Dunkin' signs LeBron to push pork doughnuts

China's fast-growing fast-food market prompts an advertising blitz for an unconventional menu item.

By InvestorPlace Mar 5, 2012 11:02AM

Last year, Dunkin Brands (DNKN), the parent of Dunkin' Donuts, pulled off a successful $423 million IPO. Now the company is working to spend its huge cash hoard from investors to fuel growth.

 

Plans involve Westward expansion in the U.S. away from the company's New England-centered operations. They also involve opening shops to the Far East and a bold strategy to tap into China sales.

 

The move couples the star power of NBA icon LeBron James and a menu including pork doughnuts that is in line with Asian tastes, even if it sounds pretty darn unappetizing to many Americans.

 

The move is no surprise. Western corporations have been flocking to Asia to tap into booming growth that has continued unabated despite the global economic downturn of the past few years.

 

Restaurant rivals like McDonald's (MCD) are already in China big-time and continue to grow their presence there rapidly. McDonald's announced in 2010 a plan to double its restaurants in China and has been making good on its word. And fast-food conglomerate Yum Brands (YUM) -- which operates KFC, Taco Bell and Pizza Hut -- already derives close to half of its current revenue from overseas sales, with the lion's share coming from Asia.

 

Dunkin' is admittedly a bit late to the game, with only about 100 stores in China. But it's banking big on a marketing splash from Miami Heat star LeBron James, who is extremely popular in China.  It is also planning to double the number of stores there over the next two years.

 

Will the move pay off? Maybe. After all, Chinese restaurant tastes are decidedly different than in the U.S. and a doughnut shop with pork menu items could be a hit. It's also worth noting that while commodity inflation is squeezing the bottom line of traditional fast-food joints that sell burgers, Dunkin' may be insulated because of its lack of fresh veggies and beef on the menu. If the company taps into Asian tastes and makes big profits with big margins, it will be an important win.

 

Not that every China growth move is a guaranteed success. While U.S. corporations have placed a lot of emphasis on the seemingly recession-proof expansion of the region's economy, there are serious fears China may be in for a slowdown. That would hurt consumer spending and undoubtedly the growth of any new franchises in the region.

 

The bottom line is that it may take more than LeBron and the magic of pork products to tap into China growth.

 

Read more about China's "year of the draggin'" and the prospect of an economic slowdown in Asia soon.

 

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4Comments
Mar 5, 2012 1:52PM
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Doughnuts and LeBron James' game do have something in common, they both have holes in them.

: )

 

Plus they are only .75 cents each, so neither one uses a fourth quarter!!!!

Mar 5, 2012 1:35PM
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OK China or America pork fried donut with BBQ sauce.   How about one in every City in the Middle East. 
Mar 5, 2012 1:22PM
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Wow, not one LJ hate-infused comment yet.

YET, being the operative word.

Mar 5, 2012 2:21PM
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Doughnuts and Lebron? Hmmm ... how about they're both crumble under pressure? Trying to be PC here.
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