Dunkin’, previously known as Dunkin’ Donuts, has established itself as one of the premier coffee and donut chains throughout the country. Founded in Quincy, Massachusetts in 1950 Dunkin’ has since expanded into a multi-concept international chain. Currently, Dunkin’ has over 11,300 locations. In the US they cover 41 states. Baskin-Robbins is also under the Dunkin’ umbrella and both concepts will often share one space.
Net Lease Overview
Dunkin’ stands out as an investment opportunity against competitors in the market due to its strong brand recognition, popularity, and ability to connect with customers. Like other Quick Service Restaurants (QSRs), Dunkin’ is resistant to online competition, the act of going to a physical location to pick up coffee and breakfast items will ensure the need for retail locations, but Dunkin’ also provides quick reliable service that makes it convenient for the customers to visit. These locations are typically located in areas with high visibility and high traffic counts. These factors help ensure a strong demand for coffee but are highly desirable for any retail tenant. The flexible size of a Dunkin’ store allows them to operate in a variety of locations, while their common layout is easy to retenant, in the event Dunkin’ decides to vacate the property.
Dunkin’ features a mixture of double net and triple net leases, a driving factor in their cap rate when sold. The types of lease impact the level of responsibility that falls on the investor. Investors expect to be compensated with a higher cap rates when they have higher levels of landlord responsibilities. Another factor that comes in to play is the financial strength of the operator. Most locations are franchisees, which come in an assortment of financial strengths.