Dunkin' Donuts to Enter U.K. Market

   By Saabira Chaudhuri 
 

Dunkin' Brands Group Inc. (DNKN) has signed a deal to take its eponymous donut restaurants to London, as the company continues its push to expand internationally.

The move returns Dunkin' Donuts to the U.K. after it pulled out of the country in the mid-nineties.

The Canton, Mass., company has signed franchise agreements with Court Group and DDMG Ltd. to develop 50 Dunkin' Donuts restaurants in Greater London over the next five years, with an initial focus on North London and East London.

The donut-focused chain also said it is in advanced discussions with other franchise partners to help develop 150 Dunkin' Donuts restaurants in the U.K. over the next five years.

"We feel there is significant opportunity for Dunkin' Donuts in the UK, and we have had a tremendous response from potential franchisees interested in developing the brand across the country," President of Dunkin' Brands International Giorgio Minardi said in prepared remarks.

Dunkin' Donuts currently has more than 10,500 restaurants in 31 countries, including more than 100 locations across Europe in Bulgaria, Germany, Russia and Spain.

The restaurants in the U.K. will feature Dunkin's coffees, teas, espresso-based beverages, frozen drinks, donuts, muffins, croissants and sandwiches. The brand will also offer regional menu items to cater to local tastes.

This isn't the first time Dunkin' has beat a retreat from a country only to return. In 2010, the company said it would open 20 stores in Moscow, after exiting Russia in 1999 following three years of losses exacerbated by a rogue franchisee who sold liquor and meat pies alongside coffee and crullers.

Last year, Dunkin' Brands Chief Executive Nigel Travis told U.K. paper the Telegraph that he was investigating how Dunkin' could tap what he said was "enormous interest" in the Dunkin' Donuts brand in the country. He had said he believed the brand's range of breakfast sandwiches, "slightly milder" coffee and donuts could appeal to people who go to McDonald's Corp. (MCD) or Starbucks Corp. (SBUX)

Dunkin' Brands ice-cream chain, Baskin-Robbins, already has 100 locations in the U.K.

The parent company of Dunkin' Donuts and Baskin-Robbins would be competing with rival Krispy Kreme Doughnuts Inc. (KKD), which has had a strong presence in the U.K. for several years now.

Dunkin' has been focused on expanding the doughnut-and-coffee brand westward in the U.S., improving its performance abroad and staging a turnaround of its ice cream shops domestically.

Dunkin' in January signed an agreement allowing it to push into Vietnam. At the start of the year it unveiled plans to open stores in California. The company had a few Dunkin' Donuts shops in California years ago but has never had a strong presence there. It expects to open the first one in Southern California in 2015 and to reach about 150 in the first five years.

In July, Dunkin' Brands reported its second-quarter profit surged as the restaurant-chain company's mostly higher same-store sales and lower costs boosted results.

Shares closed Wednesday at $43.76 and were inactive premarket. The stock has risen 5.8% in the past three months.

Write to Saabira Chaudhuri at [e-mail]

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