After Starbucks, it’s now the turn of Massachusetts-based Dunkin’ Donuts to come knocking on India. The world’s-largest baked goods and coffee chain has entered into a master franchisee agreement with Noida-headquartered Jubilant FoodWorks (JFL) to set up restaurants here. JFL signed the agreement with the international arm of Dunkin’ Donuts.
With this, JFL will add one more brand to its existing portfolio. It is already the master franchisee of Domino’s Pizza for India, Bangladesh, Nepal and Sri Lanka.
Though JFL gets full rights for the Indian market by virtue of the agreement with Dunkin’ Donuts, it has been given the first right of refusal for the Sri Lanka, Bangladesh and Nepal markets. So, Dunkin’ Donuts can select alternate partners for these markets, but it will have to get approval from JFL first.
“This gives us the flexibility to seek new partners if required. But there’s a good chance that Jubilant will do some of those markets,” said Nigel Travis, chief executive officer, Dunkin’ Brands, and president, Dunkin’ Donuts.
Dunkin’ Donuts is a subsidiary of US-based Dunkin’ Brands. It has operations in 31 markets largely through the franchisee route.
According to JFL Co-Chairman Hari Bhartia, the first Dunkin’ Donuts outlet will be opened in the first quarter of 2012. “Within five years, we intend to open 80-100 outlets. In 15 years, the target is to open 500 outlets,” he said.
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Though Bhartia declined to comment on the quantum of investments in opening Dunkin’ Donuts outlets, he said JFL would fund the project through internal accruals. “We won’t take debt for the purpose.”
JFL Chief Executive Officer Ajay Kaul said the business was expected to be one which was low-capital expenditure and high return. “The stores should start generating cash profits within one year,” he said, adding JFL would not enter into a similar agreement with any other coffee chain. “We continue to be in talks with other food majors, too. But we are in no hurry. We wish to concentrate on setting up this business first. Any other tie-up or association with an allied brand will take at least another year.”
JFL is expected to leverage its strengths in supply-chain and logistics for the new business. Stores would be of 750-800 square feet.
Jubilant shares today closed 3.2 per cent higher at Rs 528.6 on the Bombay Stock Exchange.