Dunkin' Donuts 2012 Annual Report Download - page 15

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-5-
International operations
Our international business is organized by brand and by country and/or region. Operations are primarily conducted through
master franchise agreements with local operators. In certain instances, the master franchisee may have the right to sub-
franchise. In addition, in Japan and South Korea we have joint ventures with local companies for the Baskin-Robbins brand,
and in the case of South Korea, for the Dunkin' Donuts brand as well. By teaming with local operators, we believe we are better
able to adapt our concepts to local business practices and consumer preferences. We have had an international presence since
1961 when the first Dunkin' Donuts restaurant opened in Canada. As of December 29, 2012, there were 4,517 Baskin-Robbins
restaurants in 45 countries outside the U.S. and 3,173 Dunkin' Donuts restaurants in 31 countries outside the U.S. Baskin-
Robbins points of distribution represent the majority of our international presence and accounted for 67% of international
franchisee-reported sales and 87% of our international revenues for fiscal year 2012.
Our key markets for both brands are predominantly based in Asia and the Middle East, which accounted for approximately
73.8% and 13.6%, respectively, of international franchisee-reported sales for fiscal year 2012. For fiscal year 2012, $2.0 billion
of total franchisee-reported sales were generated by restaurants located in international markets, which represented 23.0% of
total franchisee-reported sales, with the Dunkin' Donuts brand accounting for $663 million and the Baskin-Robbins brand
accounting for $1.4 billion of our international franchisee-reported sales. For the same period, our revenues from international
operations totaled $117.5 million, with the Baskin-Robbins brand generating approximately 87% of such revenues.
Overview of key markets
As of December 29, 2012, the top foreign countries and regions in which the Dunkin' Donuts brand and/or the Baskin-Robbins
brand operated were:
Country Type Franchised brand(s) Number of restaurants
South Korea Joint Venture Dunkin’ Donuts 883
Baskin-Robbins 1,020
Japan Joint Venture Baskin-Robbins 1,127
Middle East Master Franchise Agreements Dunkin’ Donuts 292
Baskin-Robbins 637
South Korea
Restaurants in South Korea accounted for approximately 36% of total franchisee-reported sales from international operations
for fiscal year 2012. Baskin-Robbins accounted for 58% 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 1,020 Baskin-Robbins restaurants and 883
Dunkin' Donuts restaurants located in South Korea as of December 29, 2012. 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 27% of total franchisee-reported sales from international operations for fiscal
year 2012, 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. Our partner also owns a 43.3% interest in the joint venture, with the remaining 13.4%
owned by public shareholders. There were 1,127 Baskin-Robbins restaurants located in Japan as of December 29, 2012, 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 14% of total
franchisee-reported sales from international operations for fiscal year 2012. Baskin-Robbins accounted for approximately 75%
of such sales. We conduct operations in the Middle East through master franchise arrangements.
Industry overview
According to Technomic Information Services (“Technomic”), the QSR segment of the U.S. restaurant industry accounted for
approximately $154 billion of the total $370 billion restaurant industry sales in the U.S. in 2011. The U.S. restaurant industry is
generally categorized into segments by price point ranges, the types of food and beverages offered, and service available to