Dunkin' Donuts plans India expansion

Competition among restaurant chains heats up in the region.

By Trefis May 10, 2012 10:49AM
TrefisDunkin' Donuts, owned by Dunkin' Brands (DNKN), opened its first outlet in India recently. With the Indian food industry showing plenty of promise, most of the major restaurant chains plan to open their first restaurants in the country sometime soon, or ramp up their presence there. Dunkin' Brands has had presence in the country for several years through Baskin-Robbins.

McDonald's (MCD), Starbucks (SBUX), Yum Brands (YUM) and others are piling on their investments in this region.

We have a Trefis price estimate of $29 for Dunkin' Brands, which is about 10% below the market price.


Dunkin' not alone


Dunkin' Donuts signed an agreement with Jubilant FoodWorks (the franchisee for Domino's Pizza in India) to open around 100 restaurants in the country over the next five years. However, Dunkin' Brands is not alone in its expansion plans for the country. Earlier this year, Starbucks signed an agreement with Tata Global Beverages to open 30-50 stores in the country in 2012. There are no Starbucks stores in India presently.


Starbucks Avg Number of Franchised Stores

To highlight the growing importance of India, Yum Brands separated the reporting of its Indian operations from its international operations (putting the country on par with China). Recently, even Rita's Italian Ice signed an agreement with an Indian franchisee to open 50 new stores in the country in the next few years. In December last year, McDonald's allocated an investment of $200 million to double the number of restaurants to 500 by the end of 2014.


McDonald's Number of Company Operated Restaurants

India's fast food industry is currently pegged at $13 billion, one-fifth of China's. However, it is growing at an annual rate of 19%, surpassing China's 15% growth rate. With a population of 1.2 billion, which is relatively young (more than 35% of the population is below the age of 20), the demographics, too, work favorably for the restaurant chains. Moreover, India's GDP is expected to grow at 7%-8% over the next few years.


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