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Dunkin' Donuts: No rush for West Coast expansion

Dunkin' Donuts: No rush for West Coast expansion

A distribution center for Dunkin’ Donuts is scheduled to open in Phoenix this fall, paving the way for the brand’s cautious return to the West Coast.

The hopes of Dunkin’-loving, East Coast-born Californians were raised this week after a Dunkin’ Donuts outlet opened on the Southern California Marine base Camp Pendleton. It was the first to open in the state since 2002, when the chain pulled its final location out of Sacramento.

One report called Camp Pendleton opening the equivalent of California’s beloved In-N-Out Burgers opening a unit in New York. Dunkin’ officials, however, said the Camp Pendleton location is part of the chain’s strategy of opening on military bases, and it doesn’t necessarily mark a flood of new units to come to the Golden State.

Dunkin’ Donuts has 26 outlets on military bases worldwide, including 19 in the U.S., and the company is actively looking to develop more, said Michelle King, a company spokeswoman.

“We recognize there is a lot of demand for Dunkin’ Donuts in California, as evidenced by the fact that California is the No. 1 state for sales of our bagged grocery coffee,” said King. However, she added, “Camp Pendleton is a unique nontraditional location, and it will be some time before we consider expanding in California beyond the military base.”

The Canton, Mass.-based chain has been growing aggressively in recent months, using what King described as a disciplined “hub-and-spoke” approach. “When we enter California, we want to do it right,” she said, “and we want to make sure the infrastructure is established to satisfy the needs of our guests.”

This week, the National DCP LLC, or NDCP, Dunkin’ Donuts’ franchisee-owned distribution and purchasing cooperative, announced it had signed a lease for a distribution center in Phoenix — the first to be located West of the Mississippi River.

The distribution center will supply food, paper, and equipment to about 80 restaurants in Arizona, Texas, Nevada and New Mexico, King said.

“It has the ability to service more Dunkin’ Donuts restaurants as the network grows,” she said. “At this point, the center is sufficient for our needs (and) supports our Westward expansion.”

King noted that the NDCP plans to have a network of distribution centers that can “flex to meet our franchisees’ needs.”

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Dunkin’ Donuts had about 15 units in California in the late 1990s. The chain attempted to open in Sacramento in 2002, but all the locations ended up closing because “the time wasn’t right for the brand, and the infrastructure didn’t exist to grow and expand in the state,” King said.

California is also a hotbed for archrival Starbucks Corp., as well as donut competitor Krispy Kreme.

Dunkin’, however, has almost 7,000 U.S. locations — mostly in the East — and the company has said it plans to more than double its number over the next two decades.

Last year, Dunkin’ saw the opening of 243 units, and 260 to 280 net domestic locations are planned for 2012.

International growth is also a big push for the brand. This week, Dunkin’ opened its first units in India and Guatemala, for example.

In New Delhi, India, two restaurants opened, the first of 500 planned over the next 15 years by franchisee Jubilant FoodWorks Ltd. — the largest international store development commitment in the chain’s history.

Market research firm Technomic Inc. said coffee consumption in India doubled between 2001 and 2010, but it remains only about 5 percent of U.S. consumption levels on a per capita basis, indicating a solid growth opportunity.

Starbucks also is scheduled to open its first location in India later this year.

In Guatemala, the first of four locations planned there opened this week. The unit marks an expansion of Dunkin’s existing relationship with franchisee Grupo Intur, which operates 42 Dunkin’ locations in Honduras.


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Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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