Inspire Brands’s acquisition of Dunkin & # 39; Brands announced last week for approximately $ 11.3 billion 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 & # 39; s Restaurant Group, 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 Jimmy Johns in September 2019 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 expand the number of restaurants from 11,000 to more than 31,600 worldwide.
There are currently more than 12,500 Dunkin restaurants and nearly 8,000 Baskin-Robbins restaurants worldwide. Both Dunkin & # 39; 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 due to the pandemic, including coffee chains, Dunkin & # 39; managed to land 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’ focus has been on improving franchisee profitability and strengthening its heritage as a beverage-led brand on the go,” wrote Gonzalez in one Report.
He praised Dunkin's performance over the past few months and owed the company's success to initiatives such as the simplification of the menu, new espresso machines, new drive-thru tools and improvements to the digital apps.
According to Andrew Strelzik, restaurant analyst at equity research firm BMO Capital Markets, as a private company, Dunkin may 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 review is currently underway by the media agency. With regard to 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.
Don't miss that Brandweek Sports Marketing Summit and Upfronts, a virtual live experience 16.-19. November. Get insights from leading athletes, how they overcame a year of surprises and changes, and what to expect in the year ahead. To register.