Dunkin' Brands Group, Inc.’s (DNKN) subsidiary Dunkin’ Donuts is hiring efficient and experienced franchise partners to open new locations in different parts of North Carolina including Charlotte, Greensboro, Wilmington Raleigh-Durham, Wilmington and Winston-Salem. The company will be expanding in the state by forming franchise agreements.
In order to attract new franchisees, Dunkin' has decided to provide several incentives such as lower royalty fees for the next three years and an additional $10,000 for marketing expenses. Additionally, Dunkin’ will be assisting its partners to properly manage its restaurant operations. Apart from this, franchisees will be able to leverage the company’s multi-million dollar advertising fund.
Focus on expansion being very important with Dunkin', management finds the fast-growing markets in North Carolina to be particularly attractive. Currently, the company operates 44 locations under the Dunkin’ Donuts brand in the state.
The restaurant industry in North Carolina acts as a driving force for the U.S. economy. Several other restaurant chains, which are active in the state for years, include Krispy Kreme Doughnuts, Inc. (KKD), Burger King Worldwide, Inc. (BKW) and Starbucks Corp (SBUX). As per the National Restaurant Association, North Carolina’s emerging restaurant industry will generate total revenue of nearly $15.4 billion in 2013.
In the last month, this Zacks Rank #3 (Hold) company partnered with Little General to launch three new Dunkin’ locations in West Virginia over the next five years. The first among these Dunkin’ units is slated to open for business in 2014.
These moves are consistent with the company’s objective of doubling its store count in the U.S. with nearly 7,000 restaurants over the next 20 years. In 2013, Dunkin' is expected to launch 300-360 Dunkin' Donuts units in the U.S., resulting in an annual new unit growth rate of 4.5% - 5%.
Dunkin’ completely relies on a franchised business model. We believe that franchising provides a strong engine for earnings per share growth and ROE expansion, as the company gets to reduce its capital requirements.
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