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Dunkin’ Donuts moves into Southern California

The first wave of regional units will likely open in the state in 2015

Dunkin’ Donuts made a long-anticipated announcement on Wednesday that it would re-enter the sprawling Southern California marketplace.

While the first wave of regional outlets are not expected to open until 2015, Nigel Travis, chief executive of parent Dunkin’ Brands and president of Dunkin’ Donuts U.S., said the Canton, Mass.-based quick-service chain eventually could have as many as 1,000 locations in Southern California.

In some cases, those Dunkin’ Donuts outlets could be paired with sister brand Baskin-Robbins, he said, which also has a strong presence in the area with about 250 units.

“We’ve followed a disciplined strategy of growth and have said that we would enter Southern California when the timing was right and the infrastructure was in place,” Travis said. “We believe we have reached that point.”

Dunkin’ had debuted a branch on the Southern California U.S. Marine base at Camp Pendleton last May, but at the time company spokeswoman Michelle King characterized it as being “a unique nontraditional location” and noted that the company wasn’t ready to expand beyond that.

The Camp Pendleton opening marked the first Dunkin’ Donuts branch to open in the state since 2002, when it closed its final California location. According to published reports, the chain had more than a dozen outlets in California in the 1990s.

Dunkin’ Donuts also opened a distribution center in Phoenix in the fall, which gives the chain a closer access to the Southern California marketplace, Travis said.

Dunkin’ said it is actively seeking franchisees for Los Angeles, Riverside, San Diego, San Bernardino, Ventura and Orange counties. And while it would consider existing Dunkin’ franchisees, Travis said he expected most of the operators to be new to the system, adding that California presents a different environment for restaurant operators.

“We feel it’s important that they understand the local nuances of conducting business there,” he said. The company is targeting experienced operators with “a deep understanding of the real estate markets in the developing territories.”

He said the company was looking for each new franchisee to develop 10 to 15 locations within their territory and have a net worth of at least $5 million. He also said it would consider operators of other smaller brands who might want to reflag their existing units as Dunkin’ Donuts.

Dunkin’ Donuts has been growing rapidly, Travis said. The chain opened 291 net new locations in the United States in 2012 for a net new unit growth rate of 4 percent. The company also plans to open between 330 and 360 net new domestic units in 2013, which would represent a hike of 4.5 percent to 5 percent.

Last year, Dunkin’ Donuts remodeled more than 600 domestic outlets.

Dunkin’ currently has some 7,000 locations across the country, and anticipates that number could eventually climb to 15,000.

Contact Paul Frumkin at [email protected].
Follow him on Twitter: @NRNPaul

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