Arby’s Owner Bets on Fast Food With Dunkin’ Buy

The $11.3 billion deal will put Dunkin' under the same roof as Inspire Brands' Arby's, Buffalo Wild Wings, Sonic Drive-In, and Jimmy John's chains.
Matthew HellerNovember 2, 2020

In a major bet on quick-service restaurants, the owner of Arby’s is beefing up its lineup by acquiring the parent of Dunkin’ coffee shops and Baskin-Robbins ice cream stores for $11.3 billion.

The sale of Dunkin’ Brands will bring its two restaurant chains under the same roof as Inspire Brands’ Arby’s, Buffalo Wild Wings, Sonic Drive-In, and Jimmy John’s chains, creating the second-largest restaurant operator in the U.S. by domestic sales after McDonald’s.

Inspire, which is backed by private equity firm Roark Capital, agreed to pay $106.50 a share for Dunkin’, a 20% premium to the undisturbed closing price on Oct. 23, and assume about $2.5 billion in debt. The deal will more than double Inspire’s footprint, adding 12,700 Dunkin’ and 7,900 Baskin-Robbins outlets.

“Dunkin’ and Baskin-Robbins are category leaders with more than 70 years of rich heritage, and together they are two of the most iconic restaurant brands in the world,” Inspire CEO Paul Brown said in a news release.

While the coronavirus pandemic has ravaged the restaurant industry, fast-food restaurants, as The New York Times reports, “have held up better than full-service restaurants, as takeout and drive-through options have proved to be more appealing than long meals in a room full of strangers.”

Dunkin’ has drive-through windows in about 70% of its restaurants and has been investing in digital-ordering tools to promote “high-frequency, low-touch” service. The chain, which dropped “Donuts” from its name last year, now generates more than half of its sales from drinks.

Brown believes consumers will get back to their old routines after the pandemic is over. “There’s an opportunity for the right kind of brand doing the right thing to actually take advantage when those habits are rebuilt,” he told The Wall Street Journal.

Dunkin’ reported that U.S. same-store sales increased 1% in the quarter ended in September. The chain’s strength is in the Northeast but it has set a goal of growing to more than 17,000 locations.

“The ability to expand on the West Coast is essential,” said Peter Saleh, an analyst at brokerage firm BTIG.

(Photo by Aimee Dilger/SOPA Images/LightRocket via Getty Images)