Industry News | September 12, 2011 | QSR Exclusive Brief

Westward Ho: Dunkin' Donuts Plans New Growth

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Though it still has not committed to entering the mega market that is California, Dunkin’ Donuts announced that it is rebuffing its Westward march by opening several new markets for franchising.

The new markets include Denver and Colorado Springs, Colorado; Houston and Waco, Texas; Lincoln and Omaha, Nebraska; Oklahoma City and Tulsa, Oklahoma; and Santa Fe and Albuquerque, New Mexico.

Grant Benson, vice president of franchising and market planning for Dunkin’ Brands, says the new markets are a “natural progression” for the brand’s Westward movement.

“This is all part of a very strategic and planned march, if you will, where we’re still taking advantage of primarily contiguous markets—contiguous to those [markets] which we’ve already started to enter and sell in,” Benson says.

Benson says he expects the brand to play well in the West despite its East Coast heritage and reputation—even as it expands into Starbucks-dominated territories.

“It really can be every man’s cup of coffee, every man’s breakfast sandwich, and I think that East Coast … reputation is not indicative of what we offer, it’s just indicative of where we’ve been most predominant to this point in time,” he says. “But I think we’ll play very well with value- and quality-conscious consumers regardless of where in the country they may live.”

Over the course of the next five years, Benson says, Dunkin’ Donuts will focus mostly on building out its existing markets in the East and strengthening the new Western markets it has already opened for franchising.

“That is in no way to minimize the opportunity or the importance of our Westward march, but we still have phenomenal opportunities in the Midwest, in the South Atlantic, in the South Central parts of the country,” Benson says. “And certainly in that middle swath of the country that borders the Mississippi River, there’s a tremendous amount of opportunity to continue to fill in, better penetrate, and enjoy deeper market share in those markets.”

To attract franchisees for the new markets, Dunkin’ Donuts is offering discounted royalties for each new unit’s first three years, as well as contributions for its local store marketing. Benson says the company is looking for passionate franchisees who have business experience and will commit to at least four to nine units.

Restaurants in the new markets are expected to start opening in 2013.

As for California, Benson says he won’t speculate as to when Dunkin’ Donuts might enter the Golden State.

“We’ve got our work cut out for us at this point opening the Colorado markets, the Oklahoma markets, the Nebraska markets, and Houston,” he says. “We’re going to do that … and then we’ll see how the march continues and what the timeline for that is, when we can better assess the pace with which we’re opening in the markets that have already been opened.”

By Sam Oches