Dunkin' Brands Brews in Indonesia and Other Asian Countries

Buildings are reflected in a newly opened Dunkin Donuts cafe window in Moscow, Russia, on Wednesday, April 28, 2010. Dunkin Donuts has returned to Russia after an 11-year absence with plans to open as much as 20 outlets in Moscow this year. The U.S.-based chain operates more than 15,000 Dunkin Donuts and Baskin-Robbins ice cream shops in 44 countries. Baskin-Robbins operates in 143 locations in Russia.

Bangkok, Thailand (News Today) - The parent company of Dunkin' Donuts and Baskin-Robbins ice cream shops plans to expand further in Asia, with thousands of new outlets in China in coming years and ambitions to open its first stores in Vietnam within 18 months.

The moves come as the company, Dunkin' Brands Inc., sees a steady economic recovery in markets where it operates and amid further appreciation in Asia's currencies, which should boost the spending power of the region's consumers.

“You'd have to think it's natural for some of these fast-growing economies to have appreciating currencies“ as more companies invest their money in Asia, said Dunkin' Brands Chief Executive Nigel Travis in an interview.

The Canton, Mass., company -- owned by a consortium of private-equity firms including Bain Capital, Carlyle Group and Thomas H. Lee Partners -- has long had an international footprint. About 3,000 of its 9,700 Dunkin' Donuts restaurants, for example, are outside of the U.S. All its stores are franchised.

But a large percentage of its Asian stores are located in a handful of countries -- including South Korea, the Philippines, Indonesia and Japan -- with minimal presence in some of the region's fastest-growing markets like China and India.

That is in part because the company focused some of its earlier growth on markets with closer ties to American culture, including places with a sizeable U.S. military presence. Dunkin' Donuts had about three-dozen locations in China at the end of 2010.

Despite the opportunities for growth in Asia, retail-food operations face significant risks, in large part because of the rising commodity costs squeezing margins. The costs of wheat and other grains, for instance, are at their highest levels since 2008, while prices for coffee -- another Dunkin' staple -- have also soared over the past year.

China remains the company's top international target in the long run, with ambitions to eventually open thousands of stores there. But it may take a while to fully ramp up, Mr. Travis said, because the company is trying to focus on a few cities, including Shanghai, before expanding more aggressively elsewhere.

It has followed a similar strategy as in the U.S., where Dunkin' Donuts has a large presence in certain places such as the Northeast but little or no presence in some major markets like California.

“I'm nervous about going all over China and then finding out we have issues,“ he said.

In India, the company recently reached a deal with Jubilant FoodWorks Ltd. -- a New Delhi-based food-services company that also is a major franchisee for U.S.-based Domino's Pizza Inc. -- to develop and operate more than 500 Dunkin' Donuts outlets over the next 15 years.

Other markets with room for growth include Indonesia and Thailand. Vietnam is one of the most attractive markets in which the company doesn't currently operate, Mr. Travis said. The company is looking for partners there and hopes to begin adding outlets within 18 months. “It's a mini-China,“ he said of Vietnam.

The moves also come as other companies are looking to expand their own presence in Asia, intensifying the competition at a time when some economists fear higher inflation will curb consumer spending, at least in the short run.

Earlier this year, for instance, Starbucks Corp. unveiled an alliance with India's Tata Coffee Ltd. to source and roast coffee beans in a step aimed at paving the way for the U.S. chain to expand there.

But in many markets, local street vendors and other smaller outlets continue to play a dominant role, and consumers don't yet earn enough to pay for drinks and snacks from air-conditioned restaurants.

Source : kompas

Posted in: