A Dunkin' Donuts store in Burbank, Calif. The coffee and donut chain is returning to Canada through a partnership with Foodtastic.Justin Sullivan/Getty Images
The slogan is “America runs on Dunkin’,” but soon, a Montreal restaurant franchiser is hoping Canada will fuel up on the chain’s coffee, too.
On Tuesday, Foodtastic Inc. announced that it has signed a master franchise agreement with Dunkin’ owner Inspire Brands Inc., giving it the exclusive right to run the restaurants in Canada.
It is not the first time the American coffee chain has attempted to grow in the Canadian market. Dunkin’ Donuts had hundreds of locations north of the border before it shut down in 2018. Its franchisees in Quebec had won a lawsuit two years earlier, accusing the company of failing to promote the brand aggressively enough to compete with Tim Hortons.
“It’s a totally different company that’s going to be coming in” this time around, Foodtastic founder and chief executive officer Peter Mammas said in an interview.
Canadian restaurant operator Foodtastic says it will bring popular U.S. café chain Dunkin' north of the border again. Foodtastic CEO Peter Mammas shares his plans for the brand’s Canadian expansion.
The Canadian Press
Founded in 1950, Dunkin’ has grown into the largest coffee and donut chain in the U.S., and currently has more than 14,200 locations around the world in almost 40 markets. (In an effort to modernize the brand, it dropped “Donuts” from the name in 2018.)
Remembering the chain’s unsuccessful foray into Canada in the past, Mr. Mammas was surprised when his daughter picked up a Dunkin’ habit while attending medical school in Boston.
“She goes to me, ‘Dad, Dunkin’ is so much better. It’s got everything. It’s got the protein drinks. It’s got the refreshers. It’s got the breakfast sandwiches,’” he recalled. “She forced me to go try it.”
Since leaving Canada, Dunkin’ has been expanding under new ownership: Atlanta-based Inspire Brands, which is backed by private-equity firm Roark Capital, bought the Dunkin’ and Baskin-Robbins chains in a US$11.3-billion deal in 2020. Dunkin’ has been expanding its menu and has tapped celebrities such as Sabrina Carpenter, Ben Affleck and Ice Spice to star in its ads.
“They’ve done a great job revitalizing the brand,” Mr. Mammas said.
Inspire also owns other restaurant brands such as Arby’s, Sonic Drive-In and Buffalo Wild Wings. Last week, the holding company said it had confidentially filed for an initial public offering in the United States. Bloomberg reported that Inspire will be seeking a valuation of roughly US$20-billion if it goes public.
Foodtastic previously partnered with Inspire to expand the Jimmy John’s chain in Canada and has opened more than a dozen of the sandwich restaurants so far.
The company plans to open its first Canadian Dunkin’ location in late 2026 or early 2027, and will initially focus on the Toronto and Montreal areas, Mr. Mammas said. Within a year, his goal is to begin opening one new Dunkin’ each week, with hundreds of stores planned in the coming years.
Foodtastic CEO Peter Mammas makes a coffee at a Second Cup in Pointe-Claire, Que., last year. His company has more than 1,200 restaurants in Canada spanning 27 brands.Christopher Katsarov/The Canadian Press
The company will be going up against some entrenched competitors, with major fast-food brands such as Tim Hortons and McDonald’s MCD-N vying hard for customers.
For example, Tim Hortons, which has nearly 4,000 restaurants in Canada, has been growing sales and has announced plans to open dozens of new restaurants across the country this year alone.
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“There’s always room for new brands to enter the market, in any space, even one as crowded as coffee,” said Vince Sgabellone, a food service industry analyst with research firm Circana. “And if you want to launch a new coffee brand, Canada is the place to do it, because we do love our coffee – more than just about any country in the world.”
Canadians consumed roughly three billion cups of coffee purchased at restaurants each year, though volumes have been roughly flat in the last couple of years, according to Circana.
The morning meal is the largest time of day for restaurant sales, representing 34 per cent of fast-food visits and roughly $11-billion in annual sales for quick-service restaurants, Circana data show.
As a franchiser, Foodtastic has more than 1,200 restaurants in Canada spanning 27 brands, including Second Cup, Quesada, Freshii, Pita Pit, Rotisseries Benny and others. As it has done with other chains, it will begin by opening corporate-owned Dunkin’ locations – to work out the “hiccups,” Mr. Mammas said – before expanding through franchisee deals.
But the expansion is also taking place in a muted consumer market for fast-food companies. Last week, McDonald’s CEO Chris Kempczinski said that higher gas prices spurred by the Iran war “disproportionately impact low-income consumers,” who are pulling back on spending – putting pressure on quick-service restaurants. Other chains such as Shake Shack SHAK-N, Papa John’s PZZA-Q and Domino’s DPZ-N have also cited repercussions from the war as putting a damper on consumer demand.
“Definitely, we’re in a down period right now,” Mr. Mammas said, citing the proliferation of value-menu offers and other discounts as chains compete for customers. But he added that slower periods also present opportunities for securing better real estate to open new locations. “I’m sure when things get better, we’ll be well-positioned to take advantage of that.”
Editor’s note: A previous version of this article incorrectly stated that Inspire Brands, backed by private-equity firm Roark Capital, bought the Dunkin’ and Baskin-Robbins chains in a US$8.8-billion deal in 2020. The deal was valued at US$11.3-billion.