Dunkin’ Brands Group Inc. has signed a development agreement that will bring more than 1,400 Dunkin’ Donuts locations to China over the next two decades, the company said Thursday.
The long-term master franchise agreement is with Golden Cup Pte. Ltd., a joint venture between Jollibee Worldwide Pte. Ltd. and Jasmine Asset Holding Ltd., a subsidiary of RRJ Capital Master Fund II L.P. An Asian investment firm based in Hong Kong and Singapore, RRJ has significant investments in the food and consumer sectors in the region.
Dunkin’ Brands officials described the deal as the largest franchise agreement in the company’s 65-year history.
The doughnut-and-coffee chain will find itself up against a familiar competitor in China. Starbucks plans to double its unit count to 3,400 locations in mainland China by 2019.
Starbucks has arguably paved the way in China for coffee-focused brands like Dunkin’ Donuts. Officials with Seattle-based Starbucks have long noted the acceptance of coffee by the Chinese, despite their ingrained love of tea.
Dunkin’ Brands said the units in China will feature Dunkin’ Donuts’ full menu of hot and cold coffees, espresso-based drinks, teas, Coolatta frozen drinks, and doughnuts, bagels, muffins, croissants and sandwiches. The China units will also feature items that cater to local tastes, like Mochi Ring Donuts.
Golden Cup has exclusive rights to develop the brand in new territories across China, including the markets of Beijing, Chongqing, Fujian, Guangdong, Guangxi, Guizhou, Hainan, Hebei, Heilongjiang, Hong Kong, Hunan, Jiangxi, Jilin, Macau, Shanxi, Sichuan, Tianjin and Yunnan. The group expects to open the first unit in the fourth quarter of 2015.
“We are delighted to enter into this relationship with Jollibee and RRJ, a group with a proven track record of success in the quick-service restaurant industry in China and a deep knowledge of the consumer,” said Nigel Travis, Dunkin’ Brands chairman and chief executive, in a statement. “Through this franchise development agreement, the largest in our history, we believe we can significantly expand and accelerate Dunkin’ Donuts’ presence in China.”
Dunkin’ Brands franchises more than 11,000 Dunkin’ Donuts locations in 36 countries around the world, including currently 16 units in China and more than 2,200 outlets across the Asia-Pacific region. In 2013, the Canton, Mass.-based company also signed a franchise agreement with Fast Gourmet Group to develop more than 100 Dunkin’ Donuts units in Eastern China, including the regions of Shanghai, Jiangsu and Zhejiang.
Tony Tan Caktiong, chairman of Jollibee Foods Corp., said the brand has tremendous opportunity in China, as the country’s consumer base continues to grow in both number and spending power.
Jollibee Foods Corp. is the largest foodservice company in the Philippines, with more than 2,200 restaurants there.
Dunkin’ Brands has accelerated international growth in recent months.
Earlier this week, the company said it made a franchise agreement with a subsidiary of Sizzling Platter LLC to return the brand to Mexico. Earlier in 2014, Dunkin’ Brands said it would expand in Brazil, Sweden and Austria.
In recent earnings reports, however, the company indicated that joint ventures in Korea and Japan are under pressure, which could negatively impact results in 2015.
Macroeconomic pressures have also dampened sales in the U.S., where Dunkin’ Donuts had nearly 7,700 locations at the end of fiscal 2013.
In December, Dunkin’ downgraded expectations for 2015, saying same-store sales will rise between 1 percent and 3 percent. Earlier projections indicated a 2-percent to 4-percent increase for the year.
Dunkin’ Donuts also expects a same-store sales increase of 1.4 percent for 2014, compared with earlier projections of a 2-percent to 3-percent increase.
Still, company officials remain optimistic that Dunkin’ Donuts will hit its long-term growth target of 17,000 units across the U.S., as the largely East Coast brand expands west of the Mississippi River.
Contact Lisa Jennings at [email protected].
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