Dunkin' Confirms Acquisition Talks with Inspire Brands

Dunkin’ Brands Group, the parent company of Dunkin’ and Baskin-Robbins, has confirmed that it has held preliminary discussions to be acquired by Inspire Brands.

Dunkin’ Brands Group, a franchisor of quick-service restaurants serving hot and cold coffee and baked goods, said there is no certainty that any agreement will be reached. At the end of the second quarter of fiscal year 2020, its 100-percent franchised business model included more than 13,000 Dunkin’ restaurants and approximately 8,000 Baskin-Robbins restaurants. Overall, it has more than 21,000 points of distribution in more than 60 countries worldwide

The company said it would not comment further on the discussion with Inspire unless and until a transaction is agreed or discussions are terminated.

Chris Pappas, associate director with Marcus & Millichap’s Net Lease Division, tells GlobeSt.com that the executives at Dunkin’ have made several moves to make the brand stronger, including dropping the Donuts their name to compete more directly with Starbucks, investing heavily in their online and app capabilities in 2016 by launching On-the-Go Mobile Ordering and introducing a 2,200 square-foot store concept with double-drive throughs in 2018.

“They were dedicating one of the driver throughs for online orders,” Pappas says. “People could grab their drink and go. And at the same time, they announced that 75% of their new stores were going to have drive-throughs moving forward.”

Once COVID-19 hit, these moves paid off even more. “They were fortunate in that they were doing all these things several years ago that ended up being optimal for this pandemic environment,” Pappas says. “Obviously, they weren’t planning for a pandemic, but everything that they were doing was putting them in a position to thrive in this environment.”

Dunkin’ is one of many retailers and restaurants that have been migrating to standalone stores, according to Randy Blankstein, president of The Boulder Group.

“Net lease benefits because people are looking for free-standing buildings,” Blankstein told GlobeSt in an earlier interview. “You’re seeing Panera, Starbucks, Dunkin Donuts and those kinds of brands leave strip centers they don’t like and find their own buildings.”

Regardless of whether Dunkin’ is sold, Pappas thinks it will still be regarded as a strong tenant. 

“It’s going to be a very desirable asset,” Pappas says. “Generally, the price points on the Dunkin stores are small. So you have a broader base of buyers interested in acquiring that kind of asset. Moving forward, the drive-through is going to be critical for net lease investors and how secure they feel because those stores will be able to remain open in a healthcare crisis or a pandemic. And, they’re generally located in areas with favorable demographics.”