The parent company of the Dunkin' and Baskin-Robbins brands could go private in an $8.8 billion acquisition as soon as this week, the New York Times reported Sunday.
The deal would involve a sale to Inspire Brands Inc., a restaurant conglomerate backed by investment firm Roark Capital, which values Canton-based Dunkin' Brands Group, Inc. at a 20 percent premium over its closing price Friday.
A spokesperson for Dunkin' confirmed the company is in discussions with Inspire Brands but said “there is no certainty that any agreement will be reached.” Dunkin' declined to comment further until a deal is signed or the discussions end.
In midday trading Monday, Dunkin’s stock rose 15 percent to more than $100 per share. The company’s market capitalization is up to about $7.3 billion.
Here’s a rundown of what you need to know about the deal involving one of Massachusetts’s best-known brands.
Dunkin’ Brands CEO: Dave Hoffmann
US Dunkin' locations: More than 9,100 (about 1,100 in Mass.)
US Baskin-Robbins locations: More than 2,400
Employees: 1,109 corporate employees as of Dec. 2019 annual filing
What else do I need to know about Dunkin' Brands?
Dunkin' Brands is the parent company of coffee and donut shop Dunkin' and ice cream shop Baskin-Robbins; the coffee and donut chain is the larger of the two. Last year Dunkin' brought in $9.2 billion in sales in the US — representing more than 75 percent of the company’s global sales — compared to the ice cream chain’s $615.3 million in the US.
William Rosenberg started it all in 1948 when he opened a donut and coffee shop in Quincy called “Open Kettle.” He renamed the restaurant “Dunkin' Donuts” in 1950, and the first franchise location opened in Worcester five years later. The Dunkin' Brands business model is fully based on franchises, which means stores are run by independent business owners who partner with one of the two restaurant brands.
Baskin-Robbins was founded in Glendale, California in 1945. The donut and ice cream chains launched in the US around the same time as McDonald’s, Taco Bell, Wendy’s, and Kentucky Fried Chicken.
A sale to Inspire Brands would not be the first time Dunkin' is controlled by private equity owners. In 2005, Dunkin' Brands was acquired for $2.4 billion by a trio of private equity firms: Bain Capital, Carlyle Group, and Thomas H. Lee Partners. The group acquired Dunkin' Brands from French wine and spirits company Pernod Ricard and then took it public in 2011.
Fun Fact: Last year, Dunkin' Donuts shortened its name to “Dunkin',” a change pushed by Dunkin' Brands CEO Dave Hoffmann, a former executive at McDonald’s, who stepped in after Nigel Travis retired in 2018.
What is Inspire Brands, and why are they interested in Dunkin'?
Inspire Brands is a private equity-backed restaurant conglomerate based in Georgia. If the deal for Dunkin' goes through, Dunkin' and Baskin-Robbins would join a portfolio including more than 11,000 Arby’s, Buffalo Wild Wings, Sonic Drive-In, Rusty Taco, and Jimmy John’s restaurants worldwide. The group most recently acquired Jimmy John’s in 2019 and Sonic in 2018.
The restaurant operator acquires restaurants and runs them as separate brands, hoping to “supercharge their long-term growth.” Inspire Brands was founded in 2018 by CEO Paul Brown. Before then, Brown spent time as chief executive of Arby’s Restaurant Group, Inc. and the president of brands and commercial services of Hilton Worldwide, a global hospitality company spanning 10 separate brands.
How might a private equity firm manage the company?
Based on Inspire Brands' statements and previous acquisitions, Dunkin' fans shouldn’t worry about any drastic changes for the beloved brand — at least not right away. Inspire Brands says on its website that it aims to maintain the identity of the brands it buys.
It is unclear whether going private could result in more cuts or closures of underperforming Dunkin' and Baskin-Robbins franchises — especially since that is happening anyway. In July, Dunkin' said it expects to close about 800 stores in the US and 350 internationally this year in a “real estate portfolio rationalization.” These would be mostly locations with low sales volume, including 450 housed inside Speedway convenience stores.
How has Dunkin' performed during the COVID-19 pandemic?
Like all businesses, Dunkin' took an initial hit from the COVID-19 pandemic. In a quarterly report released July 30, the company said revenues decreased by 20 percent to $287.4 million from the comparable time period in 2019, mainly due to a drop in traffic.
However, Dunkin' noted that both of its restaurant brands are seeing a gradual uptick in sales each month. Approximately 96 percent of Dunkin' US locations were open as of July 25.
What else makes Dunkin' an appealing buy?
Over the years, Dunkin' has been bolstering its digital presence, which has become a vital asset during the pandemic. The company has offered on-the-go ordering from its mobile app since 2016.
It’s also been able to stay on top of growing trends, remaining relevant with younger audiences. Dunkin’ has added vegan meat and oat milk to its menu, and the brand is all over the popular video-sharing app TikTok.
In September, Dunkin' put TikTok star Charli D’Amelio’s go-to drink — a cold brew with whole milk and three pumps of caramel swirl — on its national menu and called it “The Charli.” D’Amelio has more than 95.2 million followers on the app, and her Dunkin' iced coffees often make cameos in her posts.
Overall on TikTok, videos posted with the hashtag “#dunkin” have a total of 1.8 billion views, and those with the hashtag “#dunkindonuts” have over 568 million views. Dunkin’s digital marketing strategy is likely a key reason for its COVID-19 performance, especially as many office-worker hubs remain deserted seven months into the pandemic.