Domecq buys sandwich chain

Allied Domecq yesterday announced plans to expand further its fast food business in the US by paying $50m (pounds 30m) in cash for Togo's, a chain of 200 franchised sandwich shops in California with an annual turnover $120m.

The Togo's chain will be enlarged to 1,000 outlets across the US, mainly in locations close to Allied Domecq's existing fast food outlets. It operates 3,370 Dunkin' Donuts coffee shops and 2,600 Baskin' Robbins ice-cream parlours in the US alone, and the three businesses will be managed as a single operation.

"The addition of Togo's will enable us to expand out customer offer with Dunkin' Donuts drawing customers primarily in the morning, Togo's primarily at lunchtime and Baskin' Robbins in the afternoon and evening. This complementary brand offering ensures that our locations can be productive throughout the day and provide our franchisees with improved returns," Stephen Alexander, chief executive of Allied Domecq Retailing, said yesterday.

Dunkin' Donuts is the world's largest coffee and donut chain, selling 4 million donuts daily. It is largely a breakfasttime and morning business, making half its daily sales before 10am. Baskin' Robbins is the world's largest ice-cream franchise serving 10 million people a week, but 65 per cent of its sales are made between 3pm and 9pm each day. There are already 164 "Combo Stores" offering both Dunkin' and Baskin' brands on the same site.

Togo's caters largely for the lunchtime market for office workers. It offers a range of 30 different sandwiches, which are prepared in front of the customer in the US style.

Annual turnover of the 200 existing outlets is around $120m, and the average sales of $600,000 ranks the outlets among the largest in the sandwich industry. Roughly half the business was takeaway and half was eat-in, and the customers were almost equally divided between men and women, a spokesman said yesterday.

In the next five years Togo's will be rolled out as a national chain of outlets with a planned 1,000 outlets across the rest of the US. The UK is also a target market and the brand could be brought into the UK within the next two years.

Togo's founder and former owner Mike Cobler, who set up the business 25 years ago, will stay on with the group.