Dunkin' Sustains Expansion Spree

Zacks

A leading quick service restaurant (:QSR) chain, Dunkin' Brands Group, Inc.’s (DNKN) subsidiary Dunkin Donuts is all set to launch its new restaurants in Southern California.

In this regard, the company will be entering into multi-unit deal with new franchisees.

Moreover, since further expansion in the markets of Los Angeles, Riverside, San Diego, San Bernardino, Ventura and Orange counties is on the company’s agenda, it is signing agreements with various franchise partners. The company is planning to open new restaurants in these regions by 2015.

These moves are part of the company’s aim to expand its footprint in the U.S. over the next 20 years. Dunkin’ is also focused on a strategy to seize growth opportunities over its competitors by catering to the consumer needs of individual markets through augmenting its restaurant productivity.

Focus on expansion being very important with Dunkin', management finds the markets in eastern and western Mississippi to be particularly attractive. Moreover, the company is also looking for new growth opportunities in various other fields including colleges and universities, casinos, military bases, supermarkets, airports and travel places.

In 2013, the company will introduce nearly 330-360 Dunkin' Donuts units in the U.S., which will represent an annual new unit growth rate of 4.5% - 5%.

Currently, Dunkin' Brands, the owner and operator of Dunkin' Donuts and Baskin-Robbins, expects that its annual development rate will be 5% in long term. Further, the company intends to open nearly 15,000 restaurants under Dunkin' Donuts brand in U.S within 3-5 years.

In 2012, the company opened 291 new Dunkin' Donuts restaurants and restored nearly 600 units in the U.S. Further, the company has also penned several multi-store contracts to open Dunkin' Donuts units in 32 regions in the U.S.

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

Dunkin' Brands currently retains a Zacks Rank #3 (Hold). Moving ahead, other retail restaurateurs, which are continuously trying to expand in the market, include The Cheesecake Factory Incorporated (CAKE), Krispy Kreme Doughnuts Inc. (KKD) and AFC Enterprises Inc. (AFCE). Krispy Kreme carries a Zacks Rank #1 (Strong Buy) whereas The Cheesecake Factory and AFC Enterprises carry a Zacks Rank #2 (Buy).

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