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Dunkin’ Donuts Inks Store-Development Deal in Raleigh-Durham


Fast food giant Dunkin’ Donuts, which is part of Dunkin’ Brands Group, Inc. DNKN, is geared up to expand in the Raleigh-Durham area of North Carolina. The company has inked a multi-unit store development agreement with its long-time franchisee Awale Networks, Inc., whereby it plans to build four new restaurants. The first restaurant under this deal is slated to open in 2018.

Awale Networks currently owns 12 locations in Atlanta and Raleigh-Durham. The addition of these restaurants will strengthen the position of this long-term franchisee of Dunkin’ Donuts.

Notably, Dunkin’ Donuts possesses more than 90 locations in the Greater Raleigh-Durham area and over 300 in North Carolina. This agreement is thus in sync with the company’s plan to drive growth in the region. Meanwhile, in order to fortify its presence, the company is continuously recruiting franchisees in the Greensboro and High Point areas as well.

Dunkin' Brands is also looking to expand its footprint in the emerging markets of Asia and the Middle East. Also, it considers the untapped market of South Africa a great opportunity. In fact, the company has made a franchise agreement to develop more than 250 Dunkin' Donuts restaurants and over 70 Baskin-Robbins shops in the continent over the next few years.

At the end of the third quarter, Dunkin' Brands opened 137 new restaurants worldwide. These include 67 Dunkin' Donuts U.S. locations, 18 Dunkin' Donuts International locations, 11 Baskin-Robbins U.S. locations and 41 Baskin-Robbins International outlets. Additionally, Dunkin' Donuts U.S. franchisees remodeled 88 restaurants, while Baskin-Robbins U.S. franchisees renovated 24 outlets.

Notably, Dunkin’ Brands’ shares have outperformed its industry in the last year. While the stock rallied 18.1%, the industry gained 16.2%.

However, Dunkin' Brands’ international comps growth has been weak over the last few years. Furthermore, a soft consumer spending environment in the domestic restaurants space along with intense competition from food & beverages companies like Starbucks Corporation SBUX, McDonald’s Corporation MCD and Jack in the Box Inc. JACK might continue to exert pressure on revenues.

Nevertheless, we are positive on the company’s continued expansion strategies along with various sales and digital initiatives. These initiatives include product launches, increased focus on its beverage portfolio, the ongoing loyalty program and mobile ordering service that are expected to draw customers and drive earnings as well as revenue growth.

Currently, Dunkin’ Brands has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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