Dunkin’ Donuts New Sandwiches Beef Up Breakfast Offerings

by Trefis Team
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Dunkin Brands
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Dunkin’ Donuts, owned by Dunkin’ Brands Group (NASDAQ:DNKN), expanded its breakfast offerings by introducing a new breakfast sandwich called the Angus steak & egg sandwich. [1] Last year the company also tied up with Hillshire Farms to introduce sausage and cheese sandwiches.  This is part of Dunkin’s broader move to expand its breakfast offerings, which has quickly become a profitable and popular segment of growth for restaurant companies.

The company competes with McDonald’s (NYSE:MCD), Starbucks (NASDAQ:SBUX), Krispy Kreme, Dairy Queen and Cold Stone Creamery to name a few. We estimate a $29 price for Dunkin’ Brands, which is about 10% below the market price.

See our full analysis of Dunkin’ Brands here

Breakfast Market Competition Heats Up

McDonald’s recently announced its plan to experiment with new bakery items, which include muffins, cheese danish and banana breads. In January 2012, Taco Bell introduced a new breakfast menu, which included variants of breakfast burritos, in 800 of its outlets in the U.S. [2]

The recent employment figures have also somewhat aided the restaurant chains as an increasing number of people go to work early in the morning. Currently, the breakfast sales are pegged to be $37 billion annually. That dwarfs the total $400 billion in restaurant sales. So, there is plenty of room for the sales in this time slot to grow. [3]

It is important for restaurants to come up with avenues to generate additional revenues since certain expenditures, like property lease amount, are fixed. So the incremental revenues can boost the profitability of the restaurant significantly. Apart from introducing new offerings, Dunkin’ Donuts plans to double the number of restaurants in the U.S. in the next 20 years.

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Notes:
  1. Dunkin’ Donuts Adds Angus Steak & Egg Sandwich to Hearty Sandwich Lineup, MarketWatch, February 27, 2012 []
  2. Make an early run for the border! Taco Bell now serves breakfast, dailymail.co.uk, January 27, 2012 []
  3. Fast Food Chains Race To Grab Breakfast Business, Fox News, January 20, 2012 []
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