Dunkin' Donuts (DNKN) is being modest in its plans to add another 1,400 stores in China over the next 20 years, and could double that number, says analyst firm Miller Tabak.

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The firm also believes the company could open as many as 20,000 combined Dunkin' Donuts and Baskin-Robbins units over the long term.

The franchisor of quick service restaurants pedaling coffee and doughnuts last week announced a new franchise agreement in China. Teaming up with Philippines-based Jollibee Worldwide and Jasmine Asset Holding,  Dunkin' Donuts said it will develop more than 1,400 new units in China over the next 20 years.

While that sounds like a rather ambitious foray into country where doughnuts and coffee are not exactly a staple, Miller Tabak believes the market in China is robust enough to support far more units in the country. Assuming a per capita count of one Dunkin' unit per 500,000 population in China, which is one-tenth the saturation level in South Korea,  the firm estimates China can support more than 2,700 Dunkin' units.

"We argue this announcement regarding the company's development plans in China is a longer-term positive," said Miller Tabak in its report. "Management has long said there is a long-term goal of 15,000 combined Dunkin' Donuts and Baskin-Robbins units, but if DNKN can get the formula in China right, we think that the long-term target could be closer to 18,000-20,000 overseas."

In addition to stand alone units, Dunkin' Donuts also has an has an opportunity to partner with gasoline retailers in China, similar to the way fast-food king McDonald's has done to reach the growing population of middle-class automobile owners in the country.

"If Dunkin' succeeds in its transition to a beverage-based concept, rather than its traditional positioning as a donut shop," said Miller Tabak, "we think new unit development in China can expand more rapidly." 

TagsReport: Dunkin’ Donuts Can Double its Planned 1, 400 Stores in China, DNKN, Miller Tabak, another 1, 400 stores in China over the next 20 years, Baskin-Robbins, Jollibee Worldwide