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Dunkin' Donuts plans to re-enter California in 2015

By Lisa Baertlein

LOS ANGELES (Reuters) - Dunkin' Donuts said on Wednesday it would open shops in southern California in 2015 in its long-awaited return to the state it left more than a decade ago when it was under different management.

Fiercely loyal Dunkin' Donuts customers have been clamoring for it to re-enter California, which the company said is the No. 1 state for grocery sales of its bagged coffee.

The coffee chain expects to open 150 to 200 shops in southern California by 2020, said Nigel Travis, chief executive of Dunkin' Brands Inc and president of Dunkin' Donuts for the United States. "We eventually plan to have more than 1,000 restaurants throughout the state," he said.

Dunkin' Donuts closed its last California store in Sacramento in August 2002. Customers complained that the firm's shops were run-down and outdated. Dunkin's marketing vice president at the time, Kenneth Kimmel, said, "We just couldn't break the doughnut paradigm in California."

Dunkin' Donuts parent Dunkin Brands went public in July 2011 with the goal of expanding Dunkin' Donuts.

The chain, whose current tagline is "America runs on Dunkin'", has since put greater emphasis on coffee and embraced its more blue collar roots by positioning itself as a more affordable alternative to fancier coffee chains like Starbucks Corp .

Travis said drive-thrus would likely be a significant part of the store mix in southern California, where driving is a big part of everyday life.

Dunkin' Donuts, which has been expanding westward in states such as Arizona, Nevada and Colorado, said it was recruiting franchisees for Los Angeles, Riverside, San Diego, San Bernardino, Ventura and Orange counties. At this time, there are no specific plans for offering franchises for sale in northern California, the company said.

California native Krista Thomas, marketing vice president at Fan Appz, said she became a "mad, passionate Dunkin' fan" during the 12 years she lived in Boston.

Now residing in the southern California beach town of Venice, she has had to settle for buying Dunkin' Donuts packaged coffee in grocery stores.

Thomas said it would be worth waiting for Dunkin' but admitted that her first reaction was, "Two years away? Come on, you're killing me!"

The chain's competitors in California, the nation's most populous state, will include national brands such as McDonald's Corp and Starbucks as well as smaller chains such as Peet's Coffee & Tea, Coffee Bean & Tea Leaf and Winchell's Donut House.

In May, Dunkin' opened a unit on a U.S. Marine base near San Diego, but access to that cafe is limited.

There are about 7,200 Dunkin' Donuts in the United States and more than 3,100 elsewhere. This year, Dunkin' Donuts plans to open 330 to 360 net new stores in the United States.

Domestic Dunkin' Donuts cafes contribute almost 75 percent of revenue and more than 80 percent of profit at Dunkin' Brands.

Shares in Dunkin' Brands closed up 2.6 percent to $34.89 on the Nasdaq.

(Editing by Dan Grebler and Andrew Hay)

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