PE-backed coffee and donuts giant Dunkin’ Brands is expanding despite bankruptcies at regional franchisees

Kelly Holman interviews Duknin’ Brands CEO Nigel Travis at (copy of article here).

She writes: one of the nation’s larger restaurants have been felled by the economic downturn, leaving some with little options other than to file bankruptcy. But don’t tell that to Dunkin’ Brands Inc., the parent company of the Dunkin’ Donuts chain and portfolio holding of private-equity firms Bain Capital Partners LLC, Carlyle Group and Thomas H. Lee Partners.

It’s true that Dunkin’, which also owns the Baskin-Robbins ice cream chain, is starting to see bankruptcies mount among its regional franchises in the U.S. For example, its Greer, N.C.-based operator of 56 Dunkin’ Donuts stores — Kainos Partners Holding Company LLC — filed Chapter 11 on Monday, joining two other franchisees that declared bankruptcy in Florida and Tennessee, respectively.

Officials from Bain, Carlyle and THL referred comments about the company’s performance to Dunkin’, which doesn’t publicly disclose its cash flow or debt figures.

Nigel Travis, chief executive of Dunkin’ Brands, isn’t discouraged about the company’s prospects in light of the bankruptcies. “We feel that considering the economic climate we’re doing pretty well. Even though in some of the markets there have been some economic issues, I’m optimistic,” he told IDD in an interview.

Travis has reasons to be optimistic.

Dunkin’ opened its 15,000th store in Raleigh, N.C., in June along with 15 other stores in eight countries. Last year, it generated a 5% increase in sales, to $6.9 billion, from 8,835 Dunkin’ Donuts and 6,013 Baskin-Robbins stores spread between the U.S. and 44 countries.

Travis’ upbeat sentiment is also based on a recent trip to several Dunkin’ store locations in the Midwestern cities of Cincinnati, Indianapolis and Detroit, where operators in the economically battered areas left the CEO feeling positive. “Customers were reacting well, [and] the franchisees seem to be re-energized,” he says.

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