The Canton, Mass.-based chain is set to open 10 new stores in Redford, Warren, Sterling Heights, Monroe and other communities by year's end. It hopes to double its foothold in the state by 2009.

"We don't see the dominance of Dunkin' Donuts here and we want to take our store growth to Detroit," said George McAllan, director of franchise services for Dunkin' Donuts in Michigan. The chain has 57 stores in Metro Detroit. All of the company's stores are franchised. It also plans to add stores in Cincinnati; Cleveland; Tampa, Fla.; and Charlotte, N.C.

The chain hopes to get a head start on its push in Metro Detroit in October when it opens a $3 million kitchen in Livonia. The 14,000-square-foot baking facility will be owned by local franchisees. The facility will allow owners to make their baked goods off-site, freeing up space and time. About two-thirds of the chain's franchisees buy their baked goods from other Dunkin owners, who bake products at their stores.

But coffee, not donuts, is leading Dunkin's growth. Filling the niche between Starbucks and McDonald's, the chain introduced a new line of espressos, lattes and cappuccinos last year. Sales of its flavored coffees and iced coffee beverages remain strong, McAllan said.

Coffee made up about 25 percent of sales at Salim and Seema Ali's Dunkin' Donuts when they opened their first franchise in 1985. Today, it makes up as much as 55 percent of sales at the couple's three stores in Lincoln Park, Dearborn and Canton. And sales of baked goods such as muffins, croissants and cookies also have increased.

"It's not only donuts anymore," Salim Ali said.

But Dunkin' Donuts may have a tough time competing with rivals such as Starbucks, Tim Horton's and Panera Bread, said Gregg Thomas, principal of THG CFO Partners, a restaurant consulting firm in Rochester Hills. Its chief rival, Starbucks, has about 80 stores in Metro Detroit, while Panera Bread has about 35 locations.

"They are a little late to this market," Thomas said. "Their ability to expand is dependent on the franchisee, but I still think they'll do well here."

Dunkin' Donuts posted $4.8 billion in sales in fiscal 2004, up from $3.2 billion in 2003, fueled by same-store sales growth -- sales at stores open at least one year -- and aggressive expansion nationwide.

The chain has opened new stores with several sister restaurants in one location -- Dunkin' Donuts, ice-cream shop Baskin-Robbins and the Togo's sandwich shop -- all owed by wine and spirits maker Allied Domecq. That strategy may give it an edge in Metro Detroit, Thomas said. About 1,100 of the company's 12,000 restaurants have different brands at one location.

"They're good at drawing people in the morning with the donuts and coffee and to the same store in the evening with ice cream," Thomas said.

Source:Dunkin' Donuts