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Dunkin_Brands_Eyes_Asian_Expansion - Dunkin Brands Eyes...

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Unformatted text preview: Dunkin' Brands Eyes Asian Expansion — WSlcom Page i of 3 Dow Jones Reprints: This copy is for your personai, non-commercial use only To order presentationlready copies for distribution to your colleagues clients or customers use lire Order fienrinls tool at the bottom of any ar‘licle or wait www djreprinls com See a sample reprint in PDF format Order a reprint of this article now THE WALL STREET JOURNAL. WSJeom ADVERTISING l JUNE4 2009 Dunkin' Brands Eyes Asian Expansion In South Korea, 100 Stores Will Be Added; its-Grain Lattcs, Soy Doughnuts on Menu By JULEE JARGON and SUNGHA PARK Dunkin' Brands Inc“ is betting more Asian consumers will acquire a taste for its coffee and doughnuts as it ramps up its expansion in South Korea, the company's top foreign growth market, Dunkin' has been in South Korea since 1992, but last year the Canton, Mass” company opened 191 stores there, and it plans to open an additional 100 by the end of this year“ There are 663 Dunkin' Donuts outlets in South Korea now, and Dunkin' executives say they expect to double that number in the next decade. With their austere interiors, Dunkin‘ Donuts outlets in the {3.3. cater to grab—and—go commuters seeking their morning caffeine fix. But in South Korea, breakfast is traditionally consumed at home, and most customers are young women and teenagers who go for a snack in the afternoon or eveningw "I come to Dunkin‘ nearly every day after lunch to drink coffee," said Shin Min~hye, 25 years old, an office worker at a Seoul law firm who was sipping an iced coffee and eating cacao honey dip munchkins at a Dunkin' outlet. She was there studying English with a friend, "I like to hang out here because I can stay as long as I want to....I sometimes study here for hours." Dunkin' stores in Korea encourage that kind of lingering with plush orange and yellow chairs, Wi—Fi Internet access and plasma~screen televisions, But Dunkin's recentiy named chief executive, Nigel Travis, said he wants to get Koreans into the habit of picking up doughnuts and bagels on their way to work in the morning, "The trick we need to focus on is how we build a breakfast business," he said. The first challenge: creating a morning coffee habit in South Korea, where older generations favor tea. To do that, the company in Aprii opened a coffee—roasting facility in Korea w- its first outside the US. —- so it no longer has to import coffee from America, To emphasize the coffee’s freshness, Dunidn' has been airing television commercials and running print ads explaining how its coffee beans go from the roasting plant to the store in seVen days. Dunldn' has also been offering free samples of coffee drinks in its stores, handing out discount coupons and offering ioyalty cards to encourage repeat coffee purchases, At a time when U .8. restaurant sales are slowing, American fast-food and casual restaurant chains are looking to Asian consumers, in particular, for sales growth. Yum Brands inc. has been expanding rapidly in China with its Pizza Hut, Taco Bell and KFC restaurants, as have McDonald's Corp. and Starbucks Corp. Brinker International Inc. last month opened its first Chili's Grill 8: Bar in India, and it is planning to open a new Chili's in Singapore this month, The Dallas~based company, which also owns Maggiano's Little Italy, Romano‘s Macaroni Grill and On the Border Mexican Grill 81: Cantina, plans to open 500 restaurants outside the U .S. by httpzl/ onlinewsj com/article! SB 1 244056248453 82149.11t1ni 6/4/2009 Dunkin' Brands Eyes Asian Expansion — WSlcom Page .2 of 3 2014. it now has 1,500 U .S. outlets. Also last month, Wendy's/Arby's Group Inc. announced plans to build more than 35 Wendy's restaurants in Singapore over the next decade. Dunlcin', owned by a consortium of'privatenequity companies, doesn't disclose precise information on its sales in Korea or by region. But in 2008, sales from Korea accounted for about 47% of the doughnut division's non—US. revenue. Dunkin' Brands also owns the Basltianobbins ice—cream chain. Revenue from international operations accounted for about 10% of the $5.5 billion in sates from its doughnut outlets last year. Its U.S. doughnut stores are heavily concentrated in the Northeast. Dunhin' Brands chose to expand in South Korea because when the company entered the market 17 years ago, South Korea‘s economy was stronger than those of many other Asian countries. And because of the longtime presence of American military troops there, Korean consumers have iong been exposed to Western influences. In addition to Western—style fare, it sells items with local flavors, such as sweet soybean doughnuts and green tea lattes. Dunlcin's Korean menus focus on natural and organic ingredients to appeai to liealthwconscious consumers. For instance, it seiis a 12—grain latte, a warm drink consisting of roasted hariey, brown rice and other grains. The company also sells the drink in powdered form so that customers can make it at home. Dnnkin' sells a lot of cold, fruit-based drinks in Korea, such as red—grapefruit coolatas and "weil~being donuts" made with organic flour. The company is also expanding in China, with plans to open 150 Dunltin‘ outlets over the next decade. It has just 11 locations there now. Dunkin' is targeting 18— to 29—year—olds in Korea because "they're more willing to try new products and to be different than their parents," said Will Kussell, Dunkin' Donuts' global president and chief brand officer. "Tea is not as much a part of their PM life as the older generations . To appeal to those younger customers, Dunkin' has hired young Korean actor Lee Min—ho as pitchman for some of its ads. It seems to be working for Jane Lee, a 21wyear~old college student who was having a cup of iced tea, a yogurt dessert cup and some doughnuts during a recent visit to a Seoul store. "The advertisements are fresh and young,” Ms. Lee says. "The image is pretty good," Write to Julie Jargon at julie.ja1‘[email protected]_j.com and SungI-Ia i’ark at [email protected] Printed in The Wall Street sournai. page 86 Copyright 2099 Dow Jones it Company, lnc Ail Rights Reserved This copy is for your personal. non-commercial use only Distribution and use of this material are governed by our Subscriber Agreement and by copyright law Fo non—personai use or in order multiple copies, please contact Dow Jones Reprints al 160643436608 or visit myw djreprinls corn http://onlinewsj .coin/articie/SB 1 24405 6248453 82149htm1 6/4/2009 ...
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