Dunkin' to double U.S. stores in anti-Starbucks push
LOS ANGELES (Reuters) - Dunkin' Donuts -- the East Coast coffee shop chain called by some the "anti-Starbucks", because of its core blue collar customer base, still plans to more than double its U.S. stores to 15,000 by 2020, as its bigger rival from Seattle retrenches.
At the same time, both Dunkin' and Starbucks Corp (SBUX.O), which is retrenching, face competition from McDonald's Corp (MCD.N), which like other fast-food restaurants is aggressively pushing into coffee.
"Coffee has become a very competitive segment. It requires us to be on top of our game," Will Kussell, president and chief brand officer of privately-held Dunkin' Donuts Worldwide told Reuters.
"It's fair to say that we expect to be a growth company and a growth brand for many years to come," said Kussell, who declined to give specific financial forecasts.
Dunkin's 8,000 global stores -- which include almost 6,000 U.S. outlets -- turned in 2007 sales of $5.3 billion and revenues and profits continue to grow, the company said.
Momentum has been tempered as higher fuel and grocery bills take a bite out of U.S. discretionary spending, Kussell said.
RBC Capital Markets analyst Larry Miller said Dunkin' is taking more money out of the overall coffee market as it expands, but that the biggest shift in consumer coffee buying patterns is toward making coffee at home.
"The only place that looks like it's gaining (competitive) share is McDonald's," Miller said.
Kussell said Dunkin' will roll out a new value promotion in October, as customers grapple with high heating oil prices.
"We are very much a middle-class brand. We will be a bit more aggressive as we move into fall and winter," he said.
Dunkin' Donuts parent Dunkin' Brands was bought by private equity firms Bain Capital Partners, the Carlyle Group and Thomas H. Lee Partners in December 2005.
The Canton, Massachusetts-based chain plans to add about 9,000 stores around the United States by 2020.
McDonald's currently has about 14,000 U.S. outlets. Starbucks will retain about 11,000 domestic stores after plans to shutter 600 outlets to contend with flagging profits and store traffic.
Kussell said the tough credit markets have not slowed its expansion -- even though lenders are demanding 10 percent to 30 percent down payments to get new franchise deals done.
Dunkin' is adding stores in three western markets: Las Vegas, Phoenix and the Dallas/San Antonio/Austin/Houston area, which Kussell said will get more than 100 new units in total over about the next three years. Continued...
