Dunkin' Plans For Growth With Purchasing Coop Agreement

Dunkin' Brands Inc. has signed a long-term agreement with National DCP, a franchisee-owned purchasing cooperative, making it the exclusive supply chain provider for all Dunkin' Donuts locations in the continental United States.

The agreement took effect January 1st, upon the merger of four regional franchisee-owned cooperatives into National DCP.

Dunkin' Brands, Dunkin' Donuts' parent company, said the agreement would help pave the way for the Canton, Mass.-based chain's continued expansion. The company plans to double the number of U.S. Dunkin' Donuts units to 14,000 over the next 20 years.

Dunkin' Brands said the agreement would streamline its distribution system and "provide significant future cost-efficiencies for the franchise community," as well as greater consistency, including uniform pricing for existing and future franchisees.

The company said it planned to phase in uniform product costs over three years, beginning in 2012.

"This is a huge step forward toward our goal of continuing to drive store-level profitability in newer markets and accelerating the expansion of Dunkin' Donuts across the U.S.," Dunkin' Brands chief financial officer Neil Moses said.

Dunkin' Donuts has used franchisee-owned distribution centers since the 1970s. The cost of supplies typically has varied depending on distribution requirements, such as the concentration of restaurants in a particular area.

National DCP will be the sole procurer and distributor for Dunkin' Donuts outlets in the continental United States, provided it meets certain performance-based requirements.

Investment firm William Blair & Company expects food costs for Dunkin' Donuts restaurants in the western United States to fall by 2 percent once the agreement is completely phased in by 2015. Dunkin' Brands northeastern stronghold also would benefit, but not as much, it added.

Dunkin' Brands currently franchises 10,000 Dunkin' Donuts units worldwide, as well as about 6,000 Baskin-Robbins units.

— Bret Thorn, NRN.com