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Dunkin' Donuts Flourishes in Memphis

Zacks Equity Research

Coffee and doughnut maker, Dunkin' Brands Group Inc. (DNKN), has been actively expanding its domestic portfolio and intends to double it in the next 20 years. 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 expand its footprint in the state of Tennessee, Dunkin' Donuts, part of Dunkin' Brands, recently formed a multi-unit deal with a new franchisee — JP Foods, LLC to open 12 restaurants in Memphis over the next seven years. The franchisee group has a proven track record as a franchisee and its superior knowledge of the local market helped it to clinch the deal.

While the company’s first restaurant is expected to hit the market in 2015, the rest will come up by 2020.

We believe, the emerging dining industry and growing population of the state caught the attention of Dunkin’ Brands. The company is also hiring new franchise partners to open Dunkin' Donuts units in other parts of Tennesseesuch as Nashville and Knoxville.

National Restaurant Association’s report on the state’s potential to generate restaurant sales worth $9.9 billion in 2013.

Dunkin’ Brands, the market leader in the various coffee, donut, bagel and muffin categories, boasts an attractive growth story, driven by its expansion plan, marketing innovation and menu innovations.

Dunkin’ Brands currently carries a Zacks Rank #3 (Hold). Some other players in the restaurant industry which look attractive at present include Cracker Barrel Old Country Store, Inc. (CBRL), DineEquity, Inc. (DIN) and Bob Evans Farms, Inc. (BOBE). All these companies hold a Zacks Rank #2 (Buy).

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