Industry News | October 31, 2017 | By Danny Klein | QSR Exclusive Brief

Is Dunkin' About to be Sold to Panera's Owner?

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Is JAB Holding Co. about to send another shockwave through quick service? Apparently the stock market thinks it’s a real possibility, as Dunkin’ Brands Group Inc. watched its shares hit near record highs Monday following speculation it would be sold to the Luxembourg-based company. Dunkin’s stock surged 8 percent following rumors JAB planned to add the brand to its growing portfolio, which recently included the $7.5 billion purchase of Panera Bread—a deal that completed in mid-July. In the past 19 months, JAB has closed on Panera, Krispy Kreme ($1.3 billion), and Keurig Green Mountain ($14.1 billion).

Buying Dunkin’ would cost JAB more than Panera, which represented the second largest acquisition in the history of the restaurant industry at the time.

Bloomberg, based on 12-month trailing figures with a 15 percent premium added to Dunkin’s stock, sees the deal as a potentially $8.2 billion one. There are some less logistical pieces that seem to connect as well.

JAB is quickly becoming a titan in the coffee world. Once known for its luxury holdings, the company shifted its stable with purchases such as Stumptown Coffee Roasters and Caribou Coffee. It also owns Einstein Bros. Naturally, tacking on Dunkin’ would progress JAB deeper into the arena Starbucks currently fronts.

Dunkin’ Donuts recently posted third-quarter results that showed some progress. U.S. same-store sales grew 0.6 percent and revenue boosted 8.3 percent. Dunkin’ also opened 137 new restaurants around the world in the quarter, including 67 in the U.S.

However, its 2017 revenue growth, as Bloomberg points out, is poised to drop below 3 percent for only the second time since 2009. Baskin-Robbins posted its fifth straight quarter of negative U.S. same-store sales, aiding in the concern.

Additionally, Dunkin’ shocked many by announcing plans to invest $100 million on digital innovations and store design in the next two years. If Dunkin’ is brought into JAB’s portfolio, those costs would hardly scrape the company’s bottom line. Not to mention JAB could share its operational processes from brands like Panera with Dunkin’.

Missing from this conversation, of course, is what JAB actually wants to do. The company, which also has controlling stakes in Coty, Calvin Klein fragrances, and Jimmy Choo, keeps its business notoriously close to the vest. The German company, led by the Reimann family, started in 1823 and is a global private investment firm with two investment vehicles: JAB Holding and JAB Consumer Fund. Read more about JAB and its history here.