Donut Dough

Business. Dunkin' Brands
Industry. Fast food, coffee
Key. Firm plans ambitious global expansion.

A company that started by delivering snacks to employees in and around Boston now seeks to come through on another promise: supersized growth.

The business, Canton, Mass.-based Dunkin' Brands, has ambitious plans to grow its donut and ice cream franchise operations worldwide, everywhere from Iowa to Ho Chi Minh City. Nigel Travis, a British-born executive who previously ran the Papa John's pizza chain, is at the helm of the expansion effort. Travis was appointed CEO of Dunkin' in January 2009; he was named president 10 months later.

Dunkin' is the parent company over two franchise-based brands: Dunkin' Donuts and Baskin-Robbins ice cream. Boston businessman William Rosenberg founded the chain in 1946, initially as a delivery service. He later opened a donut shop, Open Kettle, that ultimately became Dunkin' Donuts.

Now publicly traded, the chain has 10,000 worldwide locations, with more than 7,000 in the United States. A group of private equity firms, including Bain Capital Partners and the Carlyle Group, bought the business for $2.6 billion in a leveraged buyout in 2006. That group still has a majority ownership stake.

Travis, who has a home in Naples, held executive posts with Blockbuster and Burger King prior to Papa John's and Dunkin' Brands. Travis recently sat down with the Business Review, after he attended the grand opening of a Dunkin' Donuts in St. Petersburg. Edited excerpts follow:

Q. How has Dunkin' adapted to the recession?

A. In many ways you could argue the recession has been good for us because it made us sharpen our act. We've made a lot of operational and marketing improvements over the last two or three years. I think people appreciate our improvements in service and they love our limited-time offers and special promotions.

Q. How will the chain accomplish its growth goals?

A. We've had industry-leading development in the U.S., and we see that continuing. We currently have around 7,500 Dunkin' Donuts in the U.S. We think we could easily double that in the next 20 years. We work hard on our franchise relationships and that has worked well. We feel that at the end of the day, all that together will mean a very good future for us.

Q. What locations, both domestic and international, would you like to see Dunkin' Brands in?

A. We've got some pretty aggressive goals. We recently opened up markets in Iowa and Denver and internationally we continue to grow just about everywhere in the world. We plan to start in India this year. India is going to be a very good market for us. We have an excellent franchisee there. I was in Latin America about five weeks ago. I think that is going to be a good market for us.

Q. How does Baskin-Robbins fit into the expansion plans?

A. Baskin-Robbins is the jewel in the crown internationally. That brand continues to build on its strengths in Japan, Korea and the Middle East. We see several other countries it could open up in. For instance, (we recently) opened in Vietnam.

Q. What are the expansion plans for China?

A. I'm very bullish on China. We have more than 100 stores there between the two brands. We also have a number of stores in Taiwan with both brands. At the moment we are working to adapt the Dunkin' menu to local tastes. We have some interesting products, like smaller donuts and what we call over-the-top bagels, which are really bagels loaded with things like ham and pineapple. The taste profile of the Chinese people is much more savory than in America.

Dunkin' Donuts is a brand you can adapt market-by-market, so that's going to work well in China. On the Baskin side, we're very pleased with the progress we're making. We're in a number of markets there, notably Shanghai and Xi'An, which are traditional medieval cities.

Q. How has the company adjusted to meet changes made by competitors, such as new coffee offerings at Starbucks and McDonalds?

A. We're very lucky to have great competitors who do wonderful jobs. You always want to be in an industry where your competitors are going to push you the whole time, so I see terrific competition being really good for us.

They've done some very interesting things and we continue to look for ways to be different. We think the real differentiator we have is our speed. Our speed and service is world class and it's going to become faster. I think our breakfast sandwiches are second to none, and we're very pleased with the progress we've made on those. Our range of drinks is getting broader and broader.

Q. What were some of the factors that led the company to go public last summer?

A. It was always the plan to go public eventually. Our private equity investors are spectacular. They helped us have a long-term vision with our brand and they helped us think through a lot of issues that we had. Our relationship has been great, but we decided the company was at a stage where it was ready to go public. We've been very pleased with the results. I feel like we're in a very good spot right now. The thing I like about being public is that you spend a lot of time with investors and analysts, and a bit like competitors, they make you sharper.

Q. In the two years you have led the company, what decision would you like to do over?

A. I recruited someone to run the international division who didn't work out. We agreed mutually to leave after four months. It wasn't the right fit for that person or us.

Q. Did you hire someone else for that position?

A. We're still working on that. International is always a difficult job to fill because you'll be in Peru and you have some issues to deal with in Saudi Arabia. You'll be in Saudi Arabia and there's something else going on in Taiwan. You need a special range of skills to do international. It's pretty grueling as well, with all the travel.

Q. What would you take from Dunkin' Brands if you were stranded on a deserted island?

A. I'd have to have a medium coffee — with cream. I'd have to have a Big N' Toasty (egg sandwich.) And to make sure I have the right amount of sweetness, I would have to take something from Baskin. I like the Pralines N' Cream ice cream.