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Dunkin' Donuts (DNKN) to Expand Presence in North Carolina

Zacks Equity Research

The fast food giant, Dunkin’ Donuts, which is part of Dunkin’ Brands Group, Inc. DNKN, is geared up to expand further in North Carolina. The company has inked multi-unit store development agreements with two franchisees whereby it plans to build a total of 12 restaurants in the state over the next several years.

Details

The first agreement is with a new franchisee group, HARA Foodservice Group, LLC, which plans to develop four new outlets in the Charlotte area. Notably, the franchise’s first restaurant is set to open in 2018.

The second agreement is with existing franchisee group, Carolina Donuts, LLC, which recently acquired five existing Dunkin' Donuts restaurants throughout the Winston-Salem area. Currently, it operates 12 outlets all over Florida and Tennessee. Per the agreement, the franchisee is expected to develop eight new Dunkin' Donuts restaurants throughout the Winston-Salem area, with the first one scheduled to be launched in 2018.

Rationale Behind

These agreements are in sync with the company’s plan to fuel growth in North Carolina. Currently, the state is home to over 300 Dunkin’ Donuts outlets and the company is continuing to recruit more franchisees in various areas. It is also offering special development incentives to help fuel growth therein.

Apart from foraying into domestic markets, the company is also looking to expand its footprint internationally, especially in the emerging markets of Asia and the Middle East. Presently, the company has more than 12,200 Dunkin’ Donuts restaurants in 45 countries globally and is on track to achieve its long-term goal of opening 17,000 restaurants in the U.S.

Bottom Line

Dunkin' Brands is placed among the well-established global quick service restaurant brands. Notably, its shares have outperformed the broader Zacks categorized Retail–Restaurants industry over the past one year. While the stock returned 7.6%, the industry witnessed a decline of 3.2%.



Notably, such robust expansion strategies along with various sales and digital initiatives like product launches, loyalty program and mobile ordering service bode well. In fact, the company’s increased focus on establishing itself as a beverage leader should aid sales, going forward.

However, it is set to face tough competition from other food & beverages giants like McDonald’s Corporation MCD, Starbucks Corporation SBUX and YUM! Brands, Inc. YUM Taco Bell that intend to follow similar strategies.

Dunkin' Brands currently has 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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