This Jan. 22, 2018, file photo shows a Dunkin' Donuts logo on a shop in Mount Lebanon, Pa. The Massachusetts-based coffee and donuts empire is teaming with Post Consumer Brands to release two new breakfast cereals based on two of its most popular coffee drinks: Caramel Macchiato and Mocha Latte. The new cereals are expected to hit grocery shelves in late August 2020. (AP Photo/Gene J. Puskar, File)
The Dunkin’ doughnuts and coffee chain has confirmed it's held talks to be taken private by a private equity firm, sending its shares rocketing to an all-time high Monday.
Dunkin’ Brands Group said it’s in preliminary discussions with Inspire Brands, which also owns Arby’s and Jimmy John’s Sandwiches. In a prepared statement Sunday, Dunkin’ said it is not yet certain a deal would be reached and would not comment further.
Inspire Brands said it had no comment Monday.
Dunkin’ shares jumped $14.31, or 16.1% to close Monday at $103.10.
Dunkin’, based in Canton, Massachusetts, also owns the Baskin-Robbins ice cream chain. There are 13,000 Dunkin’ stores and 8,000 Baskin-Robbins outlets worldwide.
Both brands have significant history. Dunkin’ was founded in 1950 in Quincy, Massachusetts. Baskin-Robbins — known for its promise of 31 flavors — was founded in 1945 in Glendale, California.
But the global pandemic has hurt sales. Dunkin’ Brands revenue fell 20% in the second quarter, and the company said franchisees closed 200 restaurants permanently. Dunkin’ Brands reported full-year sales of $1.4 billion in 2019, up 4% from the previous year.
Atlanta's Inspire Brands, which was founded in 2018, is quickly placed itself among the largest restaurant groups in the U.S. It also owns the Buffalo Wild Wings and Sonic burger chains, and has annual sales of more than $14 billion.
Dunkin’ would give Inspire a spot in the breakfast category, which was the fastest-growing segment of the restaurant industry before the pandemic hit.
Inspire is part of the private equity company Roark Capital Group, also based in Atlanta. Roark also backs Focus Brands — the owner of Auntie Anne’s Pretzels and Cinnabon — and CKE Restaurants, which owns the Carl’s Jr. and Hardee’s burger chains.
7 Stocks That Will Help You Forget About the Fed
Normally when the Federal Reserve (i.e. the Fed) makes an announcement, the market reacts predictably. That’s due, in large part, to the nature of what the Fed normally announces. Will interest rates go up, down, or remain unchanged? And for their part, the markets have a pretty good idea what the Fed will do before they do it.
But the Fed’s announcement of August 26 was a little different. They talked briefly about interest rates (they’re staying really low for a long time). But they were more concerned about inflation. Well, the Fed is always concerned about inflation, but this time they really mean it. Basic economics says that low-interest rates should spur inflation.
However, the market has been defying conventional wisdom and the Fed is not getting the inflation they want. So the Fed has basically said that they’re letting inflation go rogue. If it goes above their target 2% rate, so be it. The Fed is done trying to hit a target.
At first, the markets cheered the news. Not only was the Fed not taking away the punch bowl, but they were also going to keep the low rate liquidity going for a long time!
But after a little while to digest things, investors are realizing they have to be grown-ups about this. And now investors are considering how to rebalance their portfolios for the remainder of 2020.
I don’t know about them, but if I were you I would target companies that have a high free cash flow (FCF). Whether it’s your personal finances or in evaluating a stock, cash flow is your friend.
When a corporation has high FCF, they have more strong growth in good markets and more flexibility during when the economy is weaker.
As institutional investors come back into the market, it’s time for you to reposition your portfolio for whatever comes next.
View the "7 Stocks That Will Help You Forget About the Fed".