Dunkin’ Donuts, owned by Dunkin’ Brands (NASDAQ:DNKN), opened its first outlet in India recently. Dunkin’ Brands has had presence in the country for several years through Baskin-Robbins. With the Indian food industry showing plenty of promise, restaurant chains such as McDonald’s (NYSE:MCD), Starbucks Corporation (NASDAQ:SBUX), Yum! Brands and others are piling on their investments in this region. Most of the major restaurant chains plan to open their first restaurants sometime soon, and the restaurant chains already existent in the country are ramping up their presence.
We have a Trefis price estimate of $29 for Dunkin’ Brands, which is about 10% below the market price.
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Dunkin’ Not Alone
Dunkin’ Donuts signed an agreement with Jubilant FoodWorks (the franchisee for Domino’s Pizza in India) to open around 100 restaurants in the country over the next five years. However, Dunkin’ Brands is not alone that hopes to expand presence in the country. Earlier this year, Starbucks signed an agreement with Tata Global Beverages which will see the coffee chain opening 30-50 stores in the country in 2012.  There is no Starbucks store in India presently.
To highlight the growing importance of India, Yum! separated the reporting of its Indian operations from its international operations (putting the country on par with China). Recently, even Rita’s Italian Ice signed an agreement with an Indian franchisee to open 50 new stores in the country in the next few years.  In December last year, McDonald’s allocated an investment of $200 million to double the number of restaurants to 500 by the end of 2014.
India’s fast food industry is currently pegged at $13 billion, one-fifth of China’s. However, it is growing at an annual rate of 19%, surpassing China’s 15% growth rate.  With population of 1.2 billion, which is relatively young (more than 35% of the population is below the age of 20), the demographics too work favorably for the restaurant chains.  Moreover, India’s GDP growth rate is expected to grow at 7-8% over the next few years.Notes:
- Tata Starbucks to open 30-50 cafes this year, livemint.com, Jan 31, 2012 [↩]
- Rita’s Italian Ice signs franchise deal in India, nrn.com, May 3, 2012 [↩]
- India may top China as hottest restaurant growth market, nrn.com, February 24, 2012 [↩]
- The Truth about India’s Young Population, and how it can be a boon or a bane?, sumit4all.com, April 25, 2011 [↩]