PITTSBURGH -- If Dunkin' Donuts has its way, there soon won't be any hole left in the Pittsburgh market for the Canton, Mass.-based baked goods chain.
In what it describes as the largest store-development agreement in its history, the company announced Thursday a deal with the Heartland Coffee Co. of Pittsburgh to open 105 new Dunkin' Donuts locations in the city and throughout Allegheny County within the next several years, according to a report in the Pittsburgh Business Times.
That would be more than 10 times the number [image-nocss] of Dunkin' Donuts locations now in the Pittsburgh market, according to the company.
The company expects to pursue a variety of store types in its expansion plan, including freestanding outlets, strip-mall locations and stores within convenience marts, among others. Overall, the company is undergoing a campaign to triple the number of Dunkin' Donuts stores in the United States to 15,000 by 2020.
Dunkin' Donuts' aggressive expansion comes under the new ownership of a trio of major private equity firms: Thomas H. Lee Partners, the Carlyle Group and Bain Capital, which jointly bought Dunkin' Brands Inc. from French beverage firm Pernod Ricard in a deal that closed last year.
"We are extremely excited to bring Dunkin' Donuts to more people throughout this region," said Ed Jaten, president of Heartland Coffee Co. "Dunkin' Donuts is a daily ritual for millions of people who depend on their coffee and baked goods to get them through their day. We believe we're not just bringing people faster, more affordable food and beverage choices; we're truly going to make life easier for people who live and work here."
Jason Cannon, a vice president with CB Richard Ellis/Pittsburgh, is handling the site search for new locations on behalf of Heartland. He declined to comment, according to the newspaper.
David Glickman, a vice president for Downtown-based Grubb & Ellis Co., said Dunkin' Donuts' bid to penetrate the Pittsburgh market as roughly comparable to Subway, the sandwich chain, which seeks to open a new location for every 10,000 residents in the region.
"In retail, it all comes down to penetration rate," Glickman said. "You're talking about something that could go in almost every neighborhood."
Glickman expects Dunkin' will succeed where doughnut company Krispy Kreme has largely failed to catch on in the Pittsburgh market. It operates only three locations after entering the market more than five years ago. The reason: coffee.
"One of the main reasons Dunkin' Donuts has done so well and Krispy Kreme hasn't in the Pittsburgh region is Krispy Kreme never had a strong beverage following, and Dunkin' has," Glickman said. "Beverage can be half of their sales."
Dunkin' Donuts expects the first of the new locations to open within the next 18 months.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.