Dunkin' plans aggressive expansion

LOS ANGELES -- Coffee shop chain Dunkin' Donuts is courting bigger franchisees and moving away from the smaller entrepreneurs that were the cornerstone of its early growth as it seeks to fuel an aggressive US expansion plan.

The chain, which has 5,400 franchised US stores, wants to have 15,000 by 2020, in part by making inroads into the western United States. To get there, the privately held company that is ubiquitous throughout the Northeast is seeking out partners who can commit to opening dozens of stores at a time.

"We've gone through creating a new business model from a recruitment standpoint," said Lynette McKee, Dunkin' Donuts vice president of franchising, who was brought on two years ago to revamp the way the company recruits franchisees.

"We've grown with a lot of franchisees that started with one or two locations and grew to 100 plus," McKee said. "But for us to be able to grow at the rate and pace that we'd like to, we had to look at a faster way to do it."

Two years ago, Dunkin' Brands, the parent company of Dunkin' Donuts and Baskin-Robbins, was sold to a consortium of three private equity firms. Under that new ownership, the chain has more resources than it did when it was owned by British drinks company Allied Domecq, chief executive Jon Luther has said.

The company's biggest rival, Starbucks Corp, has about 10,300 US locations and plans to add about 1,700 annually for the next few years.

Now, Dunkin' has a roster of big franchising companies committed to bringing its brand into new markets. This month, the chain said franchisee Heartland Coffee Company plans to open 105 outlets in the Pittsburgh area within the next few years. Meanwhile, three franchisees in Dallas have committed to opening about 150 stores in the next seven or eight years, McKee said.