Dunkin' Brands Shareholders Shouldn't Forget About Baskin-Robbinshttp://www.fool.com/investing/general/2014/04/08/what-ever-happened-to-baskin-robbins.aspx Dan Moskowitz
April 8, 2014
Baskin-Robbins is owned by Dunkin' Brands (NASDAQ: DNKN), the same company that owns Dunkin' Donuts. Currently, Dunkin' Donuts plays a much larger role for Dunkin' Brands, representing $7.4 billion of $9.3 billion in sales for fiscal-year 2013. However, Baskin-Robbins will play a significant role in the company's success going forward.
Baskin-Robbins must contend with other ice cream stores, such as Cold Stone Creamery. Cold Stone Creamery offers differentiation thanks to its presentation (preparing ice cream on marble slab) and because of the inclusion of snacks and candies within the ice cream, not on top of it.
While Cold Stone Creamery as well as many other ice cream shops present a threat to Baskin-Robbins in the United States, this is no longer the biggest threat. That title would belong to recent consumer demand for frozen yogurt and gelato. But Baskin-Robbins has an ace up its sleeve to combat this threat, which we'll get too soon. Most importantly, Baskin-Robbins has significant growth potential abroad.
Dunkin' Brands also slightly increased its domestic Baskin-Robbins store count to 2,467 in 2013 from 2,463 in 2012. Increased store counts often indicate that upper management is confident in the brand's future prospects.
Additionally, Baskin-Robbins will be fighting back. Not many people are aware of a recent initiative due to a small advertising fund for Baskin-Robbins franchisees ($25 million versus $350 million for Dunkin' Donuts), but Baskin-Robbins will be adding Greek yogurt to its menu in May.
The above numbers and news aren't necessarily reason for celebration. However, they are reason not to panic. Baskin-Robbins offers more growth potential on the international scene.
Most importantly, international demand for American brands is high, and most international consumers outside or Europe aren't as health-conscious as Americans. Therefore, this headwind won't be a big factor at any point in the near future. Furthermore, Baskin-Robbins increased its international store count to 4,833 in 2013 from 4,556 in 2012. This signifies a lot of optimism.
All of this is impressive. But to invest in Baskin-Robbins, you must invest in Dunkin' Brands. Therefore, let's see how efficient Dunkin' Brands is compared to its peers.
Efficient or not?
However, Dunkin' Brands hasn't been growing as quickly as Tim Hortons (NYSE: THI) on the top line over the past five years. Tim Hortons has also managed to grow its revenue faster than its SG&A expenses:
On the other hand, Tim Hortons' top-line growth has slowed to 0.2% over the past year, while Dunkin' Brands has delivered 5.3% top-line growth.
Additionally, Dunkin' Brands delivered fiscal-year 2013 comps growth in its Dunkin' Donuts U.S., Baskin-Robbins U.S., and Baskin-Robbins international segments of 3.4%, 0.8%, and 1.9%, respectively. The only segment that suffered a comps decline was Dunkin' Donuts international (0.4%). Tim Hortons delivered fiscal-year 2013 comps growth of 1.1% in its Canadian segment and 1.8% in its U.S. business. Though decent, not as impressive as Dunkin' Brands overall.<