The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (Trefis) -- Dunkin' Brands (DNKN) is a franchisor of quick service restaurants and operates globally through Dunkin' Donuts and Baskin-Robbins brand names. Dunkin' Donuts offers varied products including coffee, donuts, muffins, bagels, and breakfast sandwiches, among others, whereas Baskin-Robbins is a global chain of ice cream parlors.
At present, Dunkin' Donuts' U.S. segment contributes the most to Dunkin's revenues, with approximately 70% share of gross revenues. Going forward, we believe its contribution would decline slightly and Baskin-Robbins International would emerge as the key driver for growth. Dunkin' Brands competes with McDonald's (MCD), Starbucks (SBUX), Krispy Kreme, Dairy Queen and Cold Stone Creamery among others.
We recently launched our analysis of Dunkin' Brands stock with a $29 Trefis price estimate, which is around 10% ahead of the market price.See our full analysis of Dunkin' Brands here. Dunkin' Brands operates mainly on a full-fledged franchise model, unlike its competitors such as Starbucks and McDonald's which follow a mix of the company operated and franchise business model. Margins are higher in the franchise model compared to the company-operated model as capital investments required are lower. New store development and substantially all of the store advertising costs are funded by franchisees and thus explain the high margins in this business model. Here are the trends affecting Dunkin' Brands: Increase in health consciousness among customers The awareness about healthy food intake is increasing globally. Customers are cautious of health disorders resulting from junk food. Consequently, fast food companies have started offering healthier food offerings in order to catch up with this fast emerging trend. We believe this trend would emerge as a key factor that would govern Dunkin's product offerings in the future.
Dwindling consumer discretionary spendingVolatile economic conditions are directly affecting the fast food industry. The impending euro crisis, sluggish U.S. economic recovery and high unemployment rates are affecting disposable incomes worldwide.
Higher cost pressures troubling food and beverage sectorRising inflation has significantly increased costs for food and beverage companies. Many of the firms have increased the prices of their offerings to fight inflation. However, continued inflationary pressures could significantly affect growth prospects.
Shift in Ice Cream Consumption in U.S.The ice cream industry in the U.S. is shrinking gradually. A trend toward home consumption is growing and sales at ice cream parlors are declining. Baskin-Robbins is gradually closing down its franchises in the U.S. and expects the trend to continue in the coming years. Click here to find out how a company's products impact its stock price at Trefis. Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV