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A peek into the future: Dunkin’ Brands positioned for good growth

Matthew Krikorian

Key Highlights: Dunkin' Brands Q4 2013 Earnings Report (Part 5 of 5)

(Continued from Part 4)

Dunkin’ Brands Group, Inc. believes it is poised to leverage every resource at its disposal to once again better itself in fiscal year 2014. Chief among strategic decision making is to move forward with its expansion into the western U.S. It will do so while simultaneously leveraging its existing brand power to strengthen sales in its core operating region, New England, plus international markets. Also, Dunkin’ Brands aims to imbed itself in the lives of its customers, and be a part of their daily rituals.

Expansion efforts

Another of Dunkin’ Brands’ long-term expected value drivers is its continued expansion efforts. The company is currently targeting another year of over 5% net unit development in 2014. Executives urge investors asking questions not to jump to California when evaluating long-term growth opportunities. The company believes there are at least an additional 3,000 store opportunities east of the Mississippi River according to the Q4 earnings call.

That said, the company began issuing franchise agreements in California at the start of 2013 and was able to charter almost 100 restaurants in the trailing 12 months. This is largely due to astounding demand for franchise agreements in the Sunbelt. As of the start of fiscal year 2014, all of California is for sale, and restaurants in this region are expected to be operational by 2015 according to Dunkin’s fourth quarter 10-Q.

Brand strength

Brand power has been a strong sales driver within the U.S. since its inception in the 1950s. The company’s two core brands: Dunkin’ Donuts and Baskin-Robbins, have over 18,000 locations worldwide and boast strong consumer appeal. It plans to further strengthen brand power in the core market as well as globally by leveraging its current size and business model. One strategy it will attempt to pursue employs social media websites like Facebook and Twitter; Dunkin’ Donuts and Baskin-Robbins have over 18 million Facebook fans. Likewise, social media efforts in Japan contribute a sizable 5.5 million plus followers on a prominent social media network known as “Line.” Other examples of boosts that contribute to Dunkin’ Brands’ power comes in the form of formal professional sports partnerships such as Major League Baseball teams including: The New York Yankees and Mets, The Tampa Bay Rays, and The Boston Red Sox. Likewise, Dunkin’ Brands has partnerships with the New England Patriots, and as of January 2014, The Liverpool Football Club in England.

The Dunkin’ ritual

The accessibility of Dunkin’ Brands in both domestic and international markets is paving the way for the company to become a part of consumers’ daily ritual. Executives strive to have guests enjoy products in house and beyond the walls of their restaurants. Guests were recently introduced to the “Dunkin’ Perks” loyalty program, rewarding patrons for making the quick-service restaurants a part of their every morning. This is also reflected in mobile app downloads, which pushed past the 5.5 million mark and is the foundation for the rewards program. Likewise, twitter is leveraged in marketing efforts through the handle “#mydunkin.” All together, these features which make Dunkin’ Brands accessible to consumers is what makes the company’s slogan, “America runs on Dunkin” timeless since inception in 2006.

For more on what Dunkin’ has to offer its investors, see Opportunities and risks that Dunkin’ Brands investors must know.

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