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Baskin-Robbins & DoorDash Team Up for Delivery Across US

Zacks Equity Research

Baskin-Robbins, a unit of Dunkin' Brands Group, Inc. DNKN, has partnered with technology company DoorDash to launch door-to-door delivery at more than 600 Baskin-Robbins locations in 22 cities across the U.S., including Chicago, Houston, Los Angeles and New York City.

Currently, residents in the participating cities can make use of the DoorDash app or website to order their preferred Baskin-Robbins products with just a tap or click, from the convenience of their own home.

In fact, we note that the digital wave has hit the U.S. restaurant space for some time now as an increasing number of restaurant chains are deploying technology to enhance guest experience and Dunkin' Brands is no exception. The company is growing in terms of its usage of digital technology at its Dunkin' Donuts and Baskin-Robbins brands’ to make them more convenient and accessible for customers.

Particularly, delivery has become a growing area for the industry driven by ease of access. Notably, DoorDash, which connects customers with their favorite local and national businesses in more than 500 cities across the U.S. and Canada through door-to-door delivery, has similar partnerships with the likes of Jack in the Box Inc. JACK and The Wendy's Company WEN as well. Hence, Dunkin' Brands seems to increasingly focus on delivery in order to cash in on its growing popularity.

In fact, given the great demand for this service, the company aims to expand third-party delivery channels at both brands to boost transactions and sales in the near term.

It is to be noted that Dunkin' Brands is placed among the well-established global quick service restaurant brands. The company’s continued expansion strategies, along with various sales and digital initiatives like product launches, increased focus on its beverage portfolio, the ongoing loyalty program and mobile ordering service are expected to attract customers and positively support earnings and revenue growth.

Additionally, a look at Dunkin' Brands share price movement shows that the company has outperformed the broader Zacks categorized Retail–Restaurants industry in the last year. While the stock was up 24.3%, the broader market witnessed a gain of 8.2% in the same time period.

However, Dunkin' Brands’ international comps growth has suffered mostly over the last few years at its Dunkin’ Donuts and Baskin Robbins divisions. In addition, a soft consumer spending environment in the domestic restaurant space, along with intense competition from similar food & beverages companies like Starbucks Corp. SBUX might continue to put pressure on revenues, moving ahead.

Meanwhile, the U.S. ice cream industry is shrinking gradually. Consumers are shifting more toward healthy frozen yogurt and fruit and vegetable-based flavors, which in turn is hurting the company’s revenues.

Moreover, in the recent times, the trend of ice cream consumption at home has increased as several key brands are now available at grocery stores. This, in turn, has been further resulting in declining sales at ice cream parlors.

We thus expect this recent partnership with DoorDash to revive Baskin-Robbins top-line growth by offering customers increased convenience at home through the finest ice cream delivery experience.

Dunkin' Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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