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Dunkin' Brands, Grubhub Tie Up to Boost On-Demand Delivery

Zacks Equity Research

Dunkin' Brands Group, Inc. DNKN has partnered with Grubhub Inc. GRUB for rollout of delivery services. This nationwide delivery plan was first launched in New York City.

Currently, the new Dunkin' Delivers service is available across 400 Dunkin' restaurants throughout New York City's five boroughs and offered through Seamless — Grubhub’s New York brand. The residents of New York City can now order Dunkin' coffees, espresso drinks, Cold Brew, frozen beverages, donuts, breakfast sandwiches, bagels and more, wherever they want throughout the day.

Dunkin' and Grubhub will further expand delivery services in markets like Boston, Chicago and Philadelphia in the coming months. Per Yahoo Finance, Dunkin' aims to expand the latest delivery services to over 3,000 US Dunkin’ restaurants by the end of 2019 and to more than 9,400 by 2020.

We believe this partnership will help Dunkin' drive its sales. In the meantime, this Zacks Rank #3 (Hold) company is gaining momentum on the back of various sales-building initiatives, loyalty program and digitalization. Evidently, shares of the company have gained 25.5% year to date compared with the industry’s 20.6% growth.


Digitalization Need of the Hour

With Internet, digitalization and electronics influencing every facet of our day-to-day lives, it is obvious that the restaurant industry has embraced this trend.

Per The NPD Group, foodservice delivery services have contributed significantly to restaurant sales over the past few years. Over the last four years, digital orders increased by 23%. As a result, digital sales are no longer a luxurious feature but are the dire need of the hour.

Moreover, Morgan Stanley predicts the food delivery industry could account for 11% of all restaurant sales by 2020.

Key Picks

Better-ranked stocks worth considering in the same space include Denny's Corp. DENN, Noodles & Company NDLS and Yum China Holdings, Inc. YUMC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Denny's have gained 16.1% in the past three months.

The long-term earnings growth rate for Noodles & Company and Yum China is 8.8% and 9.4%, respectively.

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Grubhub Inc. (GRUB) : Free Stock Analysis Report
Dunkin' Brands Group, Inc. (DNKN) : Free Stock Analysis Report
Denny's Corporation (DENN) : Free Stock Analysis Report
Noodles & Company (NDLS) : Free Stock Analysis Report
Yum China Holdings Inc. (YUMC) : Free Stock Analysis Report
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