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Dunkin' Donuts Expands in Colorado

Zacks Equity Research

Canton, Massachusetts-based quick service restaurant chain, Dunkin' Brands Group, Inc. (DNKN) – owner of Dunkin’ Donuts and Baskin-Robbins brands – remains steadfast in its goal to expand in the domestic market. In the past few years, the restaurateur has signed several single and multi-unit development agreements with franchisee in order to seize growth opportunities and cater to consumer needs in individual markets.

In a bid to beef up its footprint in the market of Colorado, the coffee and doughnut maker recently entered into a multi-unit deal with two franchisees — Doug Patterson and Cameron Stapleton. Per the agreement, the company, in association with its partners, will build three Dunkin’ Donuts restaurants across northern Colorado. One restaurant will debut in 2015 while the other two are scheduled for a 2017 opening.

Stapleton will manage and control the company's daily operations. These outlets will be in proximity to the Fort Collins, Loveland, Greeley, Windsor and Estes Park areas.

Dunkin' Brands has been exploring the Colorado market for quite some time now. In Sep 2013, the company unveiled a Dunkin' Donuts unit in Denver, Colo.

As per the National Restaurant Association, the restaurant industry in Colorado contributes considerably to the state’s revenues. According to the research organization, Colorado’s restaurants are expected to record $9.5 billion in sales in 2013.

With two state universities in the vicinity, the northern Colorado market appears to be quite lucrative. There is also scope for the Dunkin' Donuts brand to grow in the under-penetrated areas like Colorado Springs.

These unit expansions are in line with the company’s goal to double its portfolio in the U.S. over the next 20 years. Further, the company intends to open nearly 15,000 restaurants under the Dunkin' Donuts brand in the U.S. within the next three to five years.

Dunkin’ Brands, the market leader in the various coffee, donut, bagel and muffin categories, boasts an attractive growth story driven by its marketing strategy and menu innovation. Currently, the annual development rate of the doughnut giant is 5%.

Dunkin' currently has a Zacks Rank #2 (Buy). Some other players in the restaurant industry that are expected to perform well include AFC Enterprises Inc. (AFCE), Jack in the Box Inc. (JACK) and Cracker Barrel Old Country Store, Inc. (CBRL). All these stocks carry a Zacks Rank #2.

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