Dunkin' to Expand in Texas

Zacks

Dunkin’ Donuts, an operational arm of Dunkin Brands Group, Inc. (DNKN), recently announced that it has inked multi-unit store development agreements with several franchise groups. The deal is in accordance with Dunkin’ Donuts' strategy of opening 29 new units in Houston and Waco in Texas in the coming years.

Dunkin’ Donuts remains focused on its strategy to seize growth opportunities and cater to consumer needs in individual markets. The company continues to expand through development of single and multi-unit opportunities.

The company has inked deals with four franchises - Daily Grind LLC, MM Donuts, LLC, Yes Partners, LLC and Medallion Donuts, LLC – to open four  restaurants in 2013 and the rest by 2019. The new restaurant development is part of the company’s goal to double its presence in the U.S. over the next 20 years.

The promising restaurant industry in Texas acts a major driving force to the U.S. economy. Renowned peer companies of Dunkin Brands like Yum! Brands, Inc. (YUM) and Brinker International Inc. (EAT) have been serving the state of Texas for years. In 2012, total revenue from the restaurant sector in Texas is projected to be around $38.4 billion.

The emerging dining industry in major cities like Houston, Waco, San Antonio, Dallas and Austin, Texas caught the attention of Dunkin’ Donuts. In the previous quarter the company signed a limited partnership agreement with Jerry Jones Family and Troy Aikman to open around 50 new Dunkin' Donuts restaurants across Dallas/Fort Worth region over the next five years.

In addition to this, the company also has 25 units in its development pipeline, to be opened in Houston and San Antonio in the coming years. Thus, the company has over 100 restaurants in its U.S. development pipeline, with Texas grabbing the biggest share.

Dunkin' Donuts is the market leader in the various coffee, donut, bagel and muffin categories. As of now, Dunkin' Donuts operates more than 10,000 restaurants worldwide, including more than 7,000 restaurants in 36 states as well as the District of Columbia in the U.S., and in more than 3,000 international locations in 33 countries.

We presently have a long-term Neutral recommendation on Dunkin Brands Group. However, the company carries a Zacks #2 Rank, which translates into a short-term Buy rating.

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