Inspire Bets $11.3B That Its Brands Can Run On Dunkin’

After first surfacing in reports about a week ago, the rumors it seems are true.  Private equity-backed Inspire Brands will be buying Dunkin’ Donuts and bringing it private for a whopping $11.3 billion. That represents a purchase price of  $106.50 a share, a 20 percent premium on the stock’s closing price on Oct. 23 before rumors of the looming deal began swirling in the ether.

Paul Brown, co-founder and chief executive officer of Inspire Brands, said in a statement announcing the deal that the acquisition would bring “two (Baskin Robbins comes as part of the Dunkin’ package)  of the most iconic restaurant brands in the world” in the Inspire Portfolio — not to mention their international operations, licenses and 15 million loyalty members.

Dunkin’ Brands CEO Dave Hoffmann noted the acquisition was a testament to the progress Dunkin’s had made and maintained during the global pandemic leaving the brand “stronger than ever.”

“We are excited to bring meaningful value to shareholders who have been with us on this journey and believe that Inspire Brands, a preeminent operator of franchised restaurant concepts, will continue to drive growth for our franchisees while remaining true to all that is unique and special about the Dunkin’ and Baskin-Robbins brands,” Hoffman noted in a statement.

Remain true, and perhaps find a way to share a bit of what remains unique about Dunkin Brands with the large — and recently always expanding — number of restaurant brands in Inspire’s stable, particularly when it comes to leveraging mobile tech to build a better customer experience and loyalty offerings.

Inspire’s Many Brands

Backed by Atlanta-based private equity firm Roark Capital, Inspire was created in 2018 due to the merger between fast-food chain Arby’s and quick-service restaurant (QSR) wing chain Buffalo Wild Wings. Since that start two years ago, Inspire has been on a steady path of growing out its brand portfolio, purchasing fast food car-hop chain Sonic in late 2018 and Jimmy John’s Sandwich shop about a year later in September 2019.

What sets the Dunkin’ acquisition apart from its previous purchases in, frankly, how well Dunkin’ is already doing. Inspire has thus far in its history has more or less focused its attention on established brands that were struggling and in need of a turn-around. Dunkin’ does not fit that pattern, even though by accounts it ought to, given the pandemic’s incredibly negative effect on fast-food breakfast sellers.

Consumers not commuting to work daily don’t stop to buy their breakfast or morning cup of joe — a difficulty that has had a dragging effect on rivals Starbucks and McDonald’s in 2020. By comparison, Dunkin’ both posted a profit and bit analyst predictions for revenue when it reported earnings on Oct. 29 and has seen its stock price up 32 percent in 2020 (only 12 percent of which was tacked on since going private entered the rumor mill).

KeyBanc analyst Eric Gonzalez said in a recent note, according to Bloomberg, that given Inspire’s historical penchant for brands in need of a turnaround, the move may look surprising. However, Dunkin’ is an undeniably desirable target.

“The market is just beginning to credit Dunkin’ for the capabilities it has put in place that have positioned it to achieve sustainable growth,” Gonzales wrote.

Capabilities, it stands to reason, that Inspire might like to move through its collection of restaurant brands to better serve customers across markets.

Leveraging Loyalty And Moving Mobile

Apart from adding 12,500 Dunkin locations, 7,000 Baskin Robbins worldwide and $1.4 billion (as of 2019) in annual sales — Inspire also gains access to Dunkin’s mobile ordering and digital loyalty program, which, since their dual launch in 2014 have been powerful tools to bring consumers to the brand — and keep them coming back.

As Stephanie Meltzer-Paul, Dunkin’s Vice President of digital and loyalty marketing, noted in a  conversation with PYMNTS, mobile has become a killer tool over the last several years in providing a faster, smoother experience to its existing and expanding base of loyal members to enhance those relationships.

“[For] most of our members … it’s very habitual. They love to order from their favorites,” Meltzer-Paul said. “They’re coming in every day and tend to buy the same things, but it is still all about providing choice.”

Something that Arby’s could use — as it lacks mobile order-ahead service and its loyalty program isn’t well known and is highly limited. The Buffalo Wild Wings brand, on the other hand, launched its “Blazin Rewards” loyalty program back in 2017.  Additionally, BWW has spent much of 2020 optimizing its locations for carryout food orders — as its primary sitdown dining status has been severely interrupted by the COVID-19 pandemic.

“Buffalo Wild Wings opened its first ‘GO’ model restaurant in May 2020,” Inspire’s CEO Paul Brown told Kiosk Marketplace in an email interview. “Unique to the ‘GO’ format, guests who order ahead will be able to pick up their meal from heated takeout lockers, providing a contactless and hassle-free experience.”

That, he went on to note, goes to Inspire’s bigger vision for  2020 to build “a robust digital infrastructure that enables guests to engage when, where and how they want with the brand.”

Dunkin’ — which comes prepacked with a fairly robust digital infrastructure all its own and with regular loyalty users trailing behind it — seems the ideal add-on for Inspire’s emerging goal to make all of its brands more multichannel as it strives to evolve to meeting diners’ evolving tastes.