Dunkin Brands Group Inc (DNKN), Starbucks Corporation (SBUX), Panera Bread Co (PNRA): Three Great Cafe Stocks

I’m a coffee snob, and I don’t mean that in a pleasant way. I’m a jerk about it, and clearly, I’m unapologetic. But that isn’t going to stop me from keeping a close eye on the workings of the biggest prepared coffee sellers in the world. Taste-wise, these guys might be third-tier — seriously, there’s better coffee to be had — but business-wise, they’re top of the heap. Here are three companies that would pair well with almost any portfolio.

Dunkin Brands Group Inc (NASDAQ:DNKN)
While Dunkin Brands Group Inc (NASDAQ:DNKN) used to be known for just its doughnuts, the brand has expanded over the last decade, and now it’s a major player in the world of coffee. In its last quarter, Dunkin’ opened 256 new franchise locations around the world, and remodeled 205 other locations. While the company also operates Baskin-Robbins, it derives most of its revenue and income from Dunkin Brands Group Inc (NASDAQ:DNKN)’ Donuts. The U.S. portion of Dunkin Brands Group Inc (NASDAQ:DNKN)’ Donuts accounted for 81% of the company’s revenue last quarter.

The next big area for Dunkin Brands Group Inc (NASDAQ:DNKN)’ is the international market. Last quarter, Dunkin Brands Group Inc (NASDAQ:DNKN)’ Donuts only earned 3% of its revenue abroad, while the international portion of Baskin-Robbins brought in 11% of revenue. That shows that the company has the ability to manage overseas locations, it just needs to add more of them. Right now, the international push is costing the company, and those locations are running on a 54% profit margin, which compares poorly to the U.S. segment’s 74% margin.

This is a long-term growth story, with international locations increasing, under a suppressed margin. Then, as marketing backs off and those locations start to operate in a regular fashion, margins expand and everyone wins.

Panera Bread Co (NASDAQ:PNRA)
If you want success in the here and now, you probably won’t do better than Panera Bread Co (NASDAQ:PNRA) . The chain has been surging recently, driven by catering expansion and strong comparable sales growth. Last quarter, catering sales grew 19%, and the company has big plans for keeping that pace up. In-store, comparable sales grew 5% in company-owned locations. That was largely affected by increase in the average check, which was up 5.4%, driven by both product mix and price increases.

Over the next year, look for more of the same from Panera Bread Co (NASDAQ:PNRA). The catering business is going to be an increasingly big deal, and the company is putting a lot of energy into making it efficient and profitable.