Dunkin Donuts Expansion Helps Stock to $29

by Trefis Team
+11.65%
Upside
43.27
Market
48.31
Trefis
DNKN
Dunkin Brands
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Dunkin Donuts, a subsidiary of Dunkin Brands (NYSE:DNKN), has signed multiple agreements to open new outlets in various locations across the country. The deals are consistent with our belief that the number of Dunkin Donuts outlets are set to increase in the coming years. Dunkin Brands competes with McDonald’s (NYSE:MCD), Starbucks (NASDAQ:SBUX), Krispy Kreme, Dairy Queen and Cold Stone Creamery, to name a few.

See our full analysis of Dunkin’ Brands here

New Outlets in Washington DC, Iowa, Michigan

The company aims to open 86 new outlets in Washington DC by the year 2020. [1] In another agreement, the company has agreed to open 12 new restaurants in Des Moines, Iowa. [2] The first restaurant will open in 2012 and the remainder by 2018. Earlier in the year, the company signed agreements with 3 franchisees to develop six new restaurants in Detroit, Michigan over the next few years. [3]

During the first half of 2010, Dunkin Donuts opened at 338  new locations worldwide with 75 of them opening up in the U.S. [3] There are around 10,000 Dunkin Donuts outlets globally out of which 7,000 are in the U.S. We believe that that the number of outlets will keep increasing at a healthy rate.

We estimate a $29 price for Dunkin’ Brands, which is about 18% above the market price.

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Notes:
  1. Dunkin’ Donuts Expansion: 86 New D.C.-Area Stores Planned, Huff Post, November 27, 2011 []
  2. Dunkin’ Donuts to expand in Iowa, BakingBuyer.com, November 9, 2011 []
  3. Detroit Is Target of Dunkin’ Donuts Expansion, quickserveleader.com [] []
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