Dunkin’ to Open Hundreds of Stores Overseas

by Jeff Reeves | May 30, 2012 11:33 am

Junk food is becoming quite the American export.

The Wall Street Journal[1] reports today that Dunkin’ Brands (NASDAQ:DNKN[2]), the corporate parent of Dunkin Donuts and Baskin-Robbins, is looking to open as many as 450 locations outside of the U.S. this year.

And Dunkin’ isn’t alone in the quest to capitalize on the taste for American foodstuffs abroad. A growing middle class in emerging markets has prompted a race to India, China and Brazil among U.S. fast-food giants.

First, the details on Dunkin’: The company announced plans to open 350 to 450 outlets abroad this year under its Dunkin’ Donuts and Baskin-Robbins nameplates. That’s an ambitious number spread across the world, but focused on the Asia-Pacific region that includes India, Taiwan and China.

“Emerging markets are attractive because they are growing very quickly, they’ve a fast-growing middle-class (population), and they love American brands,” DNKN Chief Executive Nigel Travis told the Journal.

The reason is simple mathematics: These regions are growing, and the middle class as a portion of the population is growing too. That means more eating out, more packaged food sales and more interest in U.S. tastes as populations get plugged into American brands via the Internet and television.

Dunkin’ is not alone in this push into emerging markets. In the past two years, we have seen a mad dash into regions including Brazil, Africa, India and China.

Yum! Brands (NYSE:YUM[3]) has seen huge success abroad with its various franchises. Thanks to stores that offer a potato and paneer burrito in India Taco Bells[4] and KFC in Kenya[5], more than half of this company’s profits come from overseas. Those international sales are powering big growth, too. YUM earnings for the first quarter of 2012 rose a whopping 73% on global sales growth.

And then, of course, there’s the 900-pound gorilla of fast food that is McDonald’s (NYSE:MCD[6]). McDonald’s is in the middle of its biggest expansion to date in China, building on

Even Starbucks (NASDAQ:SBUX[7]) is getting in on the act. Last year the company partnered with Tata Group — a company that has teamed up with Dunkin’ on its India expansion — to bring mochas to Mumbai[8].

Any way you slice it, fast-growing fast-food sales are driving the growth of some of the biggest U.S. restaurants.

The big question, of course, is whether the menu trade becomes two ways. Maybe in exchange for a Doritos taco shell[9] at Taco Bell we will get lo mein at Mickey D’s?

Only time will tell.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[10] Write him at editor@investorplace??.com or follow him on Twitter via @JeffReevesIP.

Endnotes:
  1. The Wall Street Journal: http://online.wsj.com/article/BT-CO-20120530-703904.html
  2. DNKN: http://studio-5.financialcontent.com/investplace/quote?Symbol=DNKN
  3. YUM: http://studio-5.financialcontent.com/investplace/quote?Symbol=YUM
  4. potato and paneer burrito in India Taco Bells: http://investorplace.com/2010/03/taco-bell-india-yum-mcd-bkc-wen-dpz/
  5. KFC in Kenya: http://investorplace.com/2011/08/kfc-yum-brands-kenya-east-africa/
  6. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  7. SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
  8. mochas to Mumbai: http://investorplace.com/2011/01/starbucks-india-tata-nasdaq-sbux/
  9. Doritos taco shell: http://investorplace.com/2012/05/taco-bells-upcoming-menu-moves/
  10. “The Frugal Investor’s Guide to Finding Great Stocks.”: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb

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