Dunkin Brands Group (DNKN) is a franchisor of quick service restaurants and operates globally through both Dunkin' Donuts and Baskin-Robbins brand names.

Currently, Dunkin' Donuts' U.S. segment contributes the most to the company's revenues, with approximately 70% share of gross revenues. Going forward, we believe its contribution will decline slightly and Baskin-Robbins International will emerge as the key driver for growth.

Dunkin Brands competes with McDonald's (MCD), Starbucks (SBUX), Krispy Kreme, Dairy Queen and Cold Stone Creamery, among others. Trefis recently launched analysis of Dunkin' Brands stock with a $29 price estimate, which is around 10% ahead of the market price.

See our full analysis of Dunkin Brands here.

Dunkin's business model: 100% franchise-based

Dunkin Brands operates mainly on a full-fledged franchise model, unlike its competitors such as Starbucks and McDonald's, which have a mix of company-owned stores and franchises.

Margins are higher in the franchise model, compared to the company-operated model as capital investments required are lower. New store development and substantially all of the store advertising costs are funded by franchisees.

Trends affecting Dunkin Brands:

• Increase in health consciousness among customers: Awareness about healthy food is increasing globally. Customers are cautious of junk food. Consequently, fast food companies have started offering healthier offerings. We believe this will be a key theme for Dunkin's product offerings in the future.
• Dwindling consumer discretionary spending: Volatile economic conditions are directly affecting the fast food industry. The euro crisis, sluggish U.S. economic recovery and high unemployment rates are affecting disposable incomes worldwide.
• Higher cost pressures: Rising inflation has significantly increased costs for food and beverage companies. Many of the firms have increased the prices of their offerings to fight inflation. But higher pressures could significantly affect growth prospects.
• More ice cream consumed at home, not in parlors: The ice cream industry in the U.S. is shrinking gradually. A trend toward home consumption is growing and sales at ice cream parlors are declining. Baskin-Robbins is gradually closing down its franchises in the U.S. and expects the trend to continue in the coming years.