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Category: Dunkin' Brands and Stock Market
Last updated: 27 May 2020 Stock price: $65.49 On this page we will look to provide more details about Dunkin' Brands the owner of Dunkin' Donuts and Baskin Robbins. The group has more than 21 000 distribution points in more than 60 countries.
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About Dunkin' Brands
We are one of the leading franchisors of quick service restaurants (QSR) serving hot and cold coffee and baked goods, as well as hard serve ice cream. We franchise restaurants under our Dunkin' and Baskin Robbins brands. With over 21,000 points of distribution in more than 60 countries worldwide, we believe that our portfolio has strong brand awareness in our key markets.
We believe that our 100% franchised business model offers strategic and financial benefits. For example, because we do not own or operate restaurants, our Company is able to focus on menu innovation, marketing, franchisee coaching and support, and other initiatives to drive the overall success of our brands. Financially, our franchised model allows us to grow our points of distribution and brand recognition with limited capital investment by us.
We believe that our 100% franchised business model offers strategic and financial benefits. For example, because we do not own or operate restaurants, our Company is able to focus on menu innovation, marketing, franchisee coaching and support, and other initiatives to drive the overall success of our brands. Financially, our franchised model allows us to grow our points of distribution and brand recognition with limited capital investment by us.
Quick facts about Dunkin' Brands
- Total distribution points of all brands in all countries (as at end December 2019): 21 297
- Dunkin' US had 9 630 distribution points as at end of December 2019
- Dunkin' International operations has 3 507 distribution points in 40 countries
- Total revenue for 2019 fiscal year: $1.370 billion
- Earnings per share for 2019 fiscal year: $2.89
- Cash and equivalents: $707.977 million
- Shares in issue: 83.674 million
Dunkin' Brands brands
Dunkin' U.S.
Dunkin' is a leading U.S. QSR concept, and is the QSR leader in donut and bagel categories for servings. Dunkin' is also a national QSR leader for breakfast sandwich servings. since the late 1980s, Dunkin' has transformed itself into a coffee and beverage based concept, and is a national QSR leader in servings in the hot regular/decaf/flavored coffee category and the iced regular/decaf/flavored coffee category, with sales of approximately 1.6 billion servings of total hot and iced coffee annually. over the last ten fiscal years, Dunkin' U.S systemwide sales have grown at a 5.9% compound annual growth rate and total Dunkin' U.S. points of distribution grew from 6,583 to 9,630.
As of December 28, 2019, approximately 85% of these points of distribution were traditional restaurants consisting of end-cap, in-line and stand alone restaurants, many with drive-thrus, and gas and convenience locations. In addition, we have special distribution opportunities ("SDO"), such as full or self-service kiosks in offices, hospitals, colleges, airports, grocery stores, wholesale clubs, and other smaller-footprint properties. We believe that Dunkin' continues to have significant growth potential in the U.S. given its strong brand awareness and variety of restaurant formats. For fiscal year 2019, the Dunkin' franchise system generated U.S. systemwide sales of $9.2 billion, which Y/Y accounted for approximately 76% of our global systemwide sales, and had 9,630 U.S. points of distribution (with more than 50% of our restaurants having drive-thrus) at period end.
Baskin-Robbins U.S.
Baskin-Robbins is the leading Qsr chain in the U.s. for servings of hard-serve ice cream, according to Crest® data, and develops and sells a full range of frozen ice cream treats such as cones, cakes, sundaes, and frozen beverages. Baskin-Robbins enjoys strong brand awareness in the U.s., and we believe the brand is known for its innovative flavors, popular "Birthday Club" program and ice cream flavor library of over 1,300 different offerings. We believe we can capitalize on the brandГs strengths and continue generating renewed excitement for the brand. Baskin-Robbins' "31 flavors" offers consumers a different flavor for each day of the month. For fiscal year 2019, the Baskin-Robbins franchise system generated U.S. systemwide sales of approximately $615.3 million, which accounted for approximately 5% of our global systemwide sales.
International operations
Our international business is primarily conducted via joint ventures and country or territorial license arrangements with "master franchisees," who operate and sub-franchise the brand within their licensed areas. our international franchise system, predominantly located across Asia and the Middle East, generated systemwide sales of $2.3 billion for fiscal year 2019, which represented approximately 19% of Dunkin' brands' global systemwide sales.
As of December 28, 2019, Dunkin' had 3,507 international points of distribution in 40 countries (excluding the U.S.), which grew from 2,583 points of distribution as of December 26, 2009, and represented $834.5 million of international systemwide sales for fiscal year 2019. As of December 28, 2019, Baskin-Robbins had 5,636 international points of distribution in 51 countries (excluding the U.S.) and represented approximately $1.5 billion of international systemwide sales for fiscal year 2019. We believe that we have opportunities to continue to grow our Dunkin' and Baskin-Robbins concepts internationally in new and existing markets through brand and menu
Dunkin' is a leading U.S. QSR concept, and is the QSR leader in donut and bagel categories for servings. Dunkin' is also a national QSR leader for breakfast sandwich servings. since the late 1980s, Dunkin' has transformed itself into a coffee and beverage based concept, and is a national QSR leader in servings in the hot regular/decaf/flavored coffee category and the iced regular/decaf/flavored coffee category, with sales of approximately 1.6 billion servings of total hot and iced coffee annually. over the last ten fiscal years, Dunkin' U.S systemwide sales have grown at a 5.9% compound annual growth rate and total Dunkin' U.S. points of distribution grew from 6,583 to 9,630.
As of December 28, 2019, approximately 85% of these points of distribution were traditional restaurants consisting of end-cap, in-line and stand alone restaurants, many with drive-thrus, and gas and convenience locations. In addition, we have special distribution opportunities ("SDO"), such as full or self-service kiosks in offices, hospitals, colleges, airports, grocery stores, wholesale clubs, and other smaller-footprint properties. We believe that Dunkin' continues to have significant growth potential in the U.S. given its strong brand awareness and variety of restaurant formats. For fiscal year 2019, the Dunkin' franchise system generated U.S. systemwide sales of $9.2 billion, which Y/Y accounted for approximately 76% of our global systemwide sales, and had 9,630 U.S. points of distribution (with more than 50% of our restaurants having drive-thrus) at period end.
Baskin-Robbins U.S.
Baskin-Robbins is the leading Qsr chain in the U.s. for servings of hard-serve ice cream, according to Crest® data, and develops and sells a full range of frozen ice cream treats such as cones, cakes, sundaes, and frozen beverages. Baskin-Robbins enjoys strong brand awareness in the U.s., and we believe the brand is known for its innovative flavors, popular "Birthday Club" program and ice cream flavor library of over 1,300 different offerings. We believe we can capitalize on the brandГs strengths and continue generating renewed excitement for the brand. Baskin-Robbins' "31 flavors" offers consumers a different flavor for each day of the month. For fiscal year 2019, the Baskin-Robbins franchise system generated U.S. systemwide sales of approximately $615.3 million, which accounted for approximately 5% of our global systemwide sales.
International operations
Our international business is primarily conducted via joint ventures and country or territorial license arrangements with "master franchisees," who operate and sub-franchise the brand within their licensed areas. our international franchise system, predominantly located across Asia and the Middle East, generated systemwide sales of $2.3 billion for fiscal year 2019, which represented approximately 19% of Dunkin' brands' global systemwide sales.
As of December 28, 2019, Dunkin' had 3,507 international points of distribution in 40 countries (excluding the U.S.), which grew from 2,583 points of distribution as of December 26, 2009, and represented $834.5 million of international systemwide sales for fiscal year 2019. As of December 28, 2019, Baskin-Robbins had 5,636 international points of distribution in 51 countries (excluding the U.S.) and represented approximately $1.5 billion of international systemwide sales for fiscal year 2019. We believe that we have opportunities to continue to grow our Dunkin' and Baskin-Robbins concepts internationally in new and existing markets through brand and menu
Main international markets for Dunkin'
Lets take a look at the main international markets for Dunkin' Brands. South Korea turns out to be a very big market for Dunkin' Brands
South Korea
South Korea
- Dunkin' : 686
- Baskin-Robbins: 1476
- Baskin-Robbins: 1174
- Dunkin' : 650
- Baskin-Robbins: 944
The sector Dunkin' Brands operates in
According to The NPD Group/CREST® (CREST®"), the QSR segment of the U.S. commercial foodservice industry accounted for approximately $332 billion of the total $501 billion commercial foodservice industry sales in the U.S. for the twelve months ended January 5, 2020. The U.S. commercial foodservice industry is generally categorized into segments by price point ranges, the types of food and beverages offered, and service available to consumers. QSR is a restaurant format characterized by limited, or no, table service. QRS' generally seek to capitalize on consumer desires for quality and convenient food at economical prices.
Our Dunkin' brand competes in the QSR segment categories and subcategories that include coffee, donuts, muffins, bagels, and breakfast sandwiches. For the twelve months ended January 5, 2020, there were sales of nearly 12 billion commercial foodservice servings of coffee in the U.S., 91% of which were attributable to the QSR segment, according to CREST® data. according to CREST®, total coffee servings at QRS' have grown at a 1.4% compound annual growth rate for the five-year period ending January 5, 2020. over the years, our Dunkin' brand has evolved into a predominantly coffee-based concept, with approximately 58% of Dunkin' U.S. systemwide sales for fiscal year 2019 generated from coffee and other beverages.
We believe QSRS, including Dunkin', are positioned to capture additional coffee market share through an increased focus on coffee offerings. In addition, in the U.S., our Dunkin' brand has historically focused on the breakfast daypart, which we define to include the portion of each day from 5:00 a.m. until 11:00 a.m.
Our Baskin-Robbins brand competes primarily in QSR segment categories and subcategories that include hard-serve ice cream as well as those that include soft serve ice cream, frozen yogurt, shakes, malts, floats, and cakes. While both of our brands compete internationally, approximately 69% of Baskin-Robbins restaurants are located outside of the U.s. and represent the majority of our total international sales and points of distribution.
Our Dunkin' brand competes in the QSR segment categories and subcategories that include coffee, donuts, muffins, bagels, and breakfast sandwiches. For the twelve months ended January 5, 2020, there were sales of nearly 12 billion commercial foodservice servings of coffee in the U.S., 91% of which were attributable to the QSR segment, according to CREST® data. according to CREST®, total coffee servings at QRS' have grown at a 1.4% compound annual growth rate for the five-year period ending January 5, 2020. over the years, our Dunkin' brand has evolved into a predominantly coffee-based concept, with approximately 58% of Dunkin' U.S. systemwide sales for fiscal year 2019 generated from coffee and other beverages.
We believe QSRS, including Dunkin', are positioned to capture additional coffee market share through an increased focus on coffee offerings. In addition, in the U.S., our Dunkin' brand has historically focused on the breakfast daypart, which we define to include the portion of each day from 5:00 a.m. until 11:00 a.m.
Our Baskin-Robbins brand competes primarily in QSR segment categories and subcategories that include hard-serve ice cream as well as those that include soft serve ice cream, frozen yogurt, shakes, malts, floats, and cakes. While both of our brands compete internationally, approximately 69% of Baskin-Robbins restaurants are located outside of the U.s. and represent the majority of our total international sales and points of distribution.
Competition of Dunkin' Brands
We compete primarily in the QSR segment of the restaurant industry and face significant competition from a wide variety of restaurants, convenience stores, and other outlets that provide consumers with coffee, baked goods, sandwiches, and ice cream on an international, national, regional, and local level. We believe that we compete based on, among other things, product quality, restaurant concept, service, convenience, value perception, and price. our competition continues to intensify as competitors increase the breadth and depth of their product offerings, particularly during the breakfast daypart, and open new units.
Although new competitors may emerge at any time due to the low barriers to entry, our competitors include:
7-eleven, burger King, Cold stone Creamery, Cumberland Farms, Dairy Queen, McDonaldГs, Panera bread, Quick Trip, starbucks, subway, Taco bell, Tim Hortons, WaWa, and Wendy's, among others. additionally, we compete with Qsrs, specialty restaurants, and other retail concepts for prime restaurant locations and qualified franchisees
Although new competitors may emerge at any time due to the low barriers to entry, our competitors include:
7-eleven, burger King, Cold stone Creamery, Cumberland Farms, Dairy Queen, McDonaldГs, Panera bread, Quick Trip, starbucks, subway, Taco bell, Tim Hortons, WaWa, and Wendy's, among others. additionally, we compete with Qsrs, specialty restaurants, and other retail concepts for prime restaurant locations and qualified franchisees
Intellectual property of Dunkin' Brands, seasonality of the business and employees
We own many registered trademarks and service marks ("Marks") in the U.S. and in other countries throughout the world. We believe that our Dunkin' and Baskin-Robbins names and logos, in particular, have significant value and are important to our business. our policy is to pursue registration of our marks in the U.s. and selected international jurisdictions, monitor our marks portfolio both internally and externally through external search agents and vigorously oppose the infringement of any of our marks. We license the use of our registered marks to franchisees and third parties through franchise arrangements and licenses.
The franchise and license arrangements restrict franchisees' and licensees' activities with respect to the use of our marks, and impose quality control standards in connection with goods and services offered in connection with the marks and an affirmative obligation on the franchisees to notify us upon learning of potential infringement. In addition, we maintain a limited patent portfolio in the U.s. for bakery and serving-related methods, designs, and articles of manufacture. We generally rely on common law protection for our copyrighted works. Neither the patents nor the copyrighted works are material to the operation of our business. We also license some intellectual property from third parties for use in certain of our products. such licenses are not individually, or in the aggregate, material to our business.
The franchise and license arrangements restrict franchisees' and licensees' activities with respect to the use of our marks, and impose quality control standards in connection with goods and services offered in connection with the marks and an affirmative obligation on the franchisees to notify us upon learning of potential infringement. In addition, we maintain a limited patent portfolio in the U.s. for bakery and serving-related methods, designs, and articles of manufacture. We generally rely on common law protection for our copyrighted works. Neither the patents nor the copyrighted works are material to the operation of our business. We also license some intellectual property from third parties for use in certain of our products. such licenses are not individually, or in the aggregate, material to our business.
Seasonality of our business
Our revenues are subject to fluctuations based on seasonality, primarily with respect to Baskin-Robbins. The ice cream industry generally experiences an increase during the spring and summer months, whereas Dunkin' hot beverage sales generally increase during the fall and winter months and iced beverage sales generally increase during the spring and summer months.
Employees
As of December 28, 2019, we employed 1,114 people, 1,074 of whom were based in the U.S. and 40 of whom were based in other countries. of our domestic employees, 410 worked in the field and 664 worked at our corporate headquarters. of the total employees, 246, who are almost exclusively in marketing positions, were paid by certain of our advertising funds. None of our employees are represented by a labor union, and we believe our relationships with our employees are healthy. Our franchisees are independent business owners, so they and their employees are not included in our employee count.
Our revenues are subject to fluctuations based on seasonality, primarily with respect to Baskin-Robbins. The ice cream industry generally experiences an increase during the spring and summer months, whereas Dunkin' hot beverage sales generally increase during the fall and winter months and iced beverage sales generally increase during the spring and summer months.
Employees
As of December 28, 2019, we employed 1,114 people, 1,074 of whom were based in the U.S. and 40 of whom were based in other countries. of our domestic employees, 410 worked in the field and 664 worked at our corporate headquarters. of the total employees, 246, who are almost exclusively in marketing positions, were paid by certain of our advertising funds. None of our employees are represented by a labor union, and we believe our relationships with our employees are healthy. Our franchisees are independent business owners, so they and their employees are not included in our employee count.
Dunkin's stock performance
The following graph depicts the total return to shareholders for the five-year period ended December 28, 2019, relative to the performance of the standard & poor' (S&P) 500 index and the standard & poor's 500 consumer discretionary sector, a peer group. the graph assumes an investment of $100 in our common stock and each index on December 27, 2014 and the reinvestment of dividends paid since that date.
A $100 invested at the end of December would have resulted in an investment worth around $187.74 as at the end of December 2019. That is an annual growth rate of 14.39% over the last 5 years, which is pretty strong returns provided to stockholders, this while the S&P 500 provided an average annual return of 9.2%. So the stock of Dunkin' Brands has grown at 1.56 times that of the S&P 500
Our latest Dunkin' Brands stock valuation (4 May 2020)
So what do we value Dunkin' Brands stock at after the release of their 1st quarter 2020 earnings and the fact that the group withdrew their fiscal guidance for their 2020 fiscal year? Based on Dunkin' Brands earnings report our valuation models provides a target price (full value price) of Dunkin' Brands at $49.60 a stock. We therefore believe that the stock of Dunkin' Brands is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $49.60 therefore we believe a good entry point into Dunkin' Brands stock is at $44.60 or below. We expect the stock of Dunkin' Brands to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Dunkin' Brands as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $49.60 therefore we believe a good entry point into Dunkin' Brands stock is at $44.60 or below. We expect the stock of Dunkin' Brands to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Dunkin' Brands as a sell