In this FDD Talk 2015 post, you’ll learn the following:
- Section I – Background information on the Dunkin’ Donuts franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Dunkin’ Donuts franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Dunkin’ Donuts’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- average gross sales by geographic region for continental U.S. freestanding Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Combo Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 27, 2013 to October 25, 2014
- average gross sales by geographic region for continental U.S. shopping center/storefront Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Combo Restaurants) that have been open for business to the public for at least one year during a one-year measuring period from October 27, 2013 to October 25, 2014
- average gross sales by geographic region for continental U.S. gas/convenience Dunkin’ Donuts Restaurants that have been open for business to the public for at least one year during a one-year measuring period from October 27, 2013 to October 25, 2014
- average cost of goods sold and labor costs by geographic region for continental U.S. Dunkin’ Donuts Restaurants (and separately, for Dunkin’ Donuts/Baskin-Robbins Combo Restaurants) for the period from November 1, 2013 to October 31, 2014
Section I – Background Information
Dunkin’ Donuts will be getting a little less sweet.
The Canton, Massachusetts-based chain Dunkin’ Donuts will be cutting sugar, fat, sodium and calories over the next two years, parent company Dunkin’ Brands Group announced in May 2015. The change was announced as part of Dunkin’ Brands’ annual report on corporate social responsibility, which focused on sustainability efforts.
Also among the initiatives included in the report:
- Dunkin’ Donuts will assess the feasibility of making a global transition to 100 percent cage-free eggs. To start with, 10 percent of eggs sourced for U.S. breakfast sandwiches will be cage-free by the end of 2015. By 2022, the brand will source only pork that is gestation crate-free.
- Franchisees can get help building sustainable, energy-efficient restaurants through DD Green, a green building certification program. The first certified Dunkin’ Donuts restaurant opened in December 2014 in Long Beach, California. The company has a goal of 100 DD Green-certified restaurants by the end of 2016.
- As part of its goal to have a timeline for a transition from foam products, Dunkin’ Donuts is testing alternative materials, including a double-walled paper cup and a recyclable polypropylene cup.
Whitening Agent on the Way Out
Dunkin’ Donuts in March 2015 agreed to phase out a controversial whitening agent found in powdered sugar. Titanium dioxide has been targeted by As You Sow, an Oakland, California-based advocacy group that had submitted a shareholder request to Dunkin’ Brands Group Inc., asking that the company assess and lower usage of nanomaterials such as titanium dioxide.
Nanomaterials are extremely small particles that are small enough to be toxic to humans, the advocacy group stated. Dunkin’ Brands chose to remove titanium dioxide amid protests by the group, but denied that the ingredient fit the FDA’s definition of nanoparticle.
Google Wallet Option Added
Dunkin’ Donuts added Google Wallet to its payment options in April 2015. Customers in the U.S. can purchase and reload virtual Dunkin’ Donuts cards via Google Wallet online or through the chain’s Android app, which will have a “Buy with Google” button. The process means customers can make a purchase without having to enter credit card numbers and billing information.
No. 1 in Customer Loyalty Again
Dunkin’ Donuts was ranked No. 1 in customer loyalty in the coffee category for the ninth straight year in the Brand Keys Customer Loyalty Engagement Index, announced in February 2015. The chain was also No. 1 in the packaged coffee category for the third straight year.
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Dunkin’ Donuts Menu Changes
The restaurant chain has made a number of menu changes and additions in its donuts, beverages and savory food items, such as giving the previously limited-time-offering croissant donut a permanent spot on the menu in February 2015. Dunkin’ Donuts also is noteworthy for numerous holiday offerings, such as springtime donuts with marshmallow Peeps perched on them and heart-shaped donuts for Valentine’s Day.
Dunkin’ Donuts has developed a new blended-drink platform featuring fruit-and-yogurt smoothies, among other beverages, parent company Dunkin’ Brands said in February 2015.
Rainforest Alliance Certified Dark Roast Coffee was added to the Dunkin’ Donuts menu in September 2014. The addition is notable because it’s Dunkin’ Donuts’ first dark-roast coffee. The chain also added almond milk in most restaurants in September 2014 as a non-dairy option to stir in coffee.
Crossing New Borders
Dunkin’ Donuts expanded its global presence with several franchise agreements that will bring the chain into new countries, including a record deal. In the company’s largest franchise agreement, Dunkin’ Donuts announced a master franchise agreement in January 2015 that will place more than 1,400 units in China in the next 20 years. The agreement was with Golden Cup Pte. Ltd.
Other franchise agreements will bring Dunkin’ Donuts into Mexico, Austria, Sweden and Brazil, and continue its expansion in California with five franchise agreements that will add 63 units to the San Francisco Bay area, Palm Springs and Bakersfield.
Section II – Estimated Costs
- Please click here for detailed estimates of Dunkin’ Donuts franchise costs, based on Item 7 of the company’s 2015 FDD.
Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis
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