Dunkin’ Donuts is heading north to Canada as the retail coffee chain looks to expand its operations ahead of a blockbuster initial public offering (IPO) expected later this year.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Privately held Canadian restaurant operator Foodtastic says it has signed a master franchising agreement with Dunkin’ Donuts owner Inspire Brands that will bring the iconic U.S. coffee and donut chain north of the border.
Foodtastic says that it plans to open hundreds of Dunkin Donut locations across Canada in coming years, with the first Dunkin’ outlet likely to debut in the second half of this year. The move will put Dunkin’ Donuts in direct competition with coffee chains already established in Canada, such as Starbucks (SBUX), McDonald’s (MCD), and Tim Hortons parent company Restaurant Brands International (QSR).
Upcoming IPO
This is not Dunkin’ Donuts first foray into Canada. The chain previously had hundreds of locations across the Great White North, but left the country in 2018 after a group of Quebec franchisees sued Dunkin’ for not sufficiently promoting the brand.
Founded in 1950, Dunkin’ Donuts today is owned by Inspire Brands, a U.S. restaurant owner/operator that is also the parent company of Arby’s, Buffalo Wild Wings, Sonic Drive-In, and Baskin-Robbins. The move to bring Dunkin’ Donuts back to Canada comes as Inspire Brands prepares for an initial public offering (IPO) later this year.
Inspire Brands has confidentially filed to hold an IPO later this year. The company is seeking to raise about $2 billion at a valuation of $20 billion. Proceeds from the IPO are expected to help the company pay down debt it accumulated from several restaurant chain purchases in recent years. At that valuation, Inspire Brands would be the largest IPO of a restaurant chain in more than a decade, say analysts.
Is SBUX Stock a Buy?
As Inspire Brands is not yet public, let’s look at the stock of rival Starbucks. SBUX stock has a consensus Moderate Buy rating among 30 Wall Street analysts. That rating is based on 16 Buy, 12 Hold, and two Sell recommendations issued in the last three months. The average SBUX price target of $107.96 implies 2% upside from current levels.
