Dunkin' Brands Moves Farther West

I thought when I left the East Coast for my home state of Utah, I would only get to imbibe the nectar of the gods on return visits. Instead, my prayers have been answered, and said nectar will soon be available in my home state, though not soon enough for my taste.

Dunkin' Brands (Nasdaq: DNKN  ) , purveyor of what might be the only thing I miss about living in New England, recently announced an agreement with Sizzling Donuts, an existing franchisee, to bring 16 Dunkin' Donuts stores to Salt Lake City starting in 2013. In February, Sizzling Donuts signed agreements to franchise Dunkin' Donuts in Denver and El Paso, Texas.

What took so long?
I'm personally surprised that it took Dunkin' Brands this long to head west. Some of my earliest memories growing up were taking semi-regular trips to Baskin-Robbins, the ice cream brand under the Dunkin' Brands umbrella. With that distribution channel already in place, I figured it would only be a matter of time before at least one Dunkin' Donuts location popped up within an hour's drive of me. With its franchise-based business model, maybe people were just hesitant to bring another coffee shop to Utah.

It's not that we don't like coffee in Utah; it's just something that's not as ingrained in the local culture. We've had Starbucks (Nasdaq: SBUX  ) for as long as I can remember, and Salt Lake City is dotted with smaller independent coffee houses. Perhaps the hesitance came from previous failures of national brands like Krispy Kreme Donuts (NYSE: KKD  ) in the state in the past, with huge initial interest when the store opens but struggles at the end.

It's not just the coffee
If it were only about the coffee, I could just buy a bag and make it at home, or buy a Kuerig machine from Green Mountain Coffee Roasters (Nasdaq: GMCR  ) and use the licensed K-cups. Personally, I've always liked Dunkin' Donuts more than Starbucks. The coffee is cheaper and not a mouthful to order, and donuts are always better than scones. But I am a man of simple taste.

What impact will this expansion have on Dunkin' Brands' stock? With western expansion important for the company's future growth, this is a step in the right direction. Though Sizzling Donuts is only currently franchising a total of 35 stores in its three locations, Dunkin Brands is still seeking franchisees in other western locations, including Reno, Nev., and northern Utah.

I was worried that I would have to become independently wealthy to bring my beloved Dunkin' Donuts to Utah, but Sizzling Donuts has done it for me. Though I will have to wait at least six months to taste the first Dunkin' Donuts coffee brewed in Utah, it will be worth the wait and is a step in the right direction for Dunkin' Brands.

Dunkin' Donuts coffee just isn't the same when made with a Keurig, but that doesn't mean that you still can't enjoy it. With Green Mountain as cheap as it's ever been, many investors are wondering whether this is the end of the former market darling -- or the perfect entry point for an enormous rebound. You can find our recommendation on how to play the company in our new premium research report. In it, you'll find everything you need to know about Green Mountain, including whether it's a buy at today's prices. Click here for instant access.

Fool contributor Robert Eberhard owns shares of Starbucks. Follow him on Twitter to read his non-Dunkin'-Donuts-fueled tweets. The Motley Fool owns shares of Starbucks and has the following options: long DEC 2012 $16.00 puts on Green Mountain Coffee Roasters, short DEC 2012 $21.00 calls on Green Mountain Coffee Roasters, and short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Green Mountain Coffee Roasters and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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