Dunkin' Donuts, a part of Dunkin' Brands Group Inc. (DNKN - Analyst Report), recently inked a franchise development deal to set up 7 new units in La Crosse and Eau Claire, Wis., in association with its franchise partner, Travel Mart, Inc. The first of the anticipated openings is expected to hit the market in 2014 while the rest will come up by 2020.
Dells, Wis.-based Travel Mart’s proven track record as a franchisee and its superior knowledge of the local market helped it to clinch the deal. Further, Dunkin' shares a long-standing relationship with Travel Mart. We note that Travel Mart already operates 6 Dunkin locations in the Wisconsin market. Apart from this, there are 7 restaurants in the pipeline, which, when added to the latest announcement of 7 more, will take the tally to 20 units in Wisconsin.
We believe, the latest alliance reflects Dunkin' Donuts’ intent to make Wisconsin one of the prime states for expansion considering its potential to generate about $7.3 billion in restaurant sales in 2013, as per the National Restaurant Association. Further, expanding into an existing market will provide the company with support infrastructure and an improved distribution model which, in turn, is expected to facilitate supply chain management.
This leading quick-service restaurant chain is aggressively expanding in various U.S. states. In early July, the company opened its 500th restaurant in New York. This company also aims to double its portfolio by expanding in the lucrative domestic market over the next 20 years. Further, the company will remodel many more outlets in the Americas in order to capitalize on the strong demand for Dunkin’ Donuts’ products.
To cater to the various market specific needs, this Zacks Rank #3 (Hold) company has undertaken a series of initiatives such as flexible concepts for any real estate format including free-standing restaurants, end caps and in-line sites, menu innovation and improvements in food presentation.
Other Stocks to Consider:
Some other players in the restaurant industry, which look attractive at current levels, include The Wendy’s Co. (WEN - Analyst Report), Domino’s Pizza Inc. (DPZ - Analyst Report) and Burger King Worldwide Inc. , all carrying a Zacks Rank #2 (Buy).