Dunkin' Donuts 2011 Annual Report Download - page 25

Certain of our Dunkin’ Donuts brand restaurants produce donuts and bakery goods on-site rather than relying
upon CMLs. Many of such restaurants, known as full producers, also supply other local Dunkin’ Donuts
restaurants that do not have access to CMLs. In addition, in newer markets, Dunkin’ Donuts brand restaurants
rely on donuts and bakery goods that are finished in restaurants. We believe that this “just baked on demand”
donut manufacturing platform enables the Dunkin’ Donuts brand to more efficiently expand its restaurant base in
newer markets where franchisees may not have access to a CML.
Baskin-Robbins ice cream
Prior to 2000, we manufactured and sold ice cream products to substantially all of our Baskin-Robbins brand
franchisees. Beginning in 2000, we made the strategic decision to outsource the manufacturing and distribution
of ice cream products for the domestic Baskin-Robbins brand franchisees to Dean Foods. The transition to this
outsourcing arrangement was completed in 2003. We believe that this outsourcing arrangement was an important
strategic shift and served the dual purpose of further strengthening our relationships with franchisees and
allowing us to focus on our core franchising operations.
International
Dunkin’ Donuts
International Dunkin’ Donuts franchisees are responsible for sourcing their own supplies, subject to compliance
with our standards. They also produce their own donuts following the Dunkin’ Donuts brand’s approved
processes. In certain countries, our international franchisees source virtually everything locally within their
market while in others our international franchisees may source virtually everything from the NDCP. Where
supplies are sourced locally, we help identify and approve those suppliers. Supplies that cannot be sourced
locally are sourced through the NDCP. In addition, we assist our international franchisees in identifying regional
and global suppliers with the goal of leveraging the purchasing volume for pricing and product continuity
advantages.
Baskin-Robbins
The Baskin-Robbins global manufacturing network is comprised of 14 facilities, one of which, an ice cream
manufacturing facility in Peterborough, Ontario (the “Peterborough Facility”), is owned and operated by us.
These facilities supply both our international and our domestic markets with ice cream products. The
Peterborough Facility serves many of our international markets, including the Middle East, Australia, China,
Southeast Asia and Latin America. Certain international franchisees rely on third party-owned facilities to supply
ice cream and ice cream products to them, including a facility near Cork, Ireland, which supplies restaurants in
Europe and the Middle East. The Baskin-Robbins brand restaurants in India and Russia are supported by master
franchisee-owned facilities in those respective countries while the restaurants in Japan and South Korea are
supported by the joint venture-owned facilities located within each country.
Research and development
New product innovation is a critical component of our success. We believe the development of successful new
products for both brands attracts new customers, increases comparable store sales and allows franchisees to
expand into other dayparts. New product research and development is located in a state-of-the-art facility at our
headquarters in Canton, Massachusetts. The facility includes a sensory lab, a quality assurance lab and a
demonstration test kitchen. We rely on our internal culinary team, which uses consumer research, to develop and
test new products.
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