Dive Brief:
- Shipley Do-Nuts, a 375-unit doughnut chain, has been sold by owner Peak Rock Capital to Levine Leichtman Capital Partners for an undisclosed sum, Peak Rock said in a Monday press release.
- Peak Rock acquired Shipley Do-Nuts in early 2021 and sped up the brand’s growth, achieving significant unit count expansion and 18 consecutive quarters of same-store sales growth, according to the press release.
- Levine Leichtman has a track record of quickly growing its restaurant brands and spinning them off on favorable terms. The firm sold Tropical Smoothie Cafe to Blackstone for a reported $2 billion last year, after adding nearly 500 stores to its system.
Dive Insight:
Peak Rock claimed credit for a number of changes at Shipley, including “expanding in multiple geographies, developing new products, launching a marketing cooperative with franchisees, and developing a new corporate headquarters and R&D lab.”
In addition to those initiatives, Shipley launched a rewards program in 2023. At the time of the national launch, the brand said members at pilot locations spent about 60% more than non-members. Membership in the loyalty program grew 50% last year.
Shipley CEO Flynn Dekker, who joined the chain from Bonchon in 2023, said Peak Rock’s backing has been key in growing the brand and that Shipley is planning more growth under Levine Leichtman.
When Peak Rock acquired the chain, Shipley had over 300 units across nine states. At the start of 2023, Shipley’s store count was 337 units, according to its franchise disclosure document. It is now at about 375, per the press release announcing the sale. The brand, which is now in 14 states, expects to open over 40 units this year and has a pipeline of over 200 units, according to a separate press release.
The brand’s franchise disclosure document reveals a divergence in performance between its nine company-operated stores and its franchised base. The average gross sales for company-owned Shipley locations is roughly $1.47 million, while franchised units post about $930,000 in gross sales on average. By contrast, Dunkin’s average unit volume last year was about $1.3 million according to its FDD, meaning Shipley may have a ways to go in improving unit economics.
Levine Leichtman’s acquisition of the mid-sized doughnut brand is the latest in a blitz of restaurant merger-and-acquisition activity in recent months. Within the last two weeks, Brix Holdings was acquired by a franchisee of its flagship brand Friendly’s, and SPB Hospitality sold Old Chicago Pizza. Last month, Darden said it was considering a sale of Bahama Breeze, after closing a major chunk of the brand’s system; Krispy Kreme parted ways with its remaining Insomnia Cookies stake for $75 million; and Dave’s Hot Chicken sold itself to Roark Capital.
