How Dunkin’ Donuts plans to double its U.S. units

Staff Writer
How Dunkin’ Donuts plans to double its U.S. units

Dunkin’ Brands Group Inc. recently set a goal of doubling the number of Dunkin’ Donuts units in the United States over the next 20 years.

Dunkin’ Brands senior director of franchising Jeremy Vitaro is charged with leading that push. He has been with Dunkin’ Brands for nine years, and has been at the head of its franchising efforts for the past two years.

Nation’s Restaurant News recently spoke with Vitaro about the expansion strategies of both Dunkin’ Donuts and Baskin-Robbins.

Dunkin’ Donuts’ stronghold is in the Northeast. Where does the quick-service chain plan to expand from there?

There’s not a lot of new franchising activity in New York and New Jersey [where many Dunkin’ Donuts already operate]. But there’s really a lot of opportunity in the Southeast and Midwest, and we’re looking farther west as well now.

It’s really about contiguous market expansion, trying to capitalize on the fact that we have resources in one market, and then moving to adjacent markets. We have a pretty disciplined strategy around that.

One of Dunkin’ Donuts’ new markets is Denver, where the company recently signed a new franchisee. Walk us through that process.

When we enter a new market, we do a pretty thorough process of analyzing the marketplace, the competition, the development points that we’d want to penetrate over a five- to 10-year period, and then we’ll carve it up into multiple geographic sections, allowing for multiple multiunit groups [in adjacent territories] and requiring them to develop a certain number of units.

One of the differences in what we’ve done is to get larger multi-unit groups developing simultaneously in adjacent territories. That way we can penetrate the market more quickly.

In a city like Denver, we like to have five to six groups. If each group does one to three units per year, that’s five to 18 new units in that market.

What does the company look for in a Dunkin’ Donuts franchisee?

They need to be well capitalized, that’s almost a given. We also look for operating experience, ideally in quick-service restaurants, that involves some real estate experience as well, because finding the real estate and negotiating leases is a challenge. Doing that while you’re opening restaurants and learning a new system, that’s more of a challenge. We also want them to be local.

Can they operate other restaurants?

Yes, if they don’t compete directly with us. [For example,] Little Caesars or Taco Bell would be okay.

How about McDonald’s?

No. McDonald’s is No. 1 for breakfast sandwiches and Dunkin’ is No. 2, so that would make them direct competitors.

What’s the expansion strategy for Baskin-Robbins?

Baskin tends to focus more on smaller franchisees, and we’ll sign one- or two-unit agreements in smaller, more rural areas. And while we do prefer restaurant experience, other factors, such as ability to connect with the community, are more important. So we’re open to more diverse backgrounds, although you need to display experience in running a business, reading a P&L, and leasing real estate. Also, the financial requirements are a little lower.

Are there particular markets the company is targeting for new Baskin-Robbins units?

Baskin-Robbins has the largest concentration in California, and the second largest area is Texas. We’re present throughout the country and have been for many years. Right now we’re working to expand in a disciplined way within certain markets based on where we see the best opportunities: Florida, San Diego, Northern California and Phoenix.

Why is community involvement more important for a Baskin-Robbins franchisee than for a Dunkin’ Donuts franchisee?

Baskin-Robbins is more of a destination, and ice cream is associated with family and fun. Dunkin’ Donuts can be a destination, and the more [a Dunkin’ franchisee] connects with the community, the more successful you are, but Dunkin’ is more of a convenience location.

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