Dunkin' Brands, the parent company of Dunkin' Donuts, saw its share price soar to $28 dollars after an IPO of $19 dollars.
Investors went crazy for the Northeastern based coffee and donut company, pushing the share price over 50 percent higher than the IPO offering. The stock, trading under the DNKN symbol on Nasdaq, opened at $25 before hitting $28.80 a little after 1 p.m. on Wednesday.
The heavy investing is behind huge potential growth for Dunkin' Brands, which also owns Baskin-Robbins ice cream stores. Even though the company has been around for 70 years, it is highly centralized in the Northeast, allowing for a lot of potential expansion on the West Coast.
It has one Dunkin' Donuts store for every 10,000 people in the New York/New England area, while only about 1 for every 1.2 million people in Western states. This, along with potential internationally, greatly excited investors on Wednesday.
But as Dunkin' continued to soar higher and higher, its main rival Starbucks (SBUX) saw its stock drop over 2 percent, down to $39.31.
Dunkin' Brands has a distinct advantage over Starbucks in that it franchises close to all of its stores, allowing for the company to keep its expenses low and capital margins high.
Starbucks still is known as the dominant coffee chain, especially in store number, Dunkin may not be far behind. The company already gets 60 percent of its sales from coffee and coffee related products, and further expansion could increase that figure.