After speculation and anticipation, Dunkin' Donuts has officially announced its expansion plans in Southern California.
The brand has been strategically expanding in contiguous markets across the country with a long-term goal of having more than 15,000 units in the U.S.
In its new market, Dunkin' Donuts is recruiting multiunit franchisees specifically for Los Angeles, Riverside, San Diego, San Bernardino, Ventura and Orange counties and expects restaurants in these markets will begin to open in 2015.
The company is also interested in identifying qualified foodservice operators for non-traditional venues including colleges and universities, casinos, military bases, supermarkets, airports and travel centers.
A 4 percent growth rate for 2012
Dunkin' Donuts also announced the opening of 291 net new locations in the U.S. in 2012, a growth rate of 4 percent. In 2013, the company plans to open 330 to 360 net new restaurants in the U.S., representing an increase of 4.5 percent to 5 percent.
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In 2012, Dunkin' Donuts signed multi-store agreements in 32 U.S. markets, including Green Bay and Milwaukee, Wisc.; Birmingham, Ala.; Denver; and Austin, Houston and Dallas/Fort Worth, Texas. Additionally, in 2012 more than 600 Dunkin' Donuts restaurants were remodeled across the country.
"This past year was an exciting one for Dunkin' Donuts' growth in the United States, and we are delighted to begin 2013 with the long-awaited announcement that Dunkin' Donuts will be opening restaurants in California, where there is already incredible passion for our brand," said Nigel Travis, CEO, Dunkin' Brands and president, Dunkin' Donuts U.S. "Expansion to California has always been part of our plan to grow Dunkin' Donuts' presence in the U.S. We have maintained our disciplined approach to expand steadily while focusing on initiatives to improve restaurant economics and franchisee profitability."
These initiatives include the company's recent agreement with its franchisee-owned and operated distribution and procurement facility to ensure the same cost of goods to franchisees in both established and new markets by 2015.
Also to build the brand's buzz in California, its sister chain Baskin-Robbins has been selling Dunkin' Donuts K-Cups throughout the state.
Other strategies to achieve ambitious growth
Travis gave a presentation this morning at the 15th annual ICR XChange in Miami and touched upon how Dunkin' Donuts is able to plan such an ambitious growth strategy that not only entails the California market, but also doubling the brand's current U.S. footprint in about a decade to more than 15,000 units.
"My nickname is 'comps, comps, comps.' I am totally fixated on the business yesterday and increasing comp store sales and profitability in Dunkin' Donuts U.S. franchises. If that works, then the reward is increased growth," Travis said.
The company will continue Dunkin's contiguous store expansion. Its guidance for 2013 includes opening between 330 to 360 net new units in the U.S.
The expansion strategy is divided into four markets — core, or the upper New England area where there is currently one Dunkin' Donuts for every 9,400 residents; established, or the lower New England area, Florida, Chicago and Cleveland, where there is currently one unit for every 23,000 residents; emerging, the remaining markets located east of the Mississippi River, where there is one unit for every 92,000 residents; and west, or markets located west of the Mississippi, where there is currently one unit for every 840,000 residents.
The long-term growth plan predicts about 5,000 new locations in the west markets; about 3,000 in the emerging markets; 350 in established markets; and about 100 in the core markets.
"There is a real opportunity to build out the emerging and west categories," Travis said. To unlock that westward opportunity, Dunkin' is focused on five initiatives:
- Rigorous real estate and franchisee selection;
- Operations-focused culture;
- National media focused on beverages;
- Portfolio of high-margin products; and
- Flat national cost of goods by 2015.
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