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Business overview: An investor's guide to Dunkin' Brands Group

Business overview: An investor's guide to Dunkin' Brands Group (Part 1 of 10)

A new leaf: Why Dunkin’ Brands is a strong and growing player

Quick-service restaurants

Dunkin’ Brands Group is a franchisor of quick-service restaurants, serving hot and cold coffee and baked goods in addition to ice cream. It’s a strong, growing player in these segments, operating under its two primary brands: Dunkin’ Donuts and Baskin-Robbins. The Dunkin’ Donuts brand is the primary source of the company’s revenues. It sells coffee, donuts, muffins, bagels, and breakfast sandwiches to end consumers.

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Dunkin’ Donuts primarily competes with a few key players within the coffee retail industry. The most widely acknowledged competitor is the Washington-based large-scale premium coffee retailer Starbucks (SBUX). Other less recognized brands include quick-service restaurants McDonald’s (MCD) as well as Krispy Kreme (KKD), which specialize in breakfast offerings.

The Baskin-Robbins brand includes hard-serve ice cream, soft-serve ice cream, frozen yogurt, and various dessert-oriented beverages. It competes with other ice cream brands and stores such as Edy’s or Ben & Jerry’s and higher-quality ice cream products like Haagen-Daas. A spinoff in 2005 of the Dunkin’ Brands Group allowed this company to continue to grow under the wing of various private equity firms. As of the conclusion of FY2012, The Dunkin’ Brands Group. had 9,734 locations in the United States and 7,690 internationally. The company is publishing its form 10-K for FY2013 on February 6, 2014.

Spinoff

In December 2005, French distilled spirits producer Pernod Ricard (which was the previous owner of Dunkin’ Brands) announced its plans to sell the Dunkin’ Group. During this time, Pernod Ricard acquired a larger English quick-service restaurant business and spirits producer, Allied Domecq. A slew of private equity firms—including Bain Capital, the Carlyle Group, and Thomas H. Lee Group—purchased the brands for roughly $2.5 billion. Between 2005 and late 2011, these firms used large amounts of debt to focus on domestic expansion and grow brand awareness via the franchise model. These firms then listed the company as public under its current ticker in August 2011, with an initial public offering. As of 2012, Dunkin Brands Group is an independent entity, headquartered in Canton, Massachusetts.

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