Is Allied Domecq's (NYSE: AED ) Dunkin' Donuts' focus on Southern exposure paying off? The WallStreet Journal reported today that it still plans to foster its Dunkin' Donuts chain's presence in "major Southern markets," with plans to announce other markets. For anyone who immediately thinks of Winston-Salem, N.C.-based Krispy Kreme Doughnuts (NYSE: KKD ) , take note that Allied Domecq says its rivalry is elsewhere.
According to that line of thought, forget that "donuts" is a major component of Allied Domecq's chain's name. Forget that old commercial, where a sleepwalking worker chants, "Time to make the doughnuts," while the rest of us sleep. Coffee puts the "dunk" in Dunkin' Donuts.
We got our first inklings of the focus on the "dunk" in January when Rick Munarriz looked at coffee purveyors in Cup O' Joe Millionaires. It appears that coffee, not sugar, is the real hook, and according to today's WSJ piece, Allied Domecq cites its major competition as Starbucks (Nasdaq: SBUX ) and McDonald's (NYSE: MCD ) -- not Krispy Kreme. Indeed, all of them cater to a jones for a quick jolt of caffeine or quick-serve pick-me-up.
Of course, Dunkin' Donuts offers an array of latte-like beverages and lunchtime sandwiches (and, in outlets that are co-branded with another Allied Domecq unit, Baskin Robbins, there are 31 flavors, too). Ah yes, the plot thickens. (And so does my waistline, just thinking of all these treats.)
According to WSJ, Allied Domecq first planned a Southern-focused expansion by attacking the Charlotte and Raleigh-Durham, N.C., and Atlanta, Ga., markets, with an emphasis on adding stores with significant franchise interest. Now, the company said that going forward it's eyeing a more disciplined new market entry.
Markets where Dunkin' Donuts will open according to its new approach include Charlotte, N.C., and Tampa, Fla., as well as Cleveland, Ohio. It plans another new market announcement in several weeks, as well as an announcement of 10 more markets about a month after that. According to the article, it will be "aggressive" in its presence in these markets and plans to open 800 new stores in the U.S., accounting for all three of its brands.
Considering the threesome of Starbucks, McDonald's, and Krispy Kreme (and let's not forget cheap, fast7-Eleven (NYSE: SE ) ), it adds up to some tough company. Are the rivals too much? Keep an eye on upcoming announcements for any inklings of a strategy shift; one might wonder if Motley Fool Stock Advisor stock Krispy Kreme has a stronger hold on its home turf than Allied Domecq liked to admit, coffee or no coffee. The competition for coffee, convenience, and confections is steep -- and Allied Domecq's got some careful stepping to do.
There's a board for everyone at the Fool. Talk about Dunkin' Donuts' aggressive move with other Foolish investors on the Krispy Kreme, Starbucks, or McDonald's discussion boards.
Alyce Lomax does not own shares of any of the companies mentioned. She's finding that it's very hard for her to use the word "dunk" without the word "slam."
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