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Dunkin' Opts for Tech-Driven Solutions

Zacks Equity Research

It seems Dunkin' Brands Group Inc. (DNKN) is keen to make the most of technology these days, signing back-to-back deals with several tech-driven and analytics companies to enhance its operational efficiency and guest satisfaction. Yesterday, this coffee and baked goods chain cut a deal with Epsilon, a division of Alliance Data Systems Corp. (ADS). Per the deal, Epsilon will provide Dunkin' with the technology needed to spur Dunkin' Donuts' new loyalty initiative -- the DD Perks Program – slated to be rolled out later this year.

Earlier, Dunkin' inked a deal with ATM and POS manufacturer, NCR Corp. (NCR). Per the deal, Dunkin’ will be using the NCR Vitalcast digital signage solution across multiple locations in the US to create visually attractive animation and messaging targeting prospective customers. Using this technology, the restaurant owner can improve customer satisfaction to a considerable extent.

Of late, restaurants are responding to heightened competition in a somewhat over-supplied domestic market in a variety of ways. Loyalty programs and social media are have emerged as popular marketing tools. Restaurateurs are offering loyalty programs at their units to enhance value dining as well as improve sales. These initiatives are intended to boost customer presence as they are spending less enthusiastically on dining and at the same time seeking incentives for doing so.

While Epsilon is a leader in the loyalty marketing space, providing end-to-end, integrated direct marketing solutions that combine database marketing technology and analytics, NCR has been instrumental in offering value added solutions to its clients. We believe, choosing two industry leading solution providers will be beneficial for Dunkin’ - a Zacks Rank #3 (Hold) company - going forward.

Another restaurant operator, Domino's Pizza Inc. (DPZ) has also been adopting technology-backed initiatives like digital ordering to boost its sales for the past three years. Digital ordering is consistently increasing at the rate of about 5% a year. The effort appears to be paying off as Domino’s generated over $2 billion in digital sales globally in 2012, thus becoming one of the top technology-driven brands across the globe.

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