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Marketplace®

Daily business news and economic stories

Dunkin’ delivers good news to fans of nondairy drinks

No additional fee for oat milk in your morning latte instead of 2%? Yeah, that's worth a head turn.
No additional fee for oat milk in your morning latte instead of 2%? Yeah, that's worth a head turn.
Spencer Platt/Getty Images

I’m not usually a nondairy milk guy, but I wanted to see something on my coffee run this morning. I ordered a large iced coffee with almond milk and, lo and behold, it didn’t cost any extra.

Nondairy milks are surging in popularity right now. Oat-, almond-, soy-, rice- and coconut-based milk substitutes (just to name a few) are popping up on menus nationwide. And it’s changing how restaurants are setting prices.

This week, Dunkin’ dropped its surcharges on drinks with nondairy milk. Starbucks did the same late last year, as have lots of indie coffee shops. One person excited about these developments is Lizzy Freier.

“I’m an oat milk fan, yes,” she said. Freier is both an oat milk fan and the director of menu research at the consulting firm Technomic.

Especially for Gen Z and Millennial consumers, “at coffee cafes, they’re expected to have these types of nondairy milks on offer,” she said.

But those alternatives aren’t cheap. A gallon of oat milk can be twice the cost of a gallon of cow’s milk, so coffee shops charging a little extra might make sense.

Thing is, “customers rebel when they see a surcharge,” said Stephen Zagor at Columbia Business School. “It’s like a company directly sticking their hand in their pocket.”

That’s especially true for consumers with dairy allergies or who just prefer plant-based milks for ethical or health reasons, Zagor said. “And then, you go to a Starbucks or you go to a Dunkin’, and they’re being penalized for trying to be healthy.”

It also may not be a coincidence that the country’s two biggest coffee chains are dropping the extra fees right now, per Miguel Gomez, a professor of food marketing at Cornell. 

“Both companies have faced legal challenges that argue that the surcharges were discriminatory,” he said.

And in the grand scheme of running a coffee shop, Gomez said that giving away a bit of nondairy milk isn’t a huge deal.

“The cost of milk to make coffee is so small. It’s single digits as a share of the total cost,” he said. “It’s so small that I think the companies will absorb this cost, and they are not going to increase prices.”

Gomez added that the coffee shop landscape is so competitive, he expects more chains to follow suit. Otherwise, they might lose customers to the Dunkin’ down the street.

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