Why Dunkin' thinks espresso will give it the boost it needs to challenge Starbucks

Why Dunkin' is not only about drip coffee anymore
Why Dunkin' is not only about drip coffee anymore

Dunkin' Brands is making a huge bet on coffee.

It's all part of Dunkin's $100 million investment in its U.S. business to refresh the brand and become a key player in coffee.

That spending went to upgrading equipment, including new espresso machines and revamping store design. The new design also includes more room for mobile ordering and cold beverages on tap.

The move comes as Dunkin' is looking to expand from its Northeast stronghold.

"Dunkin' is a national brand, but it's almost caught in a regional brand's body," said Eric Gonzalez, equity research analyst at KeyBanc Capital Markets.

Dunkin' plans to add 200 to 250 net new restaurants a year for three years, starting in 2019, with new locations in "key growth markets."

Gonzalez said Dunkin's retail coffee business and recent rebranding help make it recognizable in most U.S. markets. One way Dunkin' has built its brand across the country is by selling packaged coffee in supermarkets.

"So the brand is there," Gonzalez said. "It's just a function of finding the markets that the stores work in."

Watch this video to find out more about how Dunkin' is looking to get into the coffee big leagues with the likes of Starbucks and McDonald's.

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