Consumer Staples

Dunkin’ Donuts takes a dip in the UK

Arjun Kharpal, special to
It's time for Dunkin' to be back in UK: CEO
It's time for Dunkin' to be back in UK: CEO

Coffee and baked goods chain Dunkin' Donuts is set to roll out stores across the U.K., as it is the "right time" for the company, the CEO told CNBC.

Dunkin' Donuts will open 150 stores nationwide over the next five years, with a particular emphasis on London.

"We think that's the area of wealth," Nigel Travis, CEO of Dunkin' Brands said. "We think that's an area where people commute, they're on the go, which really optimizes our brand."

This is the second attempt by the chain to tap the U.K. market, after its sugary treats failed to whet the British appetite in the mid-1990s.

(Read more: Starbucks latte drives early pumpkin foods craze)

Travis said that it was the "right time" to re-enter the U.K., on the back of good economic data.

"We feel that we are a very changed company from the early '90s. … We've got a very extensive product range in bakery, and obviously our sandwiches, which have become huge here in the states," he told CNBC.

Dunkin' Donuts faces stiff competition from the likes of Starbucks and Costa Coffee. But analysts said it could stand a chance, as the coffee chain market is returning to growth.

(Read more: Howard Schultz: I'm not losing any sleep over Dunkin' Donuts)

"The coffee shop market is worth more than £1.2 billion ($1.9 billion), and while being hit in the aftermath of the recession, it has regained momentum since, making it an appealing one for new entrants," Kiti Soininen, Mintel's head of food and drink research, told CNBC.

She said recent fads in gourmet doughnuts and "cronuts"—a croissant-doughnut combination—meant the pastry market had become crowded with bakery chains such as Greggs as well as independent stores.

"Whether these will pose competition for the specialist chains in the long term remains to be seen, but Dunkin's more rounded role as a coffee shop should protect it to some extent," Soininen said.