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Dunkin Remains on Growth Trajectory

Zacks Equity Research

Dunkin’ Donuts, an operational arm of Dunkin Brands Group, Inc. ( DNKN ), recently announced that it has entered into a contract with a franchise group to open two restaurants in Ohio. The move is part of the company’s goal to double its presence in the U.S. over the next 20 years.


The restaurants are planned to be opened in Cincinnati, with one restaurant slated to open in 2014 and the other in 2015. Cincinnati is the third largest city in Ohio, and Dunkin' already has a presence there.


The promising restaurant industry in Ohio acts as a driving force to the U.S. economy. Renowned peer companies of Dunkin Brands such as Darden Restaurants, Inc. ( DRI ) and Panera Bread co. ( PNRA ) have been active in the state for years. In 2012, total revenue from the restaurant sector in Ohio is projected to be around $16.6 billion.


Dunkin’ Donuts has inked a deal with an existing franchisee group - Rupal Kadakia, Kamlesh Shakrani and Hiren Pandhi – for new restaurant openings. The franchisee group will manage the day-to-day operations of each restaurant. The franchisees have handled Dunkin’ Donuts restaurants for more than 13 years. Management believes that tremendous franchise opportunities still exist in the Ohio market, particularly in the cities of Columbus, Dayton, Toledo and Lima.


Dunkin’ Donuts is focused on its strategy to seize growth opportunities and cater to consumer needs of individual markets. Thus, the company continues to expand through development of single and multi-unit opportunities. In order to be competitive and innovative, Dunkin’ Donuts offers services through various types of real estate format concepts including free-standing restaurants, end caps, in-line sites, gas and convenience, travel plazas, on- university campus and others. 


Dunkin’ continues to expand throughout the U.S. Last week, Dunkin’ Donuts also joined hands with two franchise groups to open three units in Illinois. Earlier this month, the company inked deals with four franchises - Daily Grind LLC, MM Donuts, LLC, Yes Partners, LLC and Medallion Donuts, LLC – to open new restaurants in Texas.


Dunkin' Donuts is the market leader in the coffee, donut, bagel and muffin categories. The company operates more than 10,000 restaurants worldwide, including more than 7,000 restaurants in 36 states as well as the District of Columbia, and in more than 3,000 international locations in 33 countries.


We presently have a long-term Neutral recommendation on Dunkin Brands Group. Also, the company carries a Zacks #3 Rank (a short-term Hold rating).

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