Dunkin’ plans stock sale, even more stores

Have you ever scratched your head over seeing a couple of Dunkin’ Donuts stores within a cruller’s t

Have you ever scratched your head over seeing a couple of Dunkin’ Donuts stores within a cruller’s throw of each other? You know: cater-cornered across Route 9 in Latham; at either end of Wolf Road in Colonie; or north and south of the Route 50-Glenridge Road intersection in Glenville.

Truth be told, the core New York-New England market has one Dunkin’ Donuts store per 9,700 people — more than the ratio of one store for every 48,400 people elsewhere in the East, but practically cheek by jowl when compared with the western U.S. average of one store per 1.19 million people.

The ratios are among the interesting tidbits contained in a filing made last month by Dunkin’ Brands Group Inc. as a prelude to selling shares of stock to the public. The Canton, Mass.-based company, franchisor for the Dunkin’ Donuts and Baskin-Robbins chains, said it expects to raise some $400 million from the sale, although a trading date and how much stock will be sold have not been set.

The two chains, dating to the late 1940s but not combined until the 1980s, operate internationally: Dunkin’ selling coffee and baked goods; and Baskin selling hard and soft ice cream. Together, they have 16,287 locations in 57 countries.

All but 17 of the stores are franchisee-owned — meaning they’re operated by separate businesses that buy into the chains, paying fees to Dunkin’ Brands to use the names. The franchisees reported sales of $7.7 billion last year, the bulk of it at the U.S. Dunkin’ stores.

Franchisor Dunkin’ Brands, meanwhile, earned $26.9 million on revenue of $577.1 million last year, according to the registration statement filed with regulators May 4. The prime source of that revenue — 62 percent, according to the filing — came from franchise and royalty fees paid by the franchisees. Another 16 percent — some $91 million — came from franchisees who leased their sites from Dunkin’ Brands, while the remainder was from miscellaneous items like sales of ice cream products and online training fees.

While Dunkin’ Brands’ revenue was higher last year than in 2009, net income was lower, the filing indicates, due in part to debt costs. The company has been bought and sold a couple of times since the 1980s, the last time in 2006 when it was acquired for $2.4 billion by a trio of private-equity firms. The filing indicates Dunkin’ Brands wants to use some of the proceeds from the stock sale to pay down debt.

It also wants to direct proceeds toward expansion — and not just on the West Coast. The company recently signed an agreement with a franchisee to open 500 Dunkin’ Donuts stores in India and is also targeting China, Germany, Spain and Russia. Baskin-Robbins, already strong in Japan, South Korea and the Middle East, would look to grow in China, Russia, Mexico, Australia and Indonesia.

Domestically, the filing states, Dunkin’ Brands wants to double its U.S. footprint to some 15,000 locations — a tall order that has worried franchisees in the past. A survey of members taken in 2008 by the Dunkin’ Donuts Independent Franchise Owners Association raised concern about the expansion plans then voiced by the private-equity owners.

This week, the DDIFOA declined comment through a spokesman on the public offering. I wasn’t able to make contact with any local franchisees, either.

But one Dunkin’ Donuts owner in Massachusetts told a business newspaper in that state that he’s eager to be part of any expansion — and already is eyeing new New York stores.

So get ready for some additional head-scratcher sites.

Marlene Kennedy, a longtime business editor in the Capital Region, can be reached by email at [email protected].

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