Investors are applauding Dunkin Brands Group Inc (NASDAQ:DNKN)‘ decision Monday to continue expanding its Dunkin’ Donuts and Baskin-Robbins franchises in the great state of Texas. The 17 new franchised locations, in cities stretching from Abilene to San Antonio in central Texas, will push past 50 the number of restaurants slated to open in Texas, announced in just the past few months. News of the expansion probably contributed to the company’s modest share price gain in ordinary trading Monday, and to the after-hours gain as well.
Investors seem to be thinking: Pretty soon, you won’t be able to swing a dead cat in Texas without hitting a Dunkin Brands Group Inc (NASDAQ:DNKN)’ Donuts shop.
PUBLIC SERVICE ANNOUNCEMENT: the Texas Health and Human Services Commission discourages the swinging of deceased mammals of any sort (esp. cats, rats, cattle) in the vicinity of public eateries. Aficionados of feline flinging are encouraged to direct their missiles into neighboring Oklahoma.
In fact, Dunkin Brands Group Inc (NASDAQ:DNKN)’ says it has “over 100 restaurants planned to open over the next several years” in Texas. Yet while that’s a big number, it still represents just a fraction of the roughly 500-new-restaurants-a-year pace the company has set so far this year.
Time to count the donuts
So how big of a deal is this Texas-sized expansion for Dunkin Brands Group Inc (NASDAQ:DNKN)’?
Let’s put it in context. At last report, Dunkin Brands Group Inc (NASDAQ:DNKN) had more than 10,600 Dunkin’ Donuts restaurants in operation around the globe, plus more than 7,000 Baskin-Robbins restaurants. Roughly 17,700 retail outlets total, and that’s not counting the grocery stores that sell the firm’s coffee brand (production of which is licensed to The J.M. Smucker Company (NYSE:SJM).
Even 100 new restaurants in Texas — and those opening over a span of years — represents just 0.5% of growth for Dunkin Brands Group Inc (NASDAQ:DNKN), and will not move the needle much toward hitting the firm’s projected 16% annualized rate of profits growth, much less accelerate it.