The $ 11.3 billion acquisition of Dunkin ‘Brands by Inspire Brands, announced last week, including debt, will reshape the restaurant landscape as consolidation continues.
The purchase builds on Inspire’s shopping spree – the holding company formerly known as Arby’s Restaurant Group and currently owned by private equity firm Roark Capital has acquired four brands in as many years. In late 2017, the company signed a $ 2.9 billion deal for Buffalo Wild Wings. A year later, the company bought Sonic for $ 2.3 billion, and in September 2019 Jimmy Johns for an undisclosed amount (although the sandwich chain had sales of $ 2.1 billion at the time).
The addition of Dunkin ‘and Baskin-Robbins will increase Inspire’s system-wide revenue from approximately $ 14.6 billion to $ 26 billion and increase the number of restaurant locations from 11,000 to over 31,600 worldwide.
There are currently more than 12,500 dunkin ‘and nearly 8,000 Baskin-Robbins restaurants worldwide. Both Dunkin ‘and Baskin-Robbins operate as separate brands within Inspire.
“By joining Inspire, these brands will add complementary guest experiences and occasions to our current portfolio,” said Paul Brown, co-founder and CEO of Inspire, in a statement. “In addition, they will strengthen Inspire through its scaled international platform and robust consumer product licensing infrastructure, adding more than 15 million loyalty members.”
Although restaurant businesses were under pressure from the pandemic, including coffee chains, Dunkin ‘managed to get a 20% premium over the closing price on October 23, before news of the first deal broke, according to Eric Gonzalez. a restaurant analyst at the investment firm KeyBanc Capital Markets.
“Under the leadership of former McDonald’s CEO David Hoffman, Dunkin ‘Brands focused on improving franchisee profitability and building its heritage as a beverage-led brand on the go,” wrote Gonzalez in a report.
He praised Dunkin’s performance over the past few months and owed the company’s success to initiatives such as menu simplification, new espresso machines, new drive-thru tools, and improvements to digital apps.
Andrew Strelzik, restaurant analyst at equity research firm BMO Capital Markets, said a future opportunity for Dunkin ‘as a private company is to be more willing to invest in growth by remodeling businesses and expanding into the western US.
While analysts saw many positive results in the deal, it could have an impact on Dunkin’s numerous vendors, especially creative agencies.
A possible agency change
From an advertising perspective, the most notable aspect of buying Inspire is the potential impact it could have on Dunkin’s media agency Publicis, which was hired to plan and purchase media more than two years ago.
Inspire announced in early August that it was conducting a review of its national media agencies and inviting incumbents to participate in the process. It reached out to Jones Lundin Beals + Partners to help with this search.
The company was looking for a primary agency partner to work with its in-house media team to “provide strategies and tactics that work together to benefit brands.”
“As a multi-brand company, we see the opportunity to better align our media approach to customer-oriented targeting, digital business and CRM, while at the same time optimizing media delivery and impact. This review of our role as a media agency will help improve our competitive and innovative edge, ”said Brian Pruitt, Inspire’s vice president of media strategy and planning, in a statement at the time.
According to a spokesman for the restaurant group, the media agency is currently under review. Regarding the Dunkin ‘purchase, Inspire is making no further comment as the focus is on closing the deal, the spokesman added. Dunkin ‘also declined to comment.
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