Dunkin’ Donuts, owned by Dunkin’ Brands (NYSE:DNKN), continues to expand its menu by introducing two new breakfast burritos and other items such as Undercover Black Cocoa Donut, Chocolate Lunarmax Donut and Black Cocoa Crème Iced Coffee.  The competition in breakfast is intense with McDonald’s (NYSE:MCD) recently adding McCafe Cherry Berry Chiller and Blueberry Banana Nut Oatmeal to its U.S. menu. Baskin-Robbins, also owned by Dunkin’ Brands, announced plans to almost double the number of its U.K. restaurants. The company competes with McDonald’s (NYSE:MCD), Starbucks (NASDAQ:SBUX), Krispy Kreme, Dairy Queen and Cold Stone Creamery to name a few.
We have revised our price estimate for Dunkin’ Brands to $36, which is about 10% above the market price.
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New Items Boost Sales
Dunkin’ Donuts has been regularly adding items to its menu. This year it introduced Angus Steak, Egg and Cheese Breakfast Sandwich and Turkey, Bacon and Cheddar, and Ham and Cheese Bakery Sandwiches. In November 2011, the restaurant chain also tied up with Hillshire Farm to introduce smokehouse sausage breakfast sandwich. The new additions have helped the restaurant chain post impressive comparable sales growth of 7.2% in the first quarter of 2012. For the full year, the company expects comparable sales to grow by 5%.
For restaurant chains like Dunkin’ Donuts, which are primarily franchised, sales growth means additional revenues. Moreover, since the costs are typically fixed for a franchisor (on a per restaurant basis), the incremental revenues help boost profitability. Recently, Dunkin’ Donuts also opened its first outlet in India.
Baskin-Robbins International Marches On
Baskin-Robbins announced its plan to open 80 new stores in the U.K. over the next three years. Currently, it has around 100 outlets in the country.  Although the ice cream chain has struggled domestically, it continues to do well internationally. The company plans to add 25 new outlets in Mexico as well as the Middle East. It also opened its first outlet in Vietnam this year. Baskin-Robbins added 368 new outlets in 2011, and we expect around 300 more store openings in 2012.Notes:
- Dunkin’ Donuts adds new breakfast burritos, more, jacksonville.com, May 16,2012 [↩]
- Baskin-Robbins Announces Major Expansion Plans In The UK, marketwatch.com, May 4, 2012 [↩]