Dunkin’ Brands to Add 80 U.K. Baskin-Robbins Locations

Dunkin’ Brands Group Inc. (DNKN), operator of the namesake coffee shops, plans to add 80 Baskin-Robbins ice cream parlors in the U.K. by 2015 as it focuses on expansion outside of the U.S.

The restaurants, three of which opened this week in London, will employ 400 people and showcase the brand’s new store design, which includes lounge-style seating, digital menu boards and bigger displays for ice cream cakes, the company said in a statement today. They will also serve British-themed ice cream flavors such as English Toffee.

Baskin-Robbins has almost 100 U.K. locations, part of its 6,755 sites worldwide, of which 4,200 are outside the U.S., Chief Executive Officer Nigel Travis said in an interview yesterday in London. The company has been closing U.S. Baskin- Robbins stores as it seeks growth abroad.

“The U.K. is a huge opportunity,” said Travis, a native of London. “In the U.S., we’ve stabilized the business, and our goal now is to get back to growth.”

Travis said he’s keeping “an open mind” about bringing Dunkin’ Donuts to the U.K. to compete with chains such as Krispy Kreme Doughnuts Inc. (KKD), Starbucks Corp. (SBUX) and Whitbread Plc (WTB)’s Costa Coffee, yet has no plans to do so at the moment. Starbucks unveiled its first television ads in the U.K. in March as part of a broader European marketing campaign. Some American franchisees are interested in opening Dunkin’ Donuts shops in Britain, Travis said.

‘Accelerated Transfer’

Baskin-Robbins has been switching franchises that don’t meet operational targets to new franchisees in a process dubbed “accelerated transfer,” which has led to increased sales for the switched-over locations, Travis said. Fifty franchisees changed hands last year, and 20 in the first quarter of this year, he said.

The chain’s first-quarter sales from international stores open at least a year increased 7.6 percent, compared with 7.2 percent growth at U.S. locations. Baskin-Robbins opened 49 net new stores outside the U.S. in the period, and 368 last year. In 2011, the Baskin-Robbins U.S. store count declined by 90 and the company plans to close as many as 80 this year.

Outside the U.S., Baskin-Robbins operates 1,100 stores in Japan, 900 in Korea, 200 in Russia and the Commonwealth of Independent States, and almost 100 in China, said Travis, whose favorite ice cream flavor is Pralines ‘n Cream. The Canton, Massachusetts-based company will soon open its first Indian Dunkin’ Donuts location, in Delhi, he said.

Green Mountain Test

Travis said separately that the company hasn’t started testing capsules for Green Mountain Coffee Roasters Inc.’s (GMCR) new Vue coffee maker. He said a decision on whether to sell the so- called V-Cups will be made after the test.

Dunkin’ Brands currently sells K-Cups for Green Mountain’s Keurig brewer in its stores to lure at-home coffee drinkers. Waterbury, Vermont-based Green Mountain introduced the Vue machine, which makes espresso-based drinks, in February to help combat competition when the main patents for its K-Cups expire in September.

Dunkin’ Brands, which held an initial public offering in July, fell 0.5 percent to $32.60 yesterday in New York. The shares have risen 31 percent this year, ahead of the 7.6 percent gain in the Russell 1000 U.S. Restaurant Index. (RGUSDLRT)

To contact the reporter on this story: Matthew Boyle in London at mboyle20@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net

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