hortons dominated Canada’s quick-service coffee market, becoming part of Canada’s cultural identity. But dominance can create complacency, and the Canadian marketplace today is very different from the one Dunkin’ left behind.

Today’s market revolves around specialty beverages, convenience, digital ordering, customization and brand experience. Starbucks owns the premium space. McDonald’s has become a major coffee competitor in Canada. Independent cafés are thriving in many urban centres. Tim Hortons still commands enormous market share, but it no longer enjoys the same unquestioned dominance it once did.

Foodtastic sees that opening. The Montreal-based restaurant consolidator has built a reputation for aggressively acquiring and revitalizing brands across Canada. Pita Pit, Second Cup, Freshii and Quesada are all examples of Foodtastic betting on established brands with fading momentum but strong consumer recognition. Dunkin’ fits perfectly into that strategy.

And unlike many foreign operators trying to enter Canada, Foodtastic actually understands the Canadian and Quebec markets intimately. That matters.

Many Canadians forget how significant Dunkin’ once was in Quebec. Older consumers still remember it fondly. Nostalgia alone will not guarantee success, but it certainly lowers the barrier to re-entry.

The bigger question is whether Canada’s coffee market can realistically support another major player. It will not be easy. Even grocery stores are now competing more aggressively with ready-to-drink beverages and premium beans.

But Foodtastic is likely betting on something very specific: fragmentation.

The Canadian consumer today is less loyal, more price sensitive, more curious and more willing to experiment than at any point in the last two decades. That creates opportunity for challenger brands.

Ironically, Dunkin’s return may say less about the strength of Dunkin’ and more about the reality that Tim Hortons is no longer viewed as invincible. That alone makes this story worth watching carefully.

Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.

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