Dunkin’ Plans to Conquer the United States

Last week, an independent panel of doctors and other experts voted in favor of approving a new diet pill from Vivus Inc. (NASDAQ:VVUS) called Qnexa.  If approved, it would be the first new prescription diet pill approved in over a decade.  Less than a week later, it seems only fitting that Dunkin’ Brands Group Inc. (NASDAQ:DNKN) announces a new strategy to expand its presence in the United States.

In an effort to challenge popular coffee spots such as McDonald’s (NYSE:MCD) and Starbucks (NASDAQ:SBUX), Dunkin’ has plans to increase its number of U.S. Dunkin’ Donuts stores from 7,000 to 15,000.  The majority of new store growth will come from western markets, where the company has little presence.  In the coming years, Dunkin’ estimates it will add 5,000 new stores in the west, but only around 200 more stores in the New England market.

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In order to appeal to different taste buds, Dunkin’ has changed its menu according to region.  The company is now selling biscuits in some southern locations, as well as a kind of pigs in a blanket snack in Texas stores.  Jeremy Vitaro, Dunkin’s senior director of franchise sales recognizes that it will be difficult to expand to new markets.  He explains, “We have 95 percent brand-name recognition across the country, even in markets with no stores.  But migrating customers from doughnuts, making the coffee connection, is going to take longer outside of the Northeast.”

The race for food hang-out spots continue to heat up.  In January, Starbucks announced plans to sell beer and wine in as many as 12 cafes in Atlanta and Southern California by the end of this year.  Although Dunkin’ has had trouble competing in California before, the company is not shying away from competition.  Vitaro said, “We hope to go back into California soon, but we want to do it with a critical mass of stores.”

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com