This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dunkin' Brands Eyes Big Expansion

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 - Get Report) plans to double the number of outlets of its subsidiary Dunkin' Donuts in the U.S. in the next 20 years.

The move will increase the number of outlets to a whopping 14,000 in the U.S. alone. The company will also debut Baskin-Robbins in Vietnam. Dunkin' Brands competes with McDonald's (MCD), Starbucks (SBUX), Krispy Kreme, Dairy Queen and Cold Stone Creamery to name a few.

The stock has gained almost 5% since the start of the year. We estimate a $29 price for Dunkin' Brands , which is about 10% above the market price.

See our full analysis of Dunkin' Brands here.

As part of its ambitious plans, Dunkin' plans to reduce its royalty fees for the first few years of operations as an incentive for franchisees. Almost all of the company's current 7,000 outlets in the U.S. are franchised. The company also signed an agreement with National DCP LLC, which would make it the exclusive supplier for all of Dunkin' Donuts outlets in the U.S. The company believes the deal will help accelerate its expansion plans.

According to our estimates, Dunkin' Donuts' U.S. operations contribute more than 60% to the overall stock price. Currently, Dunkin' Donuts has around 7,000 outlets in the U.S., and we expect it to increase to 9,000 by the end of 2018.

Dunkin Donuts' U.S. operations contribute a lot more than its international operations primarily due to higher Average Revenue per Outlet (ARO) enjoyed by the U.S. outlets. International outlets suffer from low AROs, less than one-fourth of that of the U.S. outlets. However, with a plethora of outlets opening up in the next few years, the company has to be careful that its new outlets don't cannibalize the sales of its existing stores, reminiscent of Starbucks back in 2008 which led to the closure of hundreds of its outlets.

Baskin-Robbins signed a franchise agreement with Blue Star Corp Ltd., a Vietnamese food manufacturing company, which will see the opening of about 50 new Baskin-Robbins restaurants over the next few years. The first three will be opened this week in Ho Chi Minh City. With this agreement, the ice cream chain will have 2,000 outlets in the Asia-Pacific region alone.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DNKN $54.05 0.00%
AAPL $122.99 0.00%
FB $96.99 0.00%
GOOG $631.93 0.00%
TSLA $263.82 0.00%

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs