Dunkin' Donuts 2011 Annual Report Download - page 23

South Korea
Restaurants in South Korea accounted for approximately 35% of total franchisee-reported sales from
international operations for fiscal year 2011. Baskin-Robbins accounted for 54% of such sales. In South Korea,
we conduct business through a 33.3% ownership stake in a combination Dunkin’ Donuts brand/Baskin-Robbins
brand joint venture, with South Korean shareholders owning the remaining 66.7% of the joint venture. The joint
venture acts as the master franchisee for South Korea, sub-franchising the Dunkin’ Donuts and Baskin-Robbins
brands to franchisees. There are 983 Baskin-Robbins restaurants and 857 Dunkin’ Donuts restaurants located in
South Korea as of December 31, 2011. The joint venture also manufactures and supplies the franchisees
operating restaurants located in South Korea with ice cream, donuts and coffee products.
Japan
Restaurants in Japan accounted for approximately 28% of total franchisee-reported sales from international
operations for fiscal year 2011, 100% of which came from Baskin-Robbins. We conduct business in Japan
through a 43.3% ownership stake in a Baskin-Robbins brand joint venture. Fujiya Co. Ltd. also owns a 43.3%
interest in the joint venture, with the remaining 13.4% owned by public shareholders. There were 1,087 Baskin-
Robbins restaurants located in Japan as of December 31, 2011, with the joint venture manufacturing and selling
ice cream to franchisees operating restaurants in Japan and acting as master franchisee for the country.
Middle East
The Middle East represents another key region for us. Restaurants in the Middle East accounted for
approximately 15% of total franchisee-reported sales from international operations for fiscal year 2011. Baskin-
Robbins accounted for approximately 80% of such sales. We conduct operations in the Middle East through
master franchise arrangements.
Competition
We compete primarily in the QSR segment of the restaurant industry and face significant competition from a
wide variety of restaurants, convenience stores and other outlets that provide consumers with coffee, baked
goods, sandwiches and ice cream on an international, national, regional and local level. We believe that we
compete based on, among other things, product quality, restaurant concept, service, convenience, value
perception and price. Our competition continues to intensify as competitors increase the breadth and depth of
their product offerings, particularly during the breakfast daypart, and open new units. Although new competitors
may emerge at any time due to the low barriers to entry, our competitors include: 7-Eleven, Burger King, Cold
Stone Creamery, Dairy Queen, McDonald’s, Quick Trip, Starbucks, Subway, Tim Hortons, WaWa and Wendy’s,
among others. Additionally, we compete with QSRs, specialty restaurants and other retail concepts for prime
restaurant locations and qualified franchisees.
Licensing
We derive licensing revenue from agreements with Dean Foods for domestic ice cream sales, with The J.M.
Smucker Co. (“Smuckers”) for the sale of packaged coffee in non-franchised outlets (primarily grocery retail) as
well as from other licensees. Dean Foods manufactures and sells ice cream to U.S. Baskin-Robbins brand
franchisees and pays us a royalty on each gallon sold. The Dunkin’ Donuts branded 12 oz. original blend coffee,
which is distributed by Smuckers, is the #1 stock-keeping unit nationally in the premium coffee category.
According to Nielsen, for the 52 weeks ending December 24, 2011, sales of our 12 oz. original blend, as
expressed in total equivalent units and dollar sales, were double that of the next closest competitor.
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