Krispy Kreme Doughnut Inc.
) is all set to expand into Taiwan. Recently, it inked a
development deal with Huan Hsin Co., Ltd, its franchisee, for
setting up 10 locations in the country over the next five
Chinese restaurant operator Huan Hsin has 30 years of
experience in the restaurant sector, food processing and imports,
and electronics manufacturing in Taiwan, Malaysia, and China.
Huan Hsin manages a variety of restaurants like approximately
90 "Super gCar" fried chicken take-out stores in Shanghai,
Suzhou, and Nanjing, and 4 "Mr. Wish" fresh fruit/bubble tea
shops in Shanghai. Given its familiarity with local food habits
and a strong presence in the same industry, Huan Hsin is deemed a
strategic fit for Krispy Kreme's Taiwanese expansion plan.
The latest alliance exhibits Krispy Kreme's intent to make
Taiwan one of the prime markets for international expansion,
considering stepped up economic growth and under-penetration of
quick-service restaurants in the region compared to the North
American countries. Further, Krispy Kreme sees coffee and
doughnuts as a flourishing category in Taiwan. It also believes
that Taiwanese have a preference for Western food.
Krispy Kreme currently has a presence in 21 countries around
the globe. According to management, the company's overseas
expansion is expected to be more in 2013 than in 2012. Encouraged
by its six-fold growth in international exposure over the last
five years, the company seeks to double its current overseas
store base within 2016.
We believe the company's extended global reach bodes well for
its financials. On the flip side, there is some fear of
deterioration in comparable store sales from cannibalization by
the new stores.
Krispy Kreme currently retains a Zacks Rank #2 (Buy). Some
other restaurant industry stocks currently performing well
Chuy's Holdings Inc.
Dunkin' Brands Group Inc.
Burger King Worldwide Inc.
), each with a Zacks Rank #2 (Buy).
BURGER KING WWD (BKW): Free Stock Analysis
CHUYS HOLDINGS (CHUY): Free Stock Analysis
DUNKIN BRANDS (DNKN): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
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