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Dunkin' Brands Group, Inc. (DNKN - Snapshot Report)
announced that it has inked a franchise agreement with the Mexico based
subsidiary of Sizzling Platter, LLC – a franchisee of Dunkin' Donuts –
in the U.S., to develop restaurants in Mexico. Per the deal, almost 100
Dunkin' Donuts restaurants will be opened in the Distrito Federal, as
well as the states of Hidalgo, Mexico, Morelos, Jalisco and Queretaro,
in the upcoming years.
The restaurants in Mexico will offer its selection of hot and iced
coffees, espresso, cappuccino, lattes, teas, frozen drinks, bagels,
muffins, croissants, donuts and sandwiches. The restaurants will also
serve certain locally popular menu items. In fact, Dunkin' Donuts is
famous for its different doughnut varieties and coffees around the
globe.
After reporting disappointing third-quarter results, and warning that
it might struggle to achieve its long-term growth targets, Dunkin’ is
looking to diversify its footprint in the international markets. The
company’s top line was hurt in the last-reported quarter by a saturated
fast food restaurant segment coupled with a sluggish macroeconomic
environment and reduced consumer spending in the domestic market.
Currently, Dunkin' Donuts has more than 11,000 restaurants in roughly
33 countries, including nearly 8,000 restaurants in North America,
Aruba, the Bahamas, Canada, Guatemala, Honduras, Panama and the United
States.
The company’s expansion in Mexico is a strategic fit as the increased
consumption of coffee drinks such as lattes or cappuccinos has
considerably boosted the per capita consumption of coffee in the region,
according to Euromonitor International — a leading market research
firm. Further, by 2015, Euromonitor expects per capita consumption of
coffee in the country to be nearly 2 kilograms.
Such high demand for coffee-related products will support growth for
cafés in the country. We believe that the Massachusetts-based quick
service restaurant operator will stand to gain from this spurt in demand
for coffee in Mexico.
Dunkin’ Brands currently has a Zacks Rank #4 (Sell). Better-ranked
stocks in the same industry include Brinker International, Inc. (EAT - Analyst Report), Chipotle Mexican Grill, Inc. (CMG - Analyst Report) and Darden Restaurants, Inc. (DRI - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).
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