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Dunkin Donuts' Not Hurting from Coffee Price Wars

CANTON, Mass. -- The fast-food coffee wars have yet to dent Dunkin Donuts' bottom line very much, one of the chain's owners said this week.

Despite efforts by McDonald's Corp to undercut competitors on price, Dunkin's market share in coffee is steady and growing, Mark Nunnelly, managing director at Bain Capital, said Monday at the Reuters Private Equity and Hedge Funds Summit in New York.

"The big hurt has not been Dunkin to McDonald's, or McDonald's to Dunkin. It's been Dunkin and McDonald's to your local fill-in-the-blank convenience store," he said.

Nunnelly, whose firm is one of three private equity owners of the doughnut chain, said Starbucks Corp. has been hurt the most by the price war and the weak economy, noting that more consumers are trading down from expensive drinks to cheaper plain coffee rather than switching among the various outlets.

"The higher-priced players at $4 or $5 for a latte have obviously had the toughest year through the crisis," Nunnelly said. "The more accessible price point players like Dunkin and McDonald's have fared better through that period."

In other Dunkin' news, the company announced the results of its most recent Brand Advisory Council (BAC) election. This year, 26 franchise leaders representing five regions will be on the council. The members serve a two-year term, attend regular meetings with the senior leadership team at Dunkin' Brands, and provide strategic advice and guidance on brand initiatives. The group represents the entire franchise community.

For 2010-2011, 11 new representatives were elected to the Dunkin' Donuts Brand Advisory Council by their colleagues from a slate of candidates for each respective region. The new franchise leaders will serve alongside returning members.

"We are always working toward building a stronger franchise system and the BAC plays a critical role in providing senior management with thoughtful and valuable advice and worthwhile perspectives to further strengthen the business," stated Nigel Travis, Dunkin' Brands CEO and Dunkin' Donuts president. "We look forward to the contributions of our newly appointed members who join a strong group of dedicated franchise leaders that takes its commitment to Dunkin' Donuts seriously."

Senior leadership consults with the BAC on a wide variety of topics, including the brand's strategic direction, marketing strategies, menu innovation, operations, technology issues, education and training needs, regional and national meeting agendas and more.

The Dunkin' Donuts Franchise Advisory Council system has been in place for more than three decades and includes operators located in 35 States across the country.

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