What is in this article?:
Darden Restaurants, Yum! Brands, Dunkin’ Brands,and Mexican Grill reveal growth plans at the Robert W. Baird & Co. 2013 Growth Stock Conference.
Dunkin': Filling in 'white space'
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Canton, Mass.-based Dunkin’ Brands identified plenty of “white space” for unit growth during its presentation at the Baird Growth Stock Conference, both for domestically and for internationally.
Chief executive Nigel Travis noted that 90 percent of Dunkin’ Donuts’ unit growth is coming from existing franchisees, who are aligned with the franchisor’s plan to gradually expand contiguously from markets that they take the time to establish. He also said Dunkin’ Donuts is far from building out its core East Coast market, even as investors keep an eye toward the brand’s expansion to California slated for 2015.
“Everyone thinks about going west, but we could build 3,000 stores east of the Mississippi,” Travis said. “We could build a bunch of stores in Charlotte, N.C., or Orlando. We had another investor conference in Miami, and everyone there complained about a lack of Dunkin’ Donuts.”
The decision to move all of Dunkin’ Donuts’ advertising to national campaigns in 2010 would pave the way for all new unit growth in new domestic markets, chief financial officer Paul Carbone said. “When we open our first restaurant in California in 2015, the markets there will have seen advertising on TV for five years before there are any assets in the ground,” he said. “Compare that to Las Vegas: We opened Las Vegas in 2005, and the first time they saw ads on TV was 2010.”
Travis added that Dunkin’ Donuts could soon ramp up international growth, as the franchisor plans to streamline the international supply chain and move from “low-GDP” markets where it is more established into more mainstream markets like Germany, the United Kingdom and Russia.
“In all those other low-average-weekly-sales markets, the franchisees were very profitable even when their [revenue] numbers were low, but we didn’t get the return we needed because the royalty flows from the top line,” Travis said. “So we’re very focused on filling that white space with those high-GDP markets.”