Wednesday, July 27, 2011

Coffee Wars: Is Dunkin’ Donuts More Valuable Than Starbucks?

Dunkin' Donuts may soon really be able to live up to its slogan -- "American runs on Dunkin'".
After Tuesday's close, Dunkin' Brands Group is slated to go public in a highly anticipated IPO. The company expects to raise roughly $400 million to help expand the Dunkin' Donuts store and brand across the Midwest and to the West Coast. Right now the chain operates only 100 of its 6,800 stores outside the Northeast. The company also owns Baskin-Robbins ice cream stores.
Dunkin', which ranked #1 ahead Starbucks in terms of customer loyalty over the last five years, plans to double U.S. storefronts over the next two decades. That means a new store and fresh cup of joe could be coming very soon to a location near you!
But the expansion of the blue-collar, no-frills brand could have negative implications for small local coffee shops and it could even stir up a brewing rivalry with high-end retailer Starbucks. (Check out this video spot released after Dunkin' conducted a consumer taste test: Dunkin' Beat Starbucks.)
The Dunkin' IPO is set to price Tuesday night after markets close. The company hopes to sell 22.25 shares at $16 to $18 a piece. If the sale price is $17 or more, Dunkin' Brands Group would have a market value of roughly $2.5 billion. "Based on those figures, the company's shares would trade at 3.7 times 2010 sales, a richer valuation than Starbucks, which at the close of trade on Monday traded at 2.8 times calendar 2010 sales," reports Reuters.
If those aren't fightin' words, then what are?

In the latest installment of The Daily Dish, Aaron Task and Daniel Gross discuss the Dunkin' Donuts vs Starbucks rivalry, what the Dunkin' IPO means for consumers and whether investors should bet on Dunkin'.
Stay tuned for additional coverage..and tell us what you think! Are you a Dunkin' Donuts or Starbucks fan, and do you think Dunkin' is worth more than Starbucks?
For more coverage like this, see:
How Domino's Delivered a Tasty Turnaround
American Fast Food: From Supersize to Downsized
Onward: CEO Howard Schultz on How Starbucks Got Its Groove Back
Does Going Upscale Make Sense for McDonald's?

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