25 June 2019 Americas/United States Equity Research Restaurants

Dunkin’ Brands Group, Inc. (DNKN) Rating UNDERPERFORM Price (21-Jun-19, US$) 79.54 INITIATION Target price (US$) 70.00 52-week price range (US$) 80.73 - 61.93 Shares Hot on Luke Warm Outlook; Initiate Market cap(US$ m) 6,574 Enterprise value (US$ m) 9,020 Underperform Target price is for 12 months.

Research Analysts ■ We initiate coverage of Dunkin’ Brands (DNKN) with an Underperform Lauren Silberman rating and $70 target price. At ~18.5x NTM EV/EBITDA (3-yr avg ~15.5x), 212 325 2720 DNKN trades near peak valuation despite ongoing traffic and SSS challenges [email protected] and lowered development targets. While we believe DNKN’s 100% franchised

business model warrants a premium to overall restaurants (~12x), its multiple has moved in-line with heavily franchised peers despite higher peer multiples driven by business model transformations. We see downside risk to shares against lower growth prospects and elevated valuation. ■ Traffic A Show-Me Story: Traffic has been negative for 12 consecutive quarters (-2.7% in 2018) and a reversal in trends seems unlikely NT against competitive headwinds. Mixed brand positioning makes Dunkin’ more susceptible to competition from high- and low-end peers. While initiatives around espresso, value, operations and digital are positives, we’re cautious on a sustainable improvement in SSS given recent trends, competitive backdrop and execution concerns. We model Dunkin’ US SSS of ~1.5% in 2019 and long-term, and relative to DNKN’s target for low-single-digit SSS. ■ Moderating Unit Growth: Following a 4.2% unit CAGR over the last five years, we expect growth of ~2.1% over the next four, or ~200 units per year (LT guide 200-250 units). Given a primary focus on improving SSS, competitive headwinds, reduced growth in core markets, cost pressures and increased capital needed for remodels, a more tempered unit growth strategy seems prudent. ■ Valuation: Our $70 target price is based on ~16x our NTM EBITDA in 12 months, a ~0.5x turn premium to DNKN’s three-year average given the run- up in valuations in the sector, though a discount to its current multiple of ~18.5x. Key risks: M&A, accelerating traffic and SSS, accelerating unit growth.

Share price performance Financial and valuation metrics

Year 12/18A 12/19E 12/20E 12/21E EPS (CS adj.) (US$) 2.90 2.98 3.16 3.39 Prev. EPS (US$) - - - - P/E rel. (%) 153.6 154.8 161.9 165.4 Revenue (US$ m) 1,321.6 1,379.5 1,425.6 1,472.1 EBITDA (US$ m) 454.5 482.6 501.2 520.1 OCFPS (US$) 3.17 3.32 3.58 3.83 P/OCF (x) 20.0 24.0 22.2 20.7 EV/EBITDA (current) 20.0 18.8 18.1 17.4 On 21-Jun-2019 the S&P 500 INDEX closed at 2950.46 Net debt (US$ m) 2,453 2,446 2,499 2,568 Daily Jun22, 2018 - Jun21, 2019, 06/22/18 = US$69.76 ROIC (%) 19.71 19.07 19.57 20.16

Quarterly EPS Q1 Q2 Q3 Q4 Number of shares (m) 82.65 IC (current, US$ m) 1,740.35 2018A 0.62 0.77 0.83 0.68 BV/share (Next Qtr., US$) -8.8 Dividend (current, US$) 1.50 2019E 0.67 0.82 0.81 0.68 Net debt (Next Qtr., US$ m) 2,513.0 2020E 0.70 0.87 0.86 0.73 Net debt/tot eq (Next Qtr.,%) -348.8

Source: Company data, Refinitiv, Credit Suisse estimates

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

25 June 2019

Dunkin’ Brands Group, Inc. (DNKN) Price (21 Jun 2019): US$79.54; Rating: UNDERPERFORM; Target Price: 70.00; Analyst: Lauren Silberman Income Statement 12/18A 12/19E 12/20E 12/21E Company Background Revenue (US$ m) 1,321.6 1,379.5 1,425.6 1,472.1 Dunkin' Brands Group is one of the world's leading franchisors of EBITDA (US$ m) 455 483 501 520 quick service restaurants with over 20,500 points of distribution Depr. & amort. (20) (20) (20) (21) globally across its two brands: Dunkin' Donuts and Baskin Robbins. EBIT (US$) 435 463 481 499 Net interest exp (122) (122) (122) (122) Blue/Grey Sky Scenario PBT (US$) 312 341 359 377 Income taxes (66) (94) (100) (105) Profit after tax 246 247 258 271 Net profit (US$) 246 247 258 271 Other NPAT adjustments 0 0 0 0 Cash Flow 12/18A 12/19E 12/20E 12/21E Cash flow from operations 269 275 292 306 CAPEX (52) (39) (32) (32) Free cashflow to the firm 217 235 260 274 Cash flow from investments (52) (40) (32) (32) Net share issue(/repurchase) (680) (110) (180) (200) Dividends paid (115) (123) (133) (144) Changes in Net Cash/Debt (490) 7 (53) (69) Balance Sheet (US$) 12/18A 12/19E 12/20E 12/21E Cash & cash equivalents 518 510 457 388 Account receivables 76 65 67 69 Other current assets 220 185 185 185 Total fixed assets 209 226 238 249 Investment securities - - - - Total assets 3,457 3,786 3,747 3,690 Total current liabilities 540 529 529 529 Shareholder equity (713) (691) (730) (786) Total liabilities and equity 3,457 3,786 3,747 3,690

Net debt 2,453 2,446 2,499 2,568 Our Blue Sky Scenario (US$) 85.00 Per share 12/18A 12/19E 12/20E 12/21E Our $85 Blue Sky scenario is based on the following assumptions in No. of shares (wtd avg) 85 83 82 80 2020: 1) Dunkin’ US SSS of 3%; 2) Unit growth of 3%; 3) operating CS adj. EPS 2.90 2.98 3.16 3.39 margin of ~55% (51.1% in 2018); and 4) EV/EBITDA multiple of Prev. EPS (US$) ~18.5x. Dividend (US$) 1.39 1.50 1.65 1.81 Free cash flow per share 2.56 2.84 3.19 3.43 Earnings 12/18A 12/19E 12/20E 12/21E Our Grey Sky Scenario (US$) 55.00 Sales growth (%) 3.6 4.4 3.3 3.3 Our $55 Grey Sky scenario is based on the following assumptions in EBIT growth (%) 5.7 6.5 3.9 3.8 2020: 1) Dunkin’ US SSS of approx. flat; 2) unit growth of ~1%; 3) Net profit growth (%) 29.2 0.1 4.7 5.1 operating margin of ~53%; and 4) EV/EBITDA multiple of ~15x. EPS growth (%) 40.2 2.7 6.3 7.3 EBITDA margin (%) 34.4 35.0 35.2 35.3 Share price performance EBIT margin (%) 32.9 33.5 33.7 33.9 Pretax margin (%) 23.6 24.7 25.1 25.6 Net margin (%) 18.6 17.9 18.1 18.4 Valuation 12/18A 12/19E 12/20E 12/21E EV/EBITDA (x) 20.0 18.8 18.1 17.4 P/E (x) 27.4 26.7 25.1 23.4 Returns 12/18A 12/19E 12/20E 12/21E ROIC (%) 19.7 19.1 19.6 20.2 Gearing 12/18A 12/19E 12/20E 12/21E Net debt/equity (%) (344.2) (354.1) (342.3) (326.6) Quarterly EPS Q1 Q2 Q3 Q4 2018A 0.62 0.77 0.83 0.68 2019E 0.67 0.82 0.81 0.68 2020E 0.70 0.87 0.86 0.73 On 21-Jun-2019 the S&P 500 INDEX closed at 2950.46 Daily Jun22, 2018 - Jun21, 2019, 06/22/18 = US$69.76

Source: Company data, Refinitiv, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 2 25 June 2019

Executive Summary We initiate coverage of Dunkin’ Brands (DNKN) with an Underperform rating and $70 target price. At ~18.5x NTM EV/EBITDA, DNKN trades near peak valuation despite ongoing traffic and SSS challenges and lowered development targets. While we believe DNKN’s 100% franchised business model warrants a premium to overall restaurants, its multiple has moved in-line with heavily franchised peers despite higher peer multiples driven by business model transformations. We see downside risk to shares against lower growth prospects and elevated valuation. Please refer to our views summarizing the Restaurants industry: US Restaurants Phone To Table: Digitizing Restaurants.

■ Dunkin’ US Traffic and SSS Likely Remain Sluggish: Dunkin’ US SSS have been sluggish in recent years, averaging 1.2% over the last five years, with largely negative traffic offset by increases in average check. Traffic was -2.7% in 2018 and has been consistently negative over the last three years, offset by price increases and some benefit from mix shift. Initiatives to improve trends through beverage positioning, better value messaging, digital and operational improvements have largely failed to gain traction. We believe DNKN faces heightened competitive pressure given mixed brand positioning as it competes against lower-end channels, QSRs increasing their coffee focus and traditional coffee peers. With limited conviction in traffic and SSS acceleration given recent trends, we model SSS relatively in-line with the five-year average (~1.5%). ■ Lower Unit Growth Expectations: Following a ~4.2% unit CAGR over the last five years, or ~350 units per year, we expect Dunkin’ to pursue a more moderate unit growth strategy going forward as it prioritizes SSS and traffic growth and looks to roll out the new remodel image across the system. We expect Dunkin’ US to grow ~200 new units per year over the next few years, translating to growth of ~2.1% per year. Our estimates are at the lower end of Dunkin’s guidance for 200-250 units per year through 2021, reflecting a challenging restaurant environment with heightened competition, still sluggish SSS and traffic trends, ongoing cost pressures and increased capital requirements as the system transitions to the NextGen image. Lower average unit volumes (AUVs) in markets outside of Dunkin’s core Northeast market, higher costs in these markets and lower cash-on-cash returns in recent years, and regionalized coffee concepts representing heightened competition contribute to our expectation for unit growth at the low end of Dunkin’s target. ■ Unlikely to Be Next M&A Target: Dunkin’ has been the subject of press speculation as a potential acquisition candidate for several years given DNKN’s attractive business model and growth opportunities, with major transactions in the global coffee market from companies like JAB as the basis for the focus in the press. Based on DNKN’s current valuation, management changes and CPG profit-sharing arrangement, we don’t believe there is a high likelihood of a takeover. ■ Credit Suisse Estimates: We model top-line growth of 3.6% over the next four years (DNKN target low-to-mid-single digits), enabling operating profit growth of ~4.5% over the same time period. Together with share repurchases representing ~2% of market cap per year, we model EPS growth of ~5.8% over the next four years. This compares to consensus expectations for EPS growth of ~7% through 2022. We estimate 100bps of SSS could contribute ~2% to EPS, likely the greatest source of upside/downside to numbers and multiple. ■ Valuation: Our $70 target price is based on ~16x our NTM EBITDA in 12 months, implying a P/E multiple of ~22x our NTM EPS in 12 months. Our ~16x EBITDA multiple is a ~0.5x premium to DNKN’s three-year average multiple of ~15.5x as valuations in the sector have moved up. DNKN shares trade at ~18.5x EBITDA. DNKN’s multiple

Dunkin’ Brands Group, Inc. (DNKN) 3 25 June 2019

has expanded in-line with heavily franchised restaurant peers over the last three years, despite franchised restaurant peer business model transformations over the last few years justifying higher multiples (i.e., YUM, MCD, WEN). ■ Risks: Primary risks include: (1) M&A, as DNKN has been cited in the press as a potential acquisition target and often moves on news of restaurant M&A. Based on recent deals in the restaurant space, if DNKN were to be acquired it could be at a premium to its current share price and valuation multiple. (2) Accelerating traffic and SSS: An acceleration in traffic to near positive/positive territory and conviction in sustainable low-single-digit SSS growth would support upside to numbers. (3) Accelerating unit growth: A reacceleration in unit growth from tempered levels would support upside to numbers.

Dunkin’ Brands Group, Inc. (DNKN) 4 25 June 2019

Key Charts

Figure 2: US unit growth has decelerated more Figure 1: Dunkin’ US SSS have been sluggish in recently, and we expect lower growth going forward recent quarters and we expect relatively similar as Dunkin’ looks to improve execution in its performance near term. existing base.

14.0% 450 12.0% 400 10.0% 350 8.0% 300 6.0% 250 4.0% 200

Dunkin' Dunkin' US SSS 2.0% 150 100

0.0% Dunkin' Dunkin' US New Net Units 50 -2.0% -

2015 2016 2017 2018 2019E 2020E 2021E 2022E

1Q11

3Q11

1Q12

3Q12

1Q13

3Q13

1Q14

3Q14

1Q15

3Q15

1Q16

3Q16

1Q17

3Q17

1Q18

3Q18

1Q19

3Q19E

1Q20E 3Q20E 1-yr SSS 2-yr SSS CSe Consensus Actual DNKN Target (200-250)

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Figure 3: Lower AUVs and margins in markets outside of the Northeast could weigh on Figure 4: At ~18.5x NTM EV/EBITDA, DNKN is development goals. trading near peak valuation.

$1,200 $1,108 20.0x $1,031 19.0x $957 $1,000 $913 18.0x 17.0x $800 16.0x 15.0x $600 $512

$000s $420 $416 14.0x

$398 EV/EBITDA $400 13.0x 12.0x $200 11.0x 10.0x $0

AUVs Gross Margins

Apr-17

Apr-18

Apr-19

Oct-16

Oct-17

Oct-18

Jun-16

Jun-17

Jun-18

Jun-19

Feb-17

Feb-18

Feb-19

Aug-16

Aug-17

Aug-18

Dec-16 Dec-17 Northeast Midwest South West Average Dec-18 NTM EV/EBITDA 3-yr Avg +1 Std Dev -1 Std Dev

Source: Franchise Disclosure Documents, Credit Suisse estimates Source: FactSet

Dunkin’ Brands Group, Inc. (DNKN) 5 25 June 2019

Figure 5: DNKN’s EV/EBITDA multiple is ~2.5x higher than its 3-yr avg, as DNKN’ exhibited multiple expansion in-line with other heavily franchised Figure 6: Business model transformations have peers which have improved their business models contributed to multiple expansion among heavily over the last few years. franchised peers over the last three years.

25x Current Multiple Premium (Discount) Select Drivers of Multiple Over 3-yr Period 3-yr Avg Multiple - YUMC spin (10/31/16) YUM 20x - Transition to 98% franchise mix - Transition to ~93% franchise mix (to ~95% over MCD 15x time) DNKN N/A 10x DPZ - Ongoing global momentum & share gains

NTM NTM EV/EBITDA 5x WEN - Transition to 95% franchised business mix

0x - Divestiture of Qdoba (complete March 2018) JACK Average YUM MCD DNKN DPZ WEN JACK QSR - Transition to ~94% franchise mix Franchised Heavily Franchised Companies QSR - Acquired Popeyes Peers Source: FactSet, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 6 25 June 2019

What is the Dunkin’ US SSS outlook? Credit Suisse View Dunkin’ US SSS have been sluggish in recent years, averaging 1.2% over the last five years, with largely negative traffic offset by increases in average check. Dunkin’s strategic plan (Blueprint for Growth) to reinvigorate traffic includes an increased focus on beverages, digital and national value. But an inflection in trends is likely to take time given increased competitive pressures from coffee peers, convenience stores and QSR players. We expect traffic to remain challenged near term, with sequential improvement over time. We estimate SSS of 1.6% in 2019 and ~1.5% long term, relative to DNKN’s long-term target of low-single digits. Traffic was -2.7% in 2018 and has been consistently negative over the last three years, offset by price increases and some benefit from mix shift. Initiatives to improve trends through beverage positioning, better value messaging, digital and operational improvements have largely failed to gain traction. We believe DNKN faces heightened competitive pressure given mixed brand positioning as it competes against lower-end channels, QSRs increasing their coffee focus and traditional coffee peers. With limited conviction in traffic and SSS acceleration given recent trends, we model SSS relatively in- line with the five-year average. Consensus Expectations Consensus is modeling Dunkin’ US SSS of ~1.7% in 2019, including traffic of -1% and average check of 2.7%. Long term, consensus expectations are for SSS of ~1.7%, including a return to positive traffic in 2021. Strategic plan to drive traffic improvement Sales and traffic trends have been sluggish in recent years against a more competitive backdrop and company-specific challenges. Over the last two years, Dunkin’ has implemented a strategic plan to better address brand positioning with a focus on beverages, national value and digital. We believe a combination of initiatives should help drive improvement in SSS and traffic trends over time, but such is likely to take time. Drivers of near- and long-term SSS growth include: 1) greater focus on national value, 2) enhanced product platforms (i.e., espresso), 3) contribution from digital initiatives, 4) improved operations, and 5) benefit from NextGen remodels. We expect sequential SSS and traffic improvement over time, and estimate Dunkin’ US SSS of 1.6% in 2019 and ~1.5% long-term, in-line with DNKN’s long-term target of low- single-digit SSS growth. Consensus models SSS of ~1.7% in 2019 and ~1.7% long term.

Figure 8: We expect SSS of 1.6% in 2019 and ~1.5% Figure 7: Dunkin’ US SSS have averaged 1.2% over longer term, relatively in-line with consensus and the last five years, largely driven by average check. DNKN’s long-term, low-single-digit target. 5.0% 4.5% 4.0% 4.0% 3.5% 3.0% 3.0% 2.0% 2.5% 1.0% 2.0%

0.0% 1.5% Dunkin' Dunkin' US SSS -1.0% 1.0% Dunkin' Dunkin' US SSS 0.5% -2.0% 0.0% -3.0%

-4.0%

2Q19E 3Q19E 4Q19E 1Q20E 2Q20E 3Q20E 4Q20E 1Q21E 2Q21E 3Q21E 4Q21E 1Q22E 2Q22E 3Q22E 4Q22E

CSe 1-yr SSS Consensus 1-yr SSS

1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 CSe 2-yr SSS Consensus 2-yr SSS Traffic Price Mix SSS

Source: Company data, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 7 25 June 2019

Better value messaging improves brand positioning Dunkin’s recent focus on enhanced value messaging through national value platforms should better position the brand to more effectively compete with lower-end channels and QSR peers. We expect the brand to lead with food through its Go2s platform offered all day, complemented by beverage value in the afternoon. Currently, Dunkin’ is offering three sandwich bundle options at the $2, $4 and $5 price ranges, and $2 beverage offer from 2- 6PM (beverage changes every ~6 weeks). In 1Q19, Dunkin’ offered the Go2s platform featuring three sandwich bundle options at the $2, $4 and $5 price ranges. The value platform delivered strong incremental sales and traffic in the quarter. In 2Q18, Dunkin’ ran a similar sandwich platform (priced at $2, $3 and $5) and a beverage variation (priced $3, $4 and $5). In 3Q18, Dunkin’ also ran the Dunkin’ Run national value platform, a $2 snacking menu aimed at revitalizing the afternoon daypart. We view national value platforms as a tool to improve consistency across the Dunkin’ system and improve the effectiveness of its value messaging. In addition, regional value offers will still be used to supplement national value platforms. Based on company commentary, the sandwich Go2s platform generates ~75% beverage attachment, supporting average checks while still providing good value and limiting core beverage discounting. With higher prices than C-stores/QSR peers and lower-quality perceptions than some third-wave coffee peers, Dunkin’ often competes on both the premium and value sides of the spectrum. We believe Dunkin’s shift to better communicate value messaging improves price competition from convenience stores and QSR peers. Digital platform to evolve over time The coffee segment has implemented digital capabilities ahead of the overall restaurant sector. While Dunkin’ has had a digital app, loyalty program and mobile order ahead, the brand has lagged competitors, and utilization rates reflect that. We believe Dunkin’ has been less effective in communicating the value of its digital ecosystem in terms of convenience and benefits of its loyalty program (which is the most lucrative among peers). The implementation of a tender agnostic system should help unlock incremental downloads and members, though the brand’s capabilities and ability to target/segment customers seems limited.

Figure 10: Similarly, Starbucks has grown its loyalty Figure 9: Dunkin’ mobile order ahead has grown at program at a faster rate relative to Dunkin’, with a much slower rate than Starbucks since launching. both requiring customers load money onto cards.

16.0% Mobile Order Launch 15% 45% 41% 14% 40% 14.0% Dunkin': 2Q16 40% 37% Starbucks: 3Q15 (SBUX F4Q15) 34% 35% 12.0% 30% 10% 30% 27% 10.0% 24% 25% 8.0% 6% 20% 6.0%

% Transactions 4% 4% 15% 11% 12% 12%

4.0% 3% Loyalty as % of Sales 10% 9% 2% 6% 2.0% 5% 3% 0.0% 0% T-0 T-1 T-2 T-3 Current 2013 2014 2015 2016 2017 2018 Current

Dunkin On-the-Go Starbucks Mobile Order & Pay Dunkin' Starbucks

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: Dunkin’ T-3 is the same as Dunkin’ Current.

Dunkin’ Brands Group, Inc. (DNKN) 8 25 June 2019

DD Perks Loyalty Platform Dunkin’ has one of the largest digital platforms in restaurants, with ~10.6MM DD Perks loyalty members representing ~12% of US sales. Perks members tend to 1) spend more and increase frequency relative to before joining the program, and 2) spend more and have higher frequency than non-perks members, highlighting benefits of conversion. We believe Dunkin’ has a meaningful opportunity to increase its DD Perks membership through greater awareness and more effective communication of benefits. The need to add a credit card to the app appears to be a source of friction in greater adoption, and expansion to a tender agnostic system should alleviate that.

Figure 11: Dunkin’ has ~10.6MM members on its loyalty platform, representing a ~40% CAGR over Figure 12: DD Perks members represent ~12% of US the last four years. sales, up from ~3% in 2014.

12 14% 12% 10 12% 11%

8 10% 9% 8% 6 6% 6% 4 4% DD Perks DD Perks Members (MM) 3% 2 2% 0

0%

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18 4Q18 1Q19 2014 2015 2016 2017 2018

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Dunkin’ offers one of the best loyalty/rewards programs based on dollar spend in our coffee peer comparison. Perks members earn one free beverage of any size for every $40 spent. For comparison, Starbucks loyalty members earn customizable additions ($12.50), brewed coffee ($25), or a handcrafted drink ($75) for every $12.50-75 spent (Starbucks rewarded any free item for every $62.50 spent prior to April 2019 loyalty change) and Caribou Coffee for every $60 spent. The simplicity of Dunkin’s spend-based loyalty program makes it easy for customers to understand the value of membership. We believe awareness could be a headwind in growing the user base and look for Dunkin’ to increase efforts to drive more customers onto the platform or even a larger scale promotion to better compete against the loud noise from QSRs trying to drive digital utilization. The recent hiring of new head of digital and loyalty and long-term licensing deal with Dunkin’s mobile vendor, CardFree, highlight increased focus on further developing the digital platform. As the barrier to entry in the digital arena is lowered, Dunkin’s competitive advantage may not be as powerful. We believe digital is a key unlock for a brand positioned as on-the-go, and we’re not sure why Dunkin’ has had such challenges in increasing penetration for such a habitual purchase.

Dunkin’ Brands Group, Inc. (DNKN) 9 25 June 2019

Figure 13: DD Perks members earn a free beverage for every $40 spent, one of the more lucrative loyalty/rewards programs among select coffee peers.

Starbucks (Handcrafted) $75 Peet's Coffee & Tea $60 Scooter's Coffee & Yogurt $60 Caribou Coffee $60 Gregory's $50 Biggby Coffee $48 Dunkin' $40 Pret A Manger $32 Starbucks (Brewed) $25 Starbucks (Customize Drink) $13 Spend Required For Reward

Source: Company data, Company websites/digital apps, Credit Suisse estimates Note: Peet’s, Coffee & Tea, Biggby Coffee and Pret A Manger rewards based on number of visits. Spend required is based off CS estimate of average check of $4.00.

Benefits from increased customer data, improved restaurant operations, and potential for increased frequency among guests underscore the importance of driving awareness of the DD Perks membership program to increase digital utilization. Currently, Dunkin’ is testing a tender agnostic system in a ~1,000 store test (following a smaller test earlier), which would allow customers to enroll in the loyalty program without having to preload money on the app. Customers can accumulate points by scanning their loyalty ID QR codes in the mobile app or by scanning a new physical loyalty card. Based on conversations with other companies that are tender agnostic, most customers choose to pay via credit card/cash rather than preloaded on cards, giving us confidence that this should reduce friction and increase adoption. We believe this could be a meaningful lever to drive digital adoption and DD Perks membership. We expect Dunkin’ is using the physical loyalty card as a gateway to introduce the customer to the loyalty program, with hopes of transitioning the customer to a digital user over time. We believe the value of the loyalty program is the opportunity to capture data and then use that data to better market and segment customers to increase loyalty and generate greater frequency and spend.

Figure 14: In Dunkin’s tender agnostic test, Figure 15: Dunkin’ is also offering new DD Perks customers can accumulate loyalty points by physical reward cards that can be scanned before scanning the DD Perks loyalty ID QR Code in the payment, which could remove friction for customers Dunkin’ mobile app. unwilling to use the app.

Source: Dunkin’ 4/16/19 Press Release Source: Dunkin’ 4/16/19 Press Release

Dunkin’ Brands Group, Inc. (DNKN) 10 25 June 2019

On-the-Go Mobile Ordering Dunkin’s mobile order & pay platform, On-the-Go, is still in early stages, representing just ~4% of transactions, which has been relatively flat since 3Q17 (~3% of transactions from 3Q17 to 4Q18). This has been somewhat surprising, given mobile order ahead growth across the restaurant industry, with the capability now available among other coffee and QSR peers. We note mobile order represents ~7% of transactions in stores without drive- thrus (~50% of Dunkin’ US base with drive-thrus), though still seems relatively low. We view Dunkin’ as well positioned to benefit from mobile order & pay given its “on-the-go” branding, but the company has had difficulty driving adoption. Based on discussions with franchisees, some remain skeptical that Dunkin’ customers will adopt digital in a big way, particularly in more rural/suburban areas where consumers may be unwilling to provide their credit card information (though this should dissipate going forward). Based on commentary from Dunkin’, a high portion of sales is still in cash and the primary friction point is when customers have to add their credit cards to join the program. However, across the board, all franchisees we’ve spoken to seem optimistic that mobile order & pay can help their four-wall operations through better throughput, improved order accuracy and overall reduction in labor costs. High-volume and urban locations have a greater mix of digital orders, with Dunkin’ indicating ~25% of transactions go through mobile in some heavy traffic, non-urban stores. With a retrial rate of ~80%, we believe mobile order transactions should increase over time as awareness builds. Further, the NextGen stores are designed for greater digital usage, so as the model rolls out in a larger way, we expect it should drive greater adoption. Based on our survey of >1,000 consumers, overall restaurant mobile order & pay utilization should continue to grow over the next several months, with a net 16% lift expected over the next 12 months (31% of consumers intend to use more often; 15% of consumers intend to use less often). Younger consumers ages 18-44 indicated higher mobile order & pay usage intent, giving us confidence that as these consumers increase buying power over time, industry-wide utilization should increase. Current mobile order & pay customers intend to increase usage across frequency levels, supporting company commentary regarding strong retrial and retention. Dunkin’ came in at the low end of our survey results, with ~16% of consumers indicating they would use mobile order & pay for Dunkin’ if available, relative to an average of 23% among the brands in our data set and ~34% for Starbucks, Dunkin’s closest competitor.

Figure 16: A net 16% of consumers indicated they Figure 17: Based on our survey, ~16% of consumers intend to use mobile order & pay more often over indicated they would use mobile order & pay at the next 12 months, with greater intent among Dunkin’ if available, relative to ~23% on average and younger cohorts and more frequent users. ~34% response rate for Starbucks.

Do you expect to use mobile order & pay more 40% Which restaurants would you use often/less often/same amount over the NTM? 35% mobile order & pay if available? 60% +31% +25% 50% +24% +23% 30% 40% +16% +15% +12% +5% 25% 30% +12% 20% +13% 20% 10% 15% 0%

-10% Respondents % 10% % Respondents % -20% 5% -30%

0%

60+

Never

18-29 30-44 45-60

KFC

Sonic

Average

1x/month 2x/month

Dunkin'

Chipotle

Popeyes

Wendy's

1-2x/week 3-5x/week

TacoBell

PizzaHut

Domino's

Starbucks

McDonald's BurgerKing

Age Frequency Papa John's Jackin the Box More often Less often Source: Survey results, Credit Suisse estimates Source: Survey results, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 11 25 June 2019

We believe a strong loyalty/rewards program should enable increased mobile utilization, with 43% of consumers indicating a loyalty/rewards program would drive increased mobile order & pay usage. 55% of consumers in the youngest cohort (age 18-29) indicated a loyalty/rewards program would drive increased usage, significantly higher than the average, and an important demographic for companies as these consumers become more meaningful spenders over time. Higher frequency mobile order & pay users (at least once a week) also value the benefits of a loyalty/rewards program meaningfully above the average, supporting that these types of programs can drive frequency.

Figure 18: A loyalty/rewards program was the most frequently cited factor for driving increased mobile Figure 19: 50%+ of consumers indicated a order & pay utilization, followed by special mobile loyalty/rewards program would drive increased discounts and curbside pick-up options – reflective mobile order & pay usage, with greater impact on of consumers’ interest in costs and convenience. younger and more frequent users.

What would get you to use mobile order & pay What would get you to use mobile order & pay MORE often? MORE often? - "Loyalty/rewards program" Loyalty/rewards program 55% 70% 61% 61% 57% 60% 59% 60% 53% 56% Special mobile only discounts 45% 48% 50% 41% Curbside pickup option 40% 40% Able to save past orders 37% 30% 20% Favorite restaurant starts to offer MOP 29% % Respondents 10% Separate section in restaurant for pick up 29% 0% 18-29 30-44 45-60 60+ Never 1x a 2x a 1-2x 3-5x LTOs available only via mobile ordering 23% month month per per week week Nothing 13% Age Frequency % Respondents

Source: Survey results, Credit Suisse estimates Source: Survey results, Credit Suisse estimates

Based on our analysis of digital utilization across a selection of mobile apps, Dunkin’ mobile users have the greatest overlap with Starbucks and McDonald’s. ~28% of Dunkin’ mobile app users also use the Starbucks app and 30% of Dunkin’ app users also use the McDonald’s app. For reference, ~9% of Starbucks mobile app users use the Dunkin’ app and ~8% of McDonald’s mobile users used the Dunkin’ app. While the app overlap is in part due to the relative sizes of the system bases and geographic overlap among these restaurants, it also highlights meaningful competitive exposure in the digital space from coffee and QSR peers.

Figure 20: Starbucks and Wawa represent the greatest digital competition for Dunkin’, with ~28% of Dunkin’ mobile app users also using the Starbucks app and ~4% of Dunkin’ mobile app users active on the Wawa app. ~30% of Dunkin’ digital Cross App Usage app users also use the Starbucks and Starbucks McDonald's Dunkin' Krispy Kreme Wawa Peet's McDonald’s apps Starbucks 24% 9% 4% 1% 1% McDonald's 19% 8% 4% 2% 0% Dunkin' 28% 30% 5% 4% 0% Krispy Kreme 32% 42% 15% 3% 1% Wawa 13% 34% 17% 6% 0% Peet's 48% 25% 6% 13% 0%

Source: comScore, Credit Suisse estimates Note: Read starting on the left (i.e. 28% of Dunkin’ app users also use the Starbucks app; 30% of Dunkin’ app users also use the McDonald’s app).

Dunkin’ Brands Group, Inc. (DNKN) 12 25 June 2019

Starbucks has dominated the digital coffee segment, capturing the majority of relative download share compared to coffee peers. Dunkin’ has made strides in growing its digital platform, though has lost some relative digital download share to emerging coffee competitors. While Dunkin’ has made notable improvements to its digital app in recent years, including the launch of an entirely new app in late 2016, greater awareness and added features (i.e., suggested sell) are likely needed to grow the platform, especially as competitive activity accelerates and smaller brands develop their digital ecosystems.

Figure 22: Dunkin’ has consistently lagged Figure 21: Dunkin’ has captured ~30% of the relative Starbucks’ iPhone app ratings. Increasing download share among coffee peers, though penetration from smaller peers likely intensifies maintaining share will likely be more challenging as competition in the digital arena, highlighting the brands develop their digital platforms. importance of continued evolution.

100% 0 7% 12% Biggby 90% 2 33% 33% Scooter's 4 80% 29% 41% 32% 6

70% Coffee Bean Food & Drink - 8 60% & Tea Leaf Peet's 10 50% 12 Caribou 40% 14 16

% Download % Download Share 30% Tim Hortons 18

20% iPhone App Ranking Dunkin' 20 10%

Starbucks

Apr-16

Apr-17

Apr-18

Apr-19

Oct-16

Oct-17

Oct-18

Jun-16

Jun-17

Jun-18

Feb-17 Feb-18

0% Feb-19

Aug-16

Aug-17

Aug-18

Dec-16

Dec-17 Dec-18 2012 2013 2014 2015 2016 2017 2018 DNKN SBUX

Source: SensorTower, Credit Suisse estimates Source: SensorTower, Credit Suisse estimates Note: Reflects iPhone app rankings in the Food & Drink category.

Delivery While still early, Dunkin’ is currently offering delivery through DoorDash in ~1,400 stores. Dunkin’ recently announced a test with Grubhub to offer delivery in ~400 stores in NYC, with expectations to expand the rollout to Boston, Chicago and Philadelphia over the next several months. Grubhub will be integrated in the POS system, allowing for seamless operations, which we view as best practice. Catering has been identified as a key opportunity for delivery growth. While unlikely to be a meaningful SSS driver, we’re encouraged that Dunkin’ recognizes delivery as a separate channel that can drive sustainable growth. Further, we expect delivery could offset some weather challenges, as restaurants can benefit from delivery orders to offset the traffic drag from inclement weather. Through Grubhub/Seamless, Dunkin’ is charging a 20% service fee, which we assume will cover the cost of commission for restaurants. Based on our channel checks, Dunkin’ has not increased the menu prices through the platform. Dunkin’ has also invested in packaging for delivery, including special beverage holders and a sealed bag to reduce spillage and maintain the integrity of the order.

Dunkin’ Brands Group, Inc. (DNKN) 13 25 June 2019

Figure 23: When searching for Dunkin’ on Seamless, other restaurants come up before Dunkin’. We also note the icon used does not easily Figure 24: Dunkin’ has not increased its menu identify the brand. prices through the delivery platform thus far.

Source: Credit Suisse Source: Credit Suisse Note: Delivery in NYC June 2019 Note: Delivery in NYC June 2019

Figure 26: Dunkin’ has invested in its packaging for Figure 25: Dunkin’ is charging an additional 20% delivery, with orders that come in a sealed delivery service fee, presumably to cover the cost of bag to ensure integrity and a special beverage commission. holder to reduce spillage.

Source: Credit Suisse Source: Credit Suisse Note: Delivery in NYC June 2019 Note: Delivery in NYC June 2019

Dunkin’ Brands Group, Inc. (DNKN) 14 25 June 2019

Product innovation, platform focus and daypart expansion potential Product innovation Efforts around menu simplification completed in 2018 should help create room for product and platform innovation, with opportunity to drive innovation with core products, as coffee, donuts and breakfast sandwiches represent 75% of overall sales. We expect product innovation to be largely focused on beverages given Dunkin’s positioning as a beverage-led, on-the-go brand. To accelerate growth in the espresso category, Dunkin’ has invested in new espresso machines alongside franchisees. Based on discussions with franchisees, the espresso is meaningfully improved from the old product offering. We believe franchisees have an even greater incentive to ensure platform success with the hope that Dunkin’ could again invest as a partner in the future. In 1Q19, espresso grew by ~30%. Innovation around breakfast sandwiches and donuts also represent key opportunities for menu expansion. A majority of Dunkin’s business is in the morning, though just 15% of beverages are sold with a breakfast sandwich. Dunkin’ has also enhanced its donut line- up and improved the quality by removing dyes and colors. More recently, Dunkin’ introduced a Power Breakfast Sandwich and Breakfast Bowls to offer better-for-you options. We’re not sure how meaningful this will be for the brand. Platform focus Dunkin’ has indicated a focus on permanent platforms rather than limited time offers, which should help remove complexity out of the restaurant. Improving the quality of core offerings appears to be top of mind, with tests in place to improve the current dark roast and the addition of new espresso machines to better compete with higher-end peers and grow share. Daypart expansion Over the years, Dunkin’ has struggled with driving sales in the afternoon daypart, with >60% of sales generated in the morning. Challenges in the afternoon are not unique to Dunkin’, with Starbucks also reporting negative comps in the afternoon (though in part due to a declining Frappuccino business). Dunkin’ has used value platforms in the afternoon to improve performance, including the Dunkin’ Run in 3Q18 and various offers across markets, such as $2 Cold Brew coffee from 2-6pm in 2Q19. Dunkin’ has also indicated tests for a “Grab-N-Go” section (potentially part of the NextGen line) with prepackaged beverages and snacks. We would expect that delivery could help drive some growth in the afternoon daypart, with an afternoon coffee less habitual and more discretionary, which we believe aligns with a delivery order, though expect minimal, if any, contribution from delivery. Given persistent challenges in the PM daypart, which has been highlighted as an opportunity for several years, significant share gains remain a show-me story. Operational improvements to modernize the restaurant and offset labor pressures In addition to menu simplification, new store equipment and technology are other initiatives helping Dunkin’ unlock operational improvements including speed, accuracy and throughput for the longer term. With labor as a top issue facing franchisees, new equipment could help improve labor margins and reduce complexity. Examples include:

■ Label printers for cups (similar to Starbucks) have been recently implemented. This equipment eliminates the need for cashiers to manually write on cups. We believe this could improve accuracy and also help modernize the restaurant and experience.

■ High-volume brewers should reduce the frequency of brew cycles and improve consistency. We often discuss consistency at Dunkin’ with franchisees and customers,

Dunkin’ Brands Group, Inc. (DNKN) 15 25 June 2019

with many indicating the products and experience are different at every Dunkin’. Improving consistency across the system could be a relatively simple and underappreciated SSS driver over time.

■ Refractometers can automate some of the daily calibration activities, also supporting greater consistency and reducing labor tasks.

■ Shelf life printers can automate the code dating requirements in the back office, also removing some labor hours and monotonous tasks for the crew. Dunkin’ also plans to deploy new store technology to improve operations, modernize the restaurant and help offset labor pressures. Examples include:

■ Conversational ordering where the crew member can enter an order in the system based on the sequence the customer uses to order the product. Currently, the crew must enter the order in the system based on a specified sequence (i.e., must indicate the size of beverage first even if the customer says the size last). Once implemented, this change should help improve speed and accuracy.

■ Instantaneous pricing where Dunkin’ can make changes across the network and franchisees can do real-time pricing to immediately react to competition. This will also help remain consistent with delivery partners as they will be integrated into the system and the pricing can automatically flow through.

■ Improved metrics as the new technology can gather more information, is mobile-enabled, and should help franchisees more efficiently and effectively run their businesses. In addition, the technology appears to be user friendly with limited training required. NextGen remodels to support long-term growth Dunkin’s Next Generation remodel program is in early stages, with ~200 restaurants opened or converted at the end of 1Q19. Following many iterations across multiple markets, Dunkin’ recently released a scalable model. The new prototype encompasses the elements of the Blueprint for Growth, supporting a more modern and relevant asset base. The NextGen prototype includes: a glass case in the front to better feature donuts, tap system for cold beverages, mobile pick-up lane to separate digital orders, mobile drive- thru lanes, new crew uniforms (in partnership with Life is Good) and “Dunkin’” signage. While the new store design is very attractive and innovative, it also comes at a higher price tag. We expect some elements could be pared back over time.

Figure 28: The new store layout is better equipped Figure 27: The NextGen stores will incorporate new for mobile with designated areas for pick-up and uniforms designed in partnership with the brand should benefit operations, customer flow and Life is Good with positive messaging. awareness.

Source: DNKN 2/8/18 Analyst Day Presentation Source: DNKN 2/8/18 Analyst Day Presentation

Dunkin’ Brands Group, Inc. (DNKN) 16 25 June 2019

Heightened competition remains a challenge Concentrated coffee segment growing share Coffee is a $33BN segment in the US, with significant sales concentration among the dominant players. The five largest coffee chains represent 90% of the segment’s sales, compared to ~80% in the highly concentrated burger segment. The emergence of smaller local chains and independent coffee shops is driving increased competition. Beyond coffee peers, non-traditional channels (i.e., convenience stores) and QSR peers are also elevating their coffee offerings, adding to the competitive dynamics within the segment. Notable concentration and increasing competition highlight the importance of differentiation in what can be considered a segment with relatively ubiquitous offerings. This makes initiatives like digital even more important to build loyalty and frequency as coffee peers and non-traditional players encroach on the market.

Figure 29: Coffee restaurants are growing at a faster rate relative to limited service restaurants, now Figure 30: The coffee segment is very concentrated, representing 11.5% of overall limited service with the five largest chains representing 90% of restaurant sales, up from ~9% in 2010. segment sales.

12.0% Burgers 78% 97% 11.5% Chicken 71% 92% 11.0% Coffee 90% 92% Bakery Café 79% 90% 10.5% Mexican 72% 84% 10.0% Sandwich 64% 77% 9.5% Frozen Desserts 59% 75% Asian/Noodle 65% 69% 9.0% Pizza 45% 60% 8.5%

Coffee Coffee as Segment % of LSR Sales 0% 20% 40% 60% 80% 100% 8.0% Sales Composition by Segment

Top 5 Chains Other Large Chains Small Chains & Independents

2010

2011

2012

2013

2014

2015

2016 2017 2018

Source: Technomic, Credit Suisse estimates Source: Technomic, Credit Suisse estimates

Starbucks is the most significant direct coffee competitor for Dunkin’, with ~46% of Dunkin’ stores facing competition from Starbucks within a one mile radius. ~61% of Dunkin’s store base competes with McDonald’s within a one mile radius and ~38% of Dunkin’s store base competes with a select group of convenience stores. Other coffee peers also represent an increasing threat, though still relatively limited with ~6% of Dunkin’s base facing competition from our aggregated small coffee peer group (comprising ~1,550 units) within a one mile radius. Beyond unit exposure, competition for digital real estate on customers’ phones is likely to increase as more restaurants and non-traditional channels invest in digital platforms, smaller coffee peers utilize white label technology to build digital platforms at a lower cost, and third-party aggregators provide an audience for small and large competitors alike.

Dunkin’ Brands Group, Inc. (DNKN) 17 25 June 2019

Figure 31: McDonald’s and Starbucks represent the most significant competitive overlap to Dunkin’ Figure 32: Over the last several years, Dunkin’ has given their relatively larger system sizes. lost ~300bps of market share, largely to Starbucks.

100% Small Chains & McDonald's 24% 39% 61% 92% 96% 90% Independents 80% Peet's Coffee & Tea Starbucks 19% 31% 46% 79% 87% 26% 70% 28% 27% 29% 29% 29% Caribou Coffee 60% 28% Convenience Stores 16% 24% 38% 74% 84% 50% Tim Hortons Coffee Peers 6%13% 19% 40% Dunkin' 30% Tim Hortons 7% 11% 20%

Coffee Segment Coffee Segment Market Share Starbucks % DNKN Base Facing Competition From Select Peers 10% 0% 0.25 Miles 0.5 Miles 1 Miles 3 Miles 5 Miles 2012 2013 2014 2015 2016 2017 2018

Source: Thinknum, Credit Suisse estimates Source: Technomic, Credit Suisse estimates Note: Coffee Peers include Peet’s Coffee & Tea, Biggby Coffee, Caribou Coffee, Joe Coffee New York, Blue Bottle, Scooter’s and The Coffee Bean & Tea Leaf. Convenience Stores include Wawa, Circle K, Murphy USA, Speedway Gas, and Casey’s General Store.

Dunkin’ Brands Group, Inc. (DNKN) 18 25 June 2019

What is the development outlook for Dunkin’ US? Credit Suisse View We expect Dunkin’ US to grow ~200 new units per year over the next few years, translating to growth of ~2.1% per year. Our estimates are at the lower end of Dunkin’s guidance for 200-250 units per year through 2021, reflecting a challenging restaurant environment with heightened competition, still sluggish SSS and traffic trends, ongoing cost pressures and increased capital requirements as the system transitions to the NextGen image. Lower AUVs outside of Dunkin’s core Northeast market, higher costs in these markets, lower cash-on-cash returns in recent years and regionalized coffee concepts representing heightened competition contribute to our expectation for unit growth at the low end of Dunkin’s target. Dunkin’ plays in a growing coffee category, which has demonstrated ~7.5% sales growth over the last five years and likely higher when considering the growth of non-traditional coffee channels. The high margin, habitual nature of coffee makes it an attractive segment, and many non-traditional coffee players have elevated coffee platforms to grow dayparts and attachment. Heightened competition across the category underscores the importance of differentiation and brand positioning to increase loyalty for an otherwise ubiquitous product offering. Following a 4.2% unit growth CAGR over the last five years, or ~350 units per year, we believe a more moderate strategy is prudent going forward as DNKN prioritizes SSS and traffic growth and looks to roll out the new remodel prototype across the system. DNKN is targeting 90% of growth outside of its core market, implying a reduction to ~20-25 units in its core market over the next few years, relative to an average of ~60 units in the core over the last five. Consensus Expectations Consensus models ~205 net new units in 2019 and ~230 over the next few years, relative to DNKN guidance for 200-250 net new units through 2021, including 2019 at the lower end of the long-term guide. More moderate unit growth going forward Dunkin’ US has demonstrated strong unit growth in recent years, representing an annual growth CAGR of ~4.2% over the last five years. Improved fundamentals, an attractive coffee category, solid relations with management and notable whitespace in the US have supported growth trends. We believe Dunkin’s new Blueprint for Growth can help modernize the brand and position it to better compete in new markets.

Figure 33: Dunkin’ has demonstrated unit growth of ~4.4% over the last 10 years and closer to 4.2% over Figure 34: Cash-on-cash returns have decreased in the last five years. recent years. 5.5% 30% 25-30% 25-30% 5.0% 28% 26% ~25% 25%+ 4.5% 20-25% 24% 20-25% 20-25% 4.0% 22%

3.5% 20%

Cash Cash Returns -

on 18%

3.0% - Unit Unit Growth YOY% 16%

2.5% Cash 14% 2.0% 12% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 10% YOY Growth % 10-yr Avg 5-yr Avg 2011 2012 2013 2014 2015 2016 2017 Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: 2017 return range reflects commentary on top 10 developing markets.

Dunkin’ Brands Group, Inc. (DNKN) 19 25 June 2019

We expect DNKN net unit growth will be more moderate relative to historical levels, with guidance for 200-250 net new units through 2021, including 2019 units at the low end of the range. We forecast ~200 net new units in 2019 and long-term, translating to ~2.1% unit growth. This compares to consensus expectations for ~205 units in 2019 and ~230 units per year over the next few years for ~2.3% growth.

Figure 35: We model ~200 units over the next few years, relative to consensus’ ~205 units in 2019 and Figure 36: DNKN’s targeted unit growth implies ~230 over the next few years. DNKN has targeted growth of ~2-2.5% over the next few years, below its 200-250 units per year through 2021. average 4.2% growth over the prior four years.

450 5.0% 400 4.5% 350 4.0% 3.5% 300 3.0% 250 2.5% 200 2.0% 150 1.5%

100 Dunkin' US Unit Growth 1.0% Dunkin' Dunkin' US New Net Units 50 0.5% - 0.0% 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2015 2016 2017 2018 2019E 2020E 2021E 2022E

CSe Consensus Actual DNKN Target (200-250) CSe Consensus Actual

Source: Company data, Consensus Metrix, Credit Suisse estimates Source: Company data, Consensus Metrix, Credit Suisse estimates

Larger chains appear better positioned than smaller coffee peers Over the last few years, large chains have outpaced unit growth of smaller chains and independents, largely led by Starbucks and Dunkin’, the two dominant players with ~65% of the coffee segment’s units. Many of the smaller chains are concentrated in certain regions, representing a still limited threat against these larger brands.

Figure 37: Small chains and independents represent Figure 38: Large chains represent the majority of 34% of the coffee segment’s units, reflecting sales growth in recent years and have grown at a modest fragmentation. faster pace than smaller shops.

10.0% 9.0% 8.0% Dunkin' 7.0% 25% Tim Hortons Starbucks 2% 6.0% 39% Caribou Coffee 5.0% 1% 4.0% Peet's Coffee & 3.0% Small Chains & Tea Independents 1% 2.0% 34% Coffee Segment Sales Growth 1.0% 0.0% 2012 2013 2014 2015 2016 2017 2018

Large Coffee Chains Small Coffee Chains

Source: Technomic, Credit Suisse estimates Source: Technomic, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 20 25 June 2019

But headwinds exist to unit growth targets Increasing competitive pressure from QSR peers and non-traditional channels While coffee segment peers are certainly competition, we believe that increasing competitive pressures are coming from QSR peers and non-traditional channel enhancing coffee offerings and delivering value. Mixed brand positioning makes DNKN more susceptible to heightened competition, not quite offering the same quality as many coffee peers or the value from QSR peers and convenience stores that are discounting coffee as a traffic driver. However, we don’t believe these dynamics will meaningfully change over the next several quarters and DNKN will likely focus on internal drivers to better position the brand against competition. Competition from regional peers could be bigger than we think We note Dunkin’ could face headwinds from regional peers as it tries to grow in new markets. Leading coffee players in a market are often regionally based, and we believe lack of brand awareness in these markets is a challenge. Based on our analysis of select large coffee peers, they have significant concentration in select states. We note there are few national coffee players that have been able to expand at a national level. Starbucks has strong presence nationally, but the next largest player, Tim Hortons, is also having trouble moving outside of the Northeast/close proximity to its home base in Canada.

Figure 40: The same holds true when looking at the Figure 39: Coffee peers are relatively regionalized, concentration in the top five states, representing with some of the largest players significantly ~90% of the entire system for the majority of concentrated in just one state. regional peers. 90% 100% 97% 96% 93% 91% 89% 80% 90% 84% 70% 80% 60% 70% 60% 55% 50% 50% 43% 40% 40% 30% 30% 20% 20%

% of Base US in Top Market 10% 10% % of US Base in Base % of in US Markets Top 5 0% 0%

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

West and Emerging Market growth still a show-me story Over the last several years, DNKN has reiterated its whitespace opportunity in underpenetrated regions in the West and emerging markets, though has missed targets, prompting concerns around the brand’s opportunity. While DNKN no longer provides annual guidance by region, DNKN is targeting growth to be concentrated in the West and Emerging markets, but such remains a show-me story. In 2017, the West and emerging markets represented ~50% of DNKN’s unit growth for the first time in the brand’s history, which we expect continued in 2018. In 2018, 90% of growth was concentrated in markets outside of the core market (West, Emerging and Established). While still early, we believe this could be the start of some momentum in these regions (though in part greater mix shift is a result of lower growth in the core market), but greater brand awareness is likely needed to meaningfully accelerate growth. We also believe coffee tends to be more regional, and Dunkin’ could face headwinds as it looks to expand into these markets.

Dunkin’ Brands Group, Inc. (DNKN) 21 25 June 2019

Figure 42: Dunkin’s shift toward less penetrated Figure 41: The West & Emerging markets regions should also support better economics in its represented 50% of Dunkin’s unit growth in 2017 & more established markets, as growth has 2018, higher relative to prior years. meaningfully decelerated, particularly in the core.

100% 450 9% 405 397 90% 16% 16% 17% 21% 27% 24% 400 371 66 349 80% 23% 69 350 60 313 25% 23% 291 70% 27% 22% 92 278 23% 300 102 60% 24% 25 92 83 250 100 68 68 50% 42% 83 36% 200 74 40% 33% 34% 65 41% Unit Growth 139 149 30% 37% 41% 150 121 124 100 135 Unit Unit Growth Composition 20% 115 115 26% 23% 24% 24% 50 10% 16% 77 87 98 87 13% 11% 39 41 0% 0 30 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018

Core Established Emerging West Core Established Emerging West

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: 2015 & 2016 unit growth exclude Speedway closures.

Over the next couple of years, we expect DNKN to concentrate development, with 90% of growth targeted outside of its core market (and ~60% primarily in the top ten development markets). We believe a focus on these regions is appropriate to best leverage advertising dollars and generate greater brand awareness. DNKN appears very confident in its expansion outlook in these markets, with visibility likely coming from development agreements. Exclusive rights to development areas and attractive franchisee terms (i.e., royalty abatements for first five years) will help incentivize franchisees to grow in these markets. Labor challenges remain the biggest headwind facing operators, and structurally higher labor margins could constrain franchisee appetite for growth, particularly in markets with increasing statutory minimum wages. But the majority of the top development markets have below average increases over the next few years, which we view as a positive.

Figure 43: Dunkin’ US Development Incentives Select Developing Market Terms Select Developing Market Deeper Terms Franchise Fee Advertising Fee Franchise Fee Advertising Fee Year 1 1.9% 3.0% *For restaurants opened within first 5 years of SDA Year 2 3.9% 3.0% Year 1 1.9% 2.5% Year 3 4.9% 4.0% Year 2 1.9% 2.5% Remaining Term 5.9% 5.0% Year 3 1.9% 2.5% Year 4 1.9% 2.5% Year 5 1.9% 2.5% Years 6-10 2.9% 3.5% Franchise Fee Advertising Fee *For restaurants opened 5 years after SDA signed Year 1 2.9% 3.5% Year 2 2.9% 3.5% Year 3 2.9% 3.5% Year 4 2.9% 3.5% Year 5 2.9% 3.5% Years 6-10 3.9% 4.5%

Source: Company data, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 22 25 June 2019

Figure 44: Labor has been a major challenge for Figure 45: Labor costs vary by market, with the Dunkin’ franchisees, with labor margins now at the highest labor margins in the West followed by the highest levels over the last decade. Northeast.

28.5% 32.0% 28.0% 31.0% 27.5% 27.0% 30.0% 26.5% 29.0% 26.0% 25.5% 28.0%

25.0% 27.0%

Labor Labor as % of Sales 24.5% Labor Labor as % of Sales 24.0% 26.0% 23.5% 25.0% 23.0%

24.0%

2009

2010

2011

2012

2013

2014

2015

2016 2017 2018 Northeast Midwest South West Average

Source: Franchise Disclosure Documents, Credit Suisse estimates Source: Franchise Disclosure Documents, Credit Suisse estimates

Figure 47: We note prime costs are the lowest in Northeast markets, in part due to higher AUVs and Figure 46: AUVS are highest in Northeast markets. likely higher beverage mix.

$1,150 70.0% $1,108 59.6% 56.4% 56.1% $1,100 60.0% 53.8% 54.7% $1,054 50.0% $1,050 $1,031 27.4% 26.7% 30.8% 40.0% 28.1% 27.8% $1,000 $957 30.0% $950 $913 20.0% $900 25.7% 29.0% 29.4% 28.8% 26.9%

10.0%

AUVs by AUVs Marketby ($000s) 2018 2018 Prime Margins by Market

$850 0.0% Northeast Midwest South West Average $800 Northeast Midwest South West Average COGS Labor

Source: Franchise Disclosure Documents, Credit Suisse estimates Source: Franchise Disclosure Documents, Credit Suisse estimates

Figure 48: Dunkin’s top 10 development markets Figure 49: Many of Dunkin’s top growth markets represent ~30% of the system’s units and are have below system average minimum wage expected to make up a majority of the new unit increases over the next couple of years, which is a growth going forward. positive.

1,000 12.0% 10.0% 900 9.0% 10.0% 800 8.0% 700 7.0% 8.0% 600 6.0%

500 6.0% 5.0% Units 400 4.0% 4.0%

300 % US Store Base 3.0% 200 2.0% 2.0%

100 Minimum Wage Growth YOY% 1.0% 0 0.0% 0.0% FL PA NC GA OH SC TN AZ IN CA DD FL PA NC GA OH SC TN AZ IN CA US Units % US Store Base Avg 2018 2019 2020

Source: Company data, Credit Suisse estimates Source: Company data, US Department of Labor, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 23 25 June 2019

Remodels could constrain capital for new unit growth Dunkin’ is currently in the process of upgrading its asset base under the NextGen image. The new prototype has recently been approved. Through 1Q19, Dunkin’ has opened or remodeled 200 NextGen stores as of the end of 1Q19. Larger scale rollout will likely begin sometime in 2019. The new image is designed with a digital focus in mind, and features such as the tap machine for cold beverages modernizes the brand. Near term, franchisee unit growth could be tempered relative to historical levels with franchisees electing to allocate capital to remodels, potentially constraining new unit growth.

Dunkin’ Brands Group, Inc. (DNKN) 24 25 June 2019

Could Dunkin’ be the next potential M&A candidate? Credit Suisse View We believe it is unlikely. Dunkin’ has been the subject of press speculation (‘Dunkin’ shares hit all-time high as Coke’s Costa deal stokes takeover speculation’ 24 September 2018, CNBC) as a potential acquisition candidate for several years given DNKN’s attractive business model and growth opportunities, with major transactions in the global coffee market from companies like JAB causing the focus in the media. The restaurants deal space has been more active over the last 18-24 months, with well-funded firms recognizing the synergies between multiple brands, greater consolidation among franchisees, an increase in shareholder activism affecting decision-making, and potential long-term capital investment as restaurants are largely insulated from the far-reaching changes in retail away from brick and mortar (though there are other major dynamic changes in restaurants). Press reports have frequently suggested JAB may be a potential buyer given its portfolio of coffee brands, number of past transactions and willingness to pay relatively high multiples. We believe DNKN’s at-home strategy could be a hurdle to any such deal due to DNKN’s profit-sharing arrangement with franchisees and licensing deal with J.M. Smucker. Please see our thoughts on other potential scenarios below. Consensus Expectations DNKN often moves on news of restaurant M&A, particularly if it relates to a potential deal with JAB, giving us reason to believe there is at least some level of M&A potential priced into the stock. Elevated M&A activity and interest in restaurants industry Over the last 18-24 months, there has been increased activity in the restaurants deal space and interest remains heightened, as buyers have access to cheap capital and there appears to be a large number of buyers in the market. Private equity, family offices and public companies all represent potential opportunities.

Dunkin’ Brands Group, Inc. (DNKN) 25 25 June 2019

Figure 50: Select M&A Restaurant Deals Date Acquirer Target Deal Size ($MM) LTM EV/EBITDA QSR/Fast Casual 2018 Durational Capital / The Jordan Company Bojangles' $715 9.9x 2018 Roark Capital/Inspire Brands Sonic Drive-In $2,300 15.7x 2018 CAVA Group Zoe's Kitchen $300 16.4x 2018 The Coca-Cola Company Costa $5,100 16.4x 2018 Butterfly Equity Modern Market 2018 Spice Private Equity Bravo Brio $100 3.8x 2017 Apollo Global Management, LLC Qdoba $305.0 5.9x 2017 JAB Panera $7,500 18.3x 2017 QSR Popeyes $1,800 20.8x 2016 JAB Krispy Kreme $1,340 18.3x 2014 Burger King Worldwide Inc./QSR Tim Hortons $11,900 14.6x 2014 JAB Einstein Noah Restaurant Group Inc $465 9.9x 2013 Roark Capital CKE Restaurants, Inc. $1,640 - $1,750 2012 JAB Caribou Coffee Company $311 11.5x 2012 Starbucks Teavana $620 17.3x 2012 JAB Peets Coffee & Tea, Inc. $949 21.0x 2011 Roark Capital/Inspire Brands Arby's Restaurants - Sub of Wendy's $430 9.0x 2010 3G Capital Burger King Holdings, Inc. $4,000 9.0x 2010 Mill Road Capital Rubio's Restaurant $83 6.3x 2010 Apollo Global Management CKE Restaurants, Inc. $1,005 6.0x Casual Dining 2018 TriArtisan Capital Partners and Paulson & Co. P.F. Chang's Inc. $700 2018 Del Frisco's Barteca $362 17.6x 2018 Rhône Capital Fogo de Chão $560 10.2x 2018 Roark Capital/Arby's Restaurant Group Buffalo Wild Wings $2,900 10.3x 2017 NRD Capital Ruby Tuesday $335 7.9x 2017 Darden Cheddar's $780 10.4x 2017 Golden Gate Capital Bob Evans Farms $610 15.4x 2014 Sentinel Capital Partners TGI Fridays $800 2014 Golden Gate Private Equity Red Lobster/Darden $2,100 9.0x 2014 Apollo Global Management CEC Entertainment $1,300 7.7x 2012 Darden Yard House $585 14.2x 2012 Centerbridge Partners PF Chang's $1,124 8.6x 2011 Golden Gate Capital California Pizza Kitchen (CPK) $470 6.6x

Source: Company data, press reports, Credit Suisse estimates

Potential takeover scenarios JAB Holding Press reports have frequently suggested JAB Holdings may be a potential buyer given its growing portfolio of coffee and bakery businesses and reports on previous discussions between the two parties (‘Dunkin’ shares hit all-time high as Coke’s Costa deal stokes takeover talk’, 5 September 2018, CNBC) . In July 2012, JAB acquired Peet’s Coffee and Tea for ~$975MM, the first in the coffee space. In years since, JAB has gone on to acquire coffee brands including: Caribou Coffee, Keurig Green Mountain, D.E. Master Blenders 1753 (now JDE), Espresso House, Baresso Coffee and Trade Coffee. JAB has also entered the bakery business with acquisitions including Einstein Noah Restaurant Group, Krispy Kreme, Panera Bread, Bruegger’s Bagels and Pret A Manger. In February 2019, reports indicated JAB was interested in pursuing a potential IPO of its coffee and bakery portfolio over the next few years (‘Germany’s JAB plans to list unit owning Keurig, Dr Pepper’ 14 February 2019, Reuters). While we believe Dunkin’ could be a strategic fit for JAB’s growing coffee portfolio, we believe Dunkin’s CPG business would pose a significant hurdle to a potential transaction. Benefits for JAB’s at-home coffee strategy are limited given Dunkin’s long-term relationship with J.M. Smucker in the procurement and distribution of Dunkin’ packaged coffee, which expires at the end of 2033. Further, Dunkin’ is required to split net profits from sales in its CPG channel with franchisees through a 50/50 profit-sharing agreement. As a result, a JAB acquisition would likely be a restaurants transaction, which is somewhat dissimilar to more recent coffee deals it has made.

Dunkin’ Brands Group, Inc. (DNKN) 26 25 June 2019

Roark Capital/Inspire Brands Roark Capital has significant investments and experience in operating restaurant brands, most recently acquiring Buffalo Wild Wings and Sonic through a newly launched multi- brand restaurant company, Inspire Brands. CEO Paul Brown has indicated the Inspire Brands portfolio could include up to 10 restaurant brands, targeting brands with $1BN to $4.5BN in system sales. We believe DNKN could fit within the Inspire Brands portfolio given limited competitive overlap among the existing concepts of Arby’s, Buffalo Wild Wings, Rusty Taco and Sonic and the opportunity for Inspire Brands to leverage Dunkin’s digital platform. That said, DNKN is a much larger company than Inspire Brands’ previous transactions and trades at a rich valuation. Global system sales of $11-12BN (including ~$9.5BN at Dunkin’ and ~$2BN at Baskin-Robbins) are well outside of Inspire Brands’ target brand size ($1- 4.5BN). Further, DNKN’s $6BN+ market cap is significantly larger than that of Buffalo Wild Wings and Sonic, making this a significantly larger potential deal. Roark would likely have to pay a rich premium given Dunkin’ is currently trading at ~18.5x NTM EBITDA, well above the industry average. Former Chairman and CEO of Dunkin’ Brands, Jon Luther, is a member of the Board of Directors of Inspire Brands, formerly serving Arby’s Restaurant Group (ARG) since 2011. It could be that the former executive who led turnaround efforts for the brand and launched the “America Runs on Dunkin’” campaign would consider DNKN as a potential strategic fit for the portfolio. Additionally, Roark Capital recently raised $6.5BN in capital for two funds, including $1.5BN for Inspire Brands, so the firm may be looking for another acquisition. Private Equity Consortium An acquisition by a conglomerate of private equity firms could be one of the more likely scenarios. In 2006, Bain Capital, The Carlyle Group and Thomas H. Lee Partners acquired Dunkin’ Brands for $2.4BN. So there is precedent for a consortium of private equity firms taking DNKN private. There has been notable franchisee consolidation in the restaurant space, and private equity has come in with deep pockets, often with economies of scale and expertise across several brands. Management benefits from a reduced number of franchisees under management, and likely greater opportunities to communicate. 3G/Restaurant Brands International (QSR) DNKN’s 100%-franchised business model and global presence could be viewed as strong attributes from a business model perspective by Restaurant Brands International for its portfolio. But the competitive overlap between Dunkin’ and RBI’s Tim Hortons likely represents an obstacle as RBI seeks to stabilize the existing business and accelerate growth internationally. That said, Tim Hortons has had challenges in the US, and should RBI prioritize development outside of the US, the brands could collaborate. RBI could leverage DNKN’s technological platform across its portfolio. Yum! Brands (YUM) DNKN’s asset-light, 100% franchised business model has limited competitive overlap with YUM’s other three brands (KFC, Pizza Hut, Taco Bell). DNKN would offer YUM greater exposure to the breakfast daypart. YUM’s strong development strategy could help DNKN reaccelerate growth. YUM has previously stated that it would be open to acquiring another brand. Coca-Cola (KO) Following Coca-Cola’s acquisition of UK coffee leader, Costa Limited, DNKN shares rose ~4%. We think this partly reflected a revitalized possibility that DNKN could be a potential candidate for acquisition, especially given the current deal environment and well-funded companies looking for attractive opportunities (‘Dunkin’ shares hit all-time high as Coke’s

Dunkin’ Brands Group, Inc. (DNKN) 27 25 June 2019

Costa deal stokes takeover talk’, 5 September 2018, CNBC). The Costa acquisition might have also fueled some hope that Coca-Cola could be added to the list of DNKN’s potential acquirers, especially given what appears to be limited interest on the part of Coca-Cola to bring Costa to the US in a major way. Costa has a core competency within the vending machine channel, which aligns better for Coca-Cola relative to a pure retail play that DNKN would offer and represents a minimal threat to major restaurant brands. Conversely, any potential acquisition of DNKN would transform Coca-Cola into a direct competitor of McDonald’s, especially in its foothold breakfast daypart. The strategically important and longstanding relationship between Coca-Cola and McDonald’s lessens the likelihood of Coca-Cola being viewed as a viable buyer of DNKN. PepsiCo (PEP) We believe there could be potential for PepsiCo (PEP) to consider a move into the coffee industry given rival KO’s recent acquisition of Costa. Starbucks and PepsiCo have been partners in the ready-to-drink business for more than 20 years, capturing ~75-80% of the category with ~$2BN in retail sales, a pursuit of DNKN would engage PepsiCo in a deal with Starbucks’ largest competitor. Nestlé Nestlé also has a licensing deal with Starbucks. In a $7BN deal closed August 2018, Nestlé acquired the rights to market, sell and distribute Starbucks’ packaged coffee and tea globally, including ground and whole bean coffee and coffee pods, but excluding ready-to-drink bottled drinks distributed by PepsiCo. Therefore, as with PepsiCo, a pursuit of DNKN would engage Nestlé in a deal with Starbucks’ largest competitor.

Dunkin’ Brands Group, Inc. (DNKN) 28 25 June 2019

Valuation $70 Target Price Our $70 target price is based on ~16x our NTM EBITDA in 12 months, implying a P/E multiple of ~22x our NTM EPS in 12 months. Our ~16x EBITDA multiple is a ~0.5x turn premium to DNKN’s three-year average multiple given the run-up in valuations in the sector, though a discount to its current multiple of ~18.5x. DNKN’s multiple has expanded in-line with peers in recent years, despite lowered growth estimates and increased peer multiples warranted from now enhanced business models. Peer Group EV/EBITDA Analysis DNKN currently trades at ~18.5x consensus NTM EBITDA estimates, above its three-year average EV/EBITDA multiple of ~15.5x. DNKN has historically traded at a ~3% discount to heavily franchised peers. DNKN is currently trading in-line with heavily franchised peers, with its historical discount implying it could trade at ~17.5x EV/EBITDA. We also note DNKN has maintained its relative valuation to peers despite lowered growth expectations and higher peer multiples driven by business model transformations (i.e., YUM, MCD, WEN).

Figure 51: DNKN 3-yr NTM EV/EBITDA Figure 52: DNKN 3-yr NTM EV/EBITDA vs. Peers 20.0x 20.0x 19.0x 19.0x 18.0x 18.0x 17.0x 17.0x 16.0x 16.0x 15.0x 15.0x

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Dec-17 Dec-18 NTM EV/EBITDA 3-yr Avg +1 Std Dev -1 Std Dev DNKN Peers Implied Multiple on Avg. Discount Source: FactSet, Credit Suisse estimates Source: FactSet, Credit Suisse estimates Note: Peers include heavily franchised companies.

Peer Group P/E Analysis DNKN currently trades at ~25.5x consensus NTM EPS estimates, above its three-year average P/E multiple of ~22.5x. DNKN has historically traded at a ~9% discount to heavily franchised restaurant peers, relative to a ~3% discount currently.

Figure 53: DNKN 3-yr NTM P/E Figure 54: DNKN 3-yr NTM P/E vs. Peers 28.0x 30.0x

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Dunkin’ Brands Group, Inc. (DNKN) 29 25 June 2019

Figure 55: DNKN trades at a premium to most heavily franchised peers despite below average system sales, FCF and EBITDA growth.

NTM System Sales % Franchised/ NTM P/E % Unit Growth EBITDA Growth EV/EBITDA Growth Licensed

SHAK 28.2x 113.8x 22.2% 22.8% 17.5% 40% CMG 25.6x 53.0x 11.0% 5.9% 22.6% 0% DPZ 20.4x 29.0x 9.7% 6.8% 10.5% 98% YUM 20.1x 28.3x 6.8% 4.1% 7.3% 98% DNKN 18.3x 26.4x 3.5% 1.5% 5.0% 100% MCD 18.0x 24.8x 5.0% 2.1% 4.4% 93% QSR 17.5x 25.5x 6.5% 5.4% 5.8% 100% SBUX 17.4x 29.0x 7.1% 6.9% 7.5% 48% PZZA 15.7x 36.8x 1.3% 2.8% 3.1% 88% WEN 15.0x 30.3x 3.3% 1.9% 5.3% 95% JACK 12.1x 19.1x 2.3% 0.9% 2.6% 94% Average 18.0x 30.2x 5.7% 3.8% 7.4% 81.3%

Source: Company data, FactSet, Consensus Metrix Note: (1) FCF, system sales and EBITDA growth calculated based on 3-yr forward CAGR using consensus estimates. (2) % Franchised/ Licensed reflects 2018 franchise mix. (3) Averages exclude SHAK.

Scenario Analysis Blue Sky Scenario: $85 Our $85 Blue Sky scenario is based on the following assumptions in 2020: 1) Dunkin’ US SSS of 3%; 2) Unit growth of ~3.5%; 3) operating margin of ~55% (51.1% in 2018); and 4) EV/EBITDA multiple of ~18.5x. Grey Sky Scenario: $55 Our $55 Grey Sky scenario is based on the following assumptions in 2020: 1) Dunkin’ US SSS of approximately flat; 2) unit growth of ~1%; 3) operating margin of ~53%; and 4) EV/EBITDA multiple of ~15x.

Dunkin’ Brands Group, Inc. (DNKN) 30 25 June 2019

Investment Risks

■ M&A: DNKN is often cited as a potential acquisition target and often moves on news of restaurant M&A. Media reports have suggested that DNKN could be an acquisition target. Based on recent deals in the restaurant space, DNKN would likely be acquired at a premium to its current share price and valuation multiple.

■ Accelerating Traffic and SSS: An acceleration in traffic to near positive/positive territory and conviction in sustainable low-single-digit SSS growth would support upside to numbers.

■ Accelerating Unit Growth: A reacceleration in unit growth from tempered levels would support upside to numbers.

■ Competition: The quick service restaurant (QSR) segment is very competitive, and DNKN competes among a wide range of other food and beverage providers including quick service restaurants, local and regional food and beverage retailers, supermarkets and wholesale suppliers.

■ Debt/Interest Rates: DNKN has a significant amount of indebtedness. A significant change in the interest rate environment could impact the business. DNKN’s financial condition and results of operations may be adversely affected if it cannot generate sufficient cash flow to meet debt service, violates the terms of its covenants or is unable to refinance its debt at reasonable terms.

Dunkin’ Brands Group, Inc. (DNKN) 31 25 June 2019

Financials

Figure 56: DNKN Income Statement

Dunkin' Brands (DNKN) Fiscal Yr Fiscal Yr 2018 Fiscal Yr 2019 Fiscal Yr 2020 Fiscal Yr Fiscal Yr Fiscal Yr ($ in millions) 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E 2016 2017 Mar-18 Jun-18 Sep-18 Dec-18 2018 Mar-19 Jun-19 Sep-19 Dec-19 2019E Mar-20 Jun-20 Sep-20 Dec-20 2020E 2021E 2022E Income Statement

Revenues Franchise fees & royalty income $536.4 $555.2 $132.5 $151.2 $152.0 $142.6 $578.3 $139.3 $154.0 $154.0 $147.3 $594.6 $143.2 $159.3 $159.2 $152.4 $614.1 $635.4 $659.5 YOY % 4.5% 3.5% 3.8% 5.1% 5.7% 2.0% 4.2% 5.1% 1.8% 1.3% 3.3% 2.8% 2.8% 3.4% 3.4% 3.5% 3.3% 3.5% 3.8% Advertising fees and related income $453.6 $471.0 $111.0 $131.5 $132.5 $118.6 $493.6 $117.2 $134.1 $135.3 $128.3 $514.8 $122.7 $138.5 $139.7 $132.5 $533.4 $550.6 $570.0 YOY % 3.8% 0.7% 7.5% 8.0% 2.4% 4.8% 5.6% 1.9% 2.1% 8.2% 4.3% 4.7% 3.3% 3.2% 3.3% 3.6% 3.2% 3.5% Rental income $101.0 $104.6 $24.5 $27.4 $27.5 $25.0 $104.4 $29.0 $31.3 $31.5 $28.7 $120.5 $29.6 $31.9 $32.1 $29.3 $122.9 $125.4 $127.9 YOY % 0.6% 3.6% 0.2% 0.0% -0.6% -0.4% -0.2% 18.6% 14.2% 14.2% 15.0% 15.4% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Company sales $12.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 YOY % -57.7% Sales of ice cream and other products $100.5 $96.4 $21.8 $28.1 $24.9 $20.4 $95.2 $20.7 $29.9 $26.7 $20.7 $98.0 $21.2 $31.2 $27.6 $21.5 $101.5 $104.6 $107.9 YOY % -12.8% -4.1% -3.2% -1.9% 7.3% -7.3% -1.2% -4.8% 6.3% 7.2% 1.5% 3.0% 2.2% 4.3% 3.6% 3.5% 3.5% 3.0% 3.2% Other revenues $44.9 $48.3 $11.6 $12.3 $13.1 $13.0 $50.1 $12.8 $13.4 $13.3 $12.0 $51.5 $13.1 $14.1 $13.9 $12.6 $53.7 $56.3 $56.9 YOY % -16.4% 7.7% 0.5% 4.1% 2.7% 7.0% 3.6% 10.6% 8.9% 1.0% -7.8% 2.9% 2.0% 5.0% 5.0% 5.0% 4.2% 4.8% 1.2% Total Revenues $1,248.4 $1,275.6 $301.3 $350.6 $350.0 $319.6 $1,321.6 $319.1 $362.7 $360.7 $337.0 $1,379.5 $329.7 $375.0 $372.5 $348.3 $1,425.6 $1,472.1 $1,522.2 YOY % 53.9% 2.2% 1.7% 4.9% 6.0% 1.5% 3.6% 5.9% 3.4% 3.0% 5.4% 4.4% 3.3% 3.4% 3.3% 3.3% 3.3% 3.3% 3.4% Revenues Excluding Advertising Fees & Related Income$794.8 $804.6 $190.3 $219.1 $217.5 $201.1 $828.0 $201.9 $228.6 $225.3 $208.8 $864.6 $207.1 $236.5 $232.9 $215.8 $892.2 $921.6 $952.2 YOY % -2.0% 1.2% 2.2% 3.4% 4.9% 0.9% 2.9% 6.1% 4.3% 3.6% 3.8% 4.4% 2.6% 3.4% 3.3% 3.4% 3.2% 3.3% 3.3%

Cost of company-operated sales $13.6 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 YOY % -54.5% % of Company Revenue 113.5% Margin Chg. YOY 799bps

Occupancy expenses - franchised restaurants $57.4 $60.3 $14.0 $14.3 $14.8 $15.0 $58.1 $19.5 $19.8 $20.2 $20.5 $80.0 $19.9 $20.3 $20.7 $21.1 $82.0 $84.9 $88.1 YOY % 5.1% 5.0% -1.1% 0.2% -3.7% -9.1% -3.6% 39.3% 38.4% 36.8% 36.6% 37.7% 2.0% 2.6% 2.6% 2.7% 2.5% 3.5% 3.8% % of Franchise fees & royalty income 10.7% 10.9% 10.6% 9.5% 9.7% 10.5% 10.0% 14.0% 12.9% 13.1% 13.9% 13.5% 13.9% 12.8% 13.0% 13.8% 13.4% 13.4% 13.4% Margin Chg. YOY 6bps 16bps -52bps -46bps -95bps -128bps -81bps 343bps 340bps 340bps 340bps 341bps -10bps -10bps -10bps -10bps -10bps 0bps 0bps

Cost of ice cream and other products $77.6 $77.0 $16.9 $22.8 $21.3 $16.5 $77.4 $16.6 $24.2 $22.7 $16.9 $80.5 $17.0 $25.2 $23.5 $17.5 $83.1 $85.5 $88.3 YOY % 1.6% -0.8% -0.3% 2.6% 9.5% -10.7% 0.5% -1.3% 6.3% 6.6% 2.8% 4.0% 2.0% 4.0% 3.3% 3.3% 3.2% 2.9% 3.2% % of ice cream & other product sales 77.2% 79.9% 77.4% 81.0% 85.7% 80.6% 81.3% 80.3% 81.0% 85.2% 81.6% 82.1% 80.1% 80.8% 85.0% 81.4% 81.9% 81.8% 81.8% Margin Chg. YOY 1089bps 271bps 225bps 355bps 174bps -306bps 142bps 282bps 0bps -50bps 100bps 78bps -20bps -20bps -20bps -20bps -20bps -10bps 0bps

Advertising expenses $458.6 $476.2 $112.0 $132.6 $133.7 $119.7 $498.0 $118.1 $134.1 $135.3 $128.3 $515.7 $122.7 $138.5 $139.7 $132.5 $533.4 $550.6 $570.0 YOY % #DIV/0! 3.8% 0.8% 7.2% 7.8% 2.1% 4.6% 5.5% 1.1% 1.2% 7.1% 3.6% 3.9% 3.3% 3.2% 3.3% 3.4% 3.2% 3.5%

General & administrative expenses $242.2 $246.7 $59.8 $59.3 $64.0 $63.7 $246.8 $56.2 $58.6 $59.8 $61.1 $235.8 $57.4 $59.9 $61.1 $62.5 $240.9 $246.1 $252.2 YOY % -0.1% 1.9% -0.9% -2.9% 4.7% -0.8% 0.0% -6.1% -1.1% -6.6% -4.0% -4.5% 2.0% 2.2% 2.2% 2.3% 2.2% 2.2% 2.5% % of Total Revenue 30.5% 30.7% 31.4% 27.1% 29.4% 31.7% 29.8% 27.8% 25.6% 26.5% 29.3% 27.3% 27.7% 25.3% 26.2% 29.0% 27.0% 26.7% 26.5% Margin Chg. YOY 57bps 19bps -100bps -177bps -5bps -55bps -86bps -359bps -143bps -289bps -238bps -254bps -14bps -30bps -30bps -31bps -27bps -30bps -22bps

Depreciation and amortization expenses $20.5 $20.1 $5.0 $5.1 $4.9 $4.8 $19.9 $4.6 $5.1 $5.0 $5.1 $19.8 $4.8 $5.3 $5.2 $5.2 $20.5 $21.1 $21.9 YOY % -0.5% -1.8% -1.0% 1.1% -0.1% -3.0% -0.8% -8.2% -0.9% 2.3% 4.5% -0.6% 3.3% 3.4% 3.3% 3.3% 3.3% 3.3% 3.4% % of Total Revenue 2.6% 2.5% 2.6% 2.3% 2.3% 2.4% 2.4% 2.3% 2.2% 2.2% 2.4% 2.3% 2.3% 2.2% 2.2% 2.4% 2.3% 2.3% 2.3% Margin Chg. YOY 4bps -8bps -9bps -5bps -11bps -10bps -9bps -36bps -12bps -3bps 2bps -12bps 2bps 0bps 0bps 0bps 0bps 0bps 0bps

Amortization of other intangible assets $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Long-lived asset impairment charges $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Total operating expenses $869.8 $880.3 $207.7 $234.1 $238.7 $219.7 $900.3 $215.0 $241.8 $243.0 $231.9 $931.8 $221.6 $249.2 $250.2 $238.8 $959.9 $988.2 $1,020.4

Net income of equity method investments $14.6 $15.2 $2.0 $3.8 $5.8 $3.2 $14.9 $2.2 $3.8 $5.5 $3.5 $15.0 $2.2 $3.8 $5.5 $3.5 $15.0 $15.0 $15.0 Other income (losses), net $9.4 $0.6 $0.0 ($0.6) ($0.2) ($0.9) ($1.7) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Operating Income $402.5 $411.1 $95.7 $119.8 $116.9 $102.2 $434.6 $106.3 $124.7 $123.1 $108.6 $462.7 $110.3 $129.6 $127.9 $112.9 $480.7 $499.0 $516.8 YOY % 0.5% 2.1% 3.9% 6.8% 5.7% 6.3% 5.7% 11.1% 4.1% 5.3% 6.3% 6.5% 3.8% 3.9% 3.9% 4.0% 3.9% 3.8% 3.6% Operating Margin 32.2% 32.2% 31.8% 34.2% 33.4% 32.0% 32.9% 33.3% 34.4% 34.1% 32.2% 33.5% 33.5% 34.6% 34.3% 32.4% 33.7% 33.9% 34.0% Margin Chg. YOY -1715bps -1bps 67bps 59bps -12bps 146bps 65bps 156bps 21bps 74bps 25bps 66bps 14bps 17bps 19bps 20bps 18bps 17bps 6bps

Interest income $0.6 $3.3 $1.6 $1.5 $1.9 $2.1 $7.2 $1.8 $1.5 $1.5 $1.5 $6.3 $1.5 $1.5 $1.5 $1.5 $6.0 $6.0 $6.0 Interest expense ($100.9) ($104.4) ($32.5) ($32.5) ($31.9) ($31.8) ($128.7) ($32.1) ($32.1) ($32.1) ($32.1) ($128.3) ($32.1) ($32.1) ($32.1) ($32.1) ($128.2) ($128.2) ($130.7) Gain (loss) on debt extinguishment & refinancing $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other income (losses), net ($1.2) $0.4 ($0.3) ($0.3) ($0.1) ($0.4) ($1.1) ($0.0) $0.0 $0.0 $0.0 ($0.0) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Total other income (expense), net ($101.5) ($100.7) ($31.2) ($31.3) ($30.1) ($30.1) ($122.6) ($30.3) ($30.6) ($30.6) ($30.6) ($122.0) ($30.6) ($30.6) ($30.6) ($30.6) ($122.2) ($122.2) ($124.7)

Pre-Tax Income $301.0 $310.4 $64.5 $88.5 $86.8 $72.1 $312.0 $76.0 $94.1 $92.6 $78.1 $340.8 $79.8 $99.0 $97.3 $82.4 $358.5 $376.8 $392.1 Pre-Tax Margin 37.9% 38.6% 33.9% 40.4% 39.9% 35.9% 37.7% 37.7% 41.2% 41.1% 37.4% 39.4% 38.5% 41.9% 41.8% 38.2% 40.2% 40.9% 41.2% $120 Income tax expense $112.6 $119.7 $10.2 $23.7 $16.9 $14.9 $65.7 $20.1 $26.4 $25.9 $21.9 $94.3 $22.3 $27.7 $27.3 $23.1 $100.4 $105.5 $109.8 Tax Rate 37.4% 38.6% 15.8% 26.8% 19.5% 20.6% 21.1% 26.5% 28.0% 28.0% 28.0% 27.7% 28.0% 28.0% 28.0% 28.0% 28.0% 28.0% 28.0% Net earnings (loss) attributable to noncontrolling interest $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Discontinued Operations Net Income $188.4 $190.6 $54.3 $64.8 $69.9 $57.3 $246.3 $55.9 $67.8 $66.6 $56.2 $246.5 $57.4 $71.3 $70.1 $59.3 $258.1 $271.3 $282.3 Net Income Margin 23.7% 23.7% 28.6% 29.6% 32.1% 28.5% 29.7% 27.7% 29.6% 29.6% 26.9% 28.5% 27.7% 30.2% 30.1% 27.5% 28.9% 29.4% 29.7%

Adj EPS $2.04 $2.07 $0.62 $0.77 $0.83 $0.68 $2.90 $0.67 $0.82 $0.81 $0.68 $2.98 $0.70 $0.87 $0.86 $0.73 $3.16 $3.39 $3.61 YOY % 5.3% 1.5% 21.2% 26.3% 63.3% 56.4% 40.2% 8.3% 6.4% -2.9% -0.4% 2.7% 4.3% 6.4% 6.7% 7.6% 6.3% 7.3% 6.4%

Weighted Average Basic Shares 91.6 90.9 86.5 82.9 82.8 83.7 83.9 82.6 81.9 81.8 81.8 82.0 81.4 81.0 80.6 80.2 80.8 79.1 77.4 YOY % -4.7% -0.8% -5.7% -9.1% -8.3% -7.3% -7.6% -4.4% -1.2% -1.1% -2.3% -2.3% -1.5% -1.1% -1.5% -1.9% -1.5% -2.1% -2.2% Weighted Average Diluted Shares 92.5 92.2 87.9 84.1 84.1 83.7 85.0 83.4 82.7 82.6 82.6 82.8 82.2 81.8 81.4 81.0 81.6 79.9 78.2 YOY % -4.7% -0.3% -5.6% -9.2% -8.0% -8.7% -7.9% -5.1% -1.7% -1.8% -1.4% -2.5% -1.5% -1.1% -1.5% -1.9% -1.5% -2.1% -2.2%

Cash Dividends per Share $1.20 $1.29 $0.35 $0.35 $0.35 $0.35 $1.39 $0.38 $0.38 $0.38 $0.38 $1.50 $0.41 $0.41 $0.41 $0.41 $1.65 $1.82 $2.00 YOY % 13.2% 7.5% 7.8% 7.8% 7.8% 7.8% 7.8% 7.9% 7.9% 7.9% 7.9% 7.9% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Payout Ratio 58.9% 62.4% 56.2% 45.1% 41.8% 50.8% 48.0% 56.0% 45.8% 46.5% 55.1% 50.4% 59.0% 47.3% 47.9% 56.3% 52.2% 53.5% 55.3%

EBITDA Operating Income $402.5 $411.1 $95.7 $119.8 $116.9 $102.2 $434.6 $106.3 $124.7 $123.1 $108.6 $462.7 $110.3 $129.6 $127.9 $112.9 $480.7 $499.0 $516.8 Depreciation $20.5 $20.1 $5.0 $5.1 $4.9 $4.8 $19.9 $4.6 $5.1 $5.0 $5.1 $19.8 $4.8 $5.3 $5.2 $5.2 $20.5 $21.1 $21.9 EBITDA $422.9 $431.2 $100.7 $124.9 $121.8 $107.0 $454.5 $110.9 $129.8 $128.2 $113.7 $482.6 $115.1 $134.8 $133.1 $118.2 $501.2 $520.1 $538.7 YOY % 0.4% 2.0% 3.6% 6.5% 5.4% 5.9% 5.4% 10.1% 3.9% 5.2% 6.2% 6.2% 3.7% 3.9% 3.9% 4.0% 3.9% 3.8% 3.6% EBITDA Margin 33.9% 33.8% 33.4% 35.6% 34.8% 33.5% 34.4% 34.8% 35.8% 35.5% 33.7% 35.0% 34.9% 36.0% 35.7% 33.9% 35.2% 35.3% 35.4% Margin Chg. YOY -1804bps -8bps 62bps 53bps -21bps 139bps 59bps 134bps 15bps 73bps 24bps 59bps 14bps 17bps 19bps 20bps 18bps 17bps 6bps Source: Company data, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 32 25 June 2019

Figure 57: DNKN Balance Sheet

Dunkin' Brands (DNKN) Fiscal Yr Fiscal Yr 2018 Fiscal Yr 2019 Fiscal Yr 2020 Fiscal Yr Fiscal Yr Fiscal Yr ($ in millions) 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E 2016 2017 Mar-18 Jun-18 Sep-18 Dec-18 2018 Mar-19 Jun-19 Sep-19 Dec-19 2019E Mar-20 Jun-20 Sep-20 Dec-20 2020E 2021E 2022E Balance Sheet Cash and cash equivalents $361.4 $1,018.3 $338.5 $367.9 $428.2 $517.6 $517.6 $458.7 $443.1 $456.3 $510.1 $510.1 $427.4 $426.4 $420.2 $457.0 $457.0 $387.8 $319.7 Restricted cash $69.7 $94.0 $82.6 $85.0 $79.4 $79.0 $79.0 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 Accounts receivable, net $62.3 $69.5 $73.9 $88.8 $79.8 $76.0 $76.0 $78.2 $59.8 $59.1 $65.0 $65.0 $67.1 $62.1 $61.4 $67.2 $67.2 $69.4 $71.8 Notes and other receivables $41.3 $52.3 $32.4 $40.1 $53.9 $64.4 $64.4 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 $36.2 Assets held for sale $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Deferred income taxes, net $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Restricted assets of advertising funds $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Prepaid income taxes $21.0 $21.9 $28.9 $17.8 $20.8 $27.0 $27.0 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 $17.4 Prepaid expenses and other current assets $41.6 $48.2 $59.5 $56.9 $48.2 $49.5 $49.5 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 $51.9 Total Current Assets $597.2 $1,304.3 $615.8 $656.5 $710.4 $813.5 $813.5 $722.0 $687.9 $700.4 $760.1 $760.1 $679.5 $673.5 $666.6 $709.3 $709.3 $642.3 $576.4

Property, plant & equipment, net $185.8 $181.5 $181.0 $204.0 $205.9 $209.2 $209.2 $204.1 $209.0 $216.5 $226.4 $226.4 $229.7 $232.4 $235.2 $238.0 $238.0 $248.8 $259.0 Operating lease assets $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 $380.2 Investments in joint ventures $114.7 $140.6 $140.9 $137.9 $143.0 $146.4 $146.4 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 $142.2 Goodwill $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 $888.3 Other intangible assets, net $1,378.7 $1,357.2 $1,351.3 $1,345.3 $1,340.0 $1,334.8 $1,334.8 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 $1,316.5 Restricted cash $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other assets $62.7 $65.5 $66.8 $66.7 $66.7 $64.5 $64.5 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 $72.1 Total Assets $3,227.4 $3,937.4 $3,244.1 $3,298.7 $3,354.2 $3,456.6 $3,456.6 $3,725.4 $3,696.3 $3,716.2 $3,785.9 $3,785.9 $3,708.4 $3,705.2 $3,701.1 $3,746.5 $3,746.5 $3,690.4 $3,634.7

Current portion of long-term debt $25.0 $31.5 $31.5 $31.7 $31.7 $31.7 $31.7 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 Operating lease liabilities $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 $33.1 Capital lease obligations $0.6 $0.6 $0.6 $0.6 $0.6 $0.5 $0.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Accounts payable $47.5 $53.4 $60.9 $68.8 $55.9 $80.0 $80.0 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 $51.6 Income tax payable $0.0 $0.0 $0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Liabilities of advertising funds $0.0 $0.0 $0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Deferred income $42.3 $44.9 $44 $44.2 $43.8 $38.1 $38.1 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 $35.9 Other current liabilities $324.6 $355.1 $272.4 $284.8 $296.6 $389.3 $389.3 $321.2 $321.2 $321.2 $381.2 $381.2 $321.2 $321.2 $321.2 $381.2 $381.2 $381.2 $381.2 Total Current Liabilities $439.9 $485.5 $409.3 $430.0 $428.4 $539.6 $539.6 $468.7 $468.7 $468.7 $528.7 $528.7 $468.7 $468.7 $468.7 $528.7 $528.7 $528.7 $528.7

Long-term debt $2,402.0 $3,035.9 $3,029.2 $3,024.0 $3,017.3 $3,010.6 $3,010.6 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 Operating lease liabilities $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 $393.2 Capital lease obligations $7.6 $7.2 $7.0 $6.9 $6.8 $7.0 $7.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Unfavorable operating leases acquired $11.4 $9.8 $9.4 $9.0 $8.7 $8.2 $8.2 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Deferred income $304.4 $361.5 $362.1 $366.2 $354.5 $327.3 $327.3 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 $325.1 Deferred income taxes, net $337.2 $214.3 $210.1 $205.9 $200.2 $204.0 $204.0 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 $198.6 Other long-term liabilities $71.6 $77.9 $77.2 $74.6 $73.9 $72.6 $72.6 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 $22.3 Total Liabilities $3,574.0 $4,192.0 $4,104.4 $4,116.5 $4,089.7 $4,169.4 $4,169.4 $4,416.7 $4,416.7 $4,416.7 $4,476.7 $4,476.7 $4,416.7 $4,416.7 $4,416.7 $4,476.7 $4,476.7 $4,476.7 $4,476.7

Preferred Stock $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Common Stock $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 Additional Paid in Capital $807.5 $724.1 $522.1 $511.4 $645.5 $642.0 $642.0 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 $618.3 Treasury stock, at cost ($1.1) ($1.1) ($1.1) ($1.1) ($1.1) ($1.1) ($1.1) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) ($3.3) Retained Earnings/Accumulated Deficit ($1,129.2) ($968.1) ($1,374.0) ($1,313.5) ($1,365.0) ($1,338.7) ($1,338.7) ($1,288.8) ($1,317.9) ($1,297.9) ($1,288.3) ($1,288.3) ($1,305.7) ($1,308.9) ($1,313.0) ($1,327.6) ($1,327.6) ($1,383.8) ($1,439.4) Accumulated other comprehensive income/loss & NCI($23.9) ($9.5) ($7.4) ($14.7) ($15.1) ($15.1) ($15.1) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) ($17.7) Noncontrolling interest $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Shareholders' Equity ($346.6) ($254.5) ($860.3) ($817.8) ($735.6) ($712.8) ($712.8) ($691.3) ($720.4) ($700.4) ($690.8) ($690.8) ($708.3) ($711.5) ($715.6) ($730.1) ($730.1) ($786.3) ($842.0)

Total Liabilities & Shareholders' Equity $3,227.4 $3,937.4 $3,244.1 $3,298.7 $3,354.2 $3,456.6 $3,456.6 $3,725.4 $3,696.3 $3,716.2 $3,785.9 $3,785.9 $3,708.4 $3,705.2 $3,701.1 $3,746.5 $3,746.5 $3,690.4 $3,634.7 check ------

Balance Sheet Analysis 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E Debt Analysis Long-term debt $2,402.0 $3,035.9 $3,029.2 $3,024.0 $3,017.3 $3,010.6 $3,010.6 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 $3,008.7 Current portion of long-term debt $25.0 $31.5 $31.5 $31.7 $31.7 $31.7 $31.7 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 $26.9 ST & LT Capital Lease Obligations $8.1 $7.8 $7.6 $7.5 $7.3 $7.5 $7.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Total Debt $2,435.1 $3,075.1 $3,068.4 $3,063.1 $3,056.3 $3,049.8 $3,049.8 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6

Less: Cash & Cash equivalents $361.4 $1,018.3 $338.5 $367.9 $428.2 $517.6 $517.6 $458.7 $443.1 $456.3 $510.1 $510.1 $427.4 $426.4 $420.2 $457.0 $457.0 $387.8 $319.7 Less: Restricted Cash $69.7 $94.0 $82.6 $85.0 $79.4 $79.0 $79.0 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 Net Debt $2,004.0 $1,962.8 $2,647.3 $2,610.2 $2,548.7 $2,453.1 $2,453.1 $2,497.4 $2,513.0 $2,499.8 $2,446.0 $2,446.0 $2,528.7 $2,529.7 $2,535.9 $2,499.0 $2,499.0 $2,568.3 $2,636.4

Average Debt $2,444.4 $2,755.1 $3,071.7 $3,065.7 $3,059.7 $3,053.0 $3,062.4 $3,042.7 $3,035.6 $3,035.6 $3,035.6 $3,042.7 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 $3,035.6 TTM EBITDA $423 $431 $435 $442 $449 $455 $455 $465 $470 $476 $483 $483 $487 $492 $497 $501 $501 $520 $539 NTM EBITDA $431 $455 $465 $470 $476 $483 $483 $487 $492 $497 $501 $501 $506 $511 $516 $520 $520 $539 $556 DNKN Reported TTM EBITDA $475.5 $514.7 $520.0 $524.2 $520.5 $499 $499 $507 DNKN Reported Net Debt $2,205 $2,171 $2,814 $2,779 $2,709 $2,669 $2,669 $2,684 Total Debt/TTM EBITDA 5.8x 7.1x 7.1x 6.9x 6.8x 6.7x 6.7x 6.5x 6.5x 6.4x 6.3x 6.3x 6.2x 6.2x 6.1x 6.1x 6.1x 5.8x 5.6x Net Debt/TTM EBITDA 4.7x 4.6x 6.1x 5.9x 5.7x 5.4x 5.4x 5.4x 5.4x 5.3x 5.1x 5.1x 5.2x 5.1x 5.1x 5.0x 5.0x 4.9x 4.9x Net Debt/DNKN TTM EBITDA 4.6x 4.2x 5.4x 5.3x 5.2x 5.3x 5.3x 5.3x Source: Company data, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 33 25 June 2019

Figure 58: DNKN Statement of Cash Flows

Dunkin' Brands (DNKN) Fiscal Yr Fiscal Yr 2018 Fiscal Yr 2019 Fiscal Yr 2020 Fiscal Yr Fiscal Yr Fiscal Yr ($ in millions) 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E 2016 2017 Mar-18 Jun-18 Sep-18 Dec-18 2018 Mar-19 Jun-19 Sep-19 Dec-19 2019E Mar-20 Jun-20 Sep-20 Dec-20 2020E 2021E 2022E Cash Flow Statement Operating Cash Flows Net income $195.6 $350.9 $50.2 $60.5 $66.1 $53.2 $229.9 $52.3 $67.8 $66.6 $56.2 $242.9 $57.4 $71.3 $70.1 $59.3 $258.1 $271.3 $282.3 Depreciation and amortization $42.5 $41.4 $10.4 $10.4 $10.2 $14.0 $45.0 $10.4 $5.1 $5.0 $5.1 $25.6 $4.8 $5.3 $5.2 $5.2 $20.5 $21.1 $21.9 Amortization of debt issuance costs $6.4 $6.2 $1.2 $1.3 $1.3 $1.3 $5.0 $1.3 $0.0 $0.0 $0.0 $1.3 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Loss on debt extinguishment and refinancing $0.0 $7.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Impact of unfavorable operating leases acquired $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Deferred income taxes ($12.5) ($145.0) ($4.3) ($4.2) ($5.6) $4.1 ($9.9) ($5.4) $0.0 $0.0 $0.0 ($5.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Impairment charges $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Provision for bad debt $0.1 $0.5 $0.4 ($0.0) $0.0 $0.3 $0.6 $0.7 $0.0 $0.0 $0.0 $0.7 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Share-based compensation expense $17.2 $14.9 $3.2 $3.7 $3.9 $4.0 $14.9 $3.6 $3.8 $4.0 $4.1 $15.5 $3.7 $3.9 $4.1 $4.2 $15.8 $16.1 $16.5 Net loss (income) of equity method investments ($14.6) ($15.2) ($2.0) ($3.8) ($5.8) ($3.2) ($14.9) ($2.2) $0.0 $0.0 $0.0 ($2.2) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Dividends received from equity method investments $5.2 $4.7 $3.9 $0.0 $0.6 $0.0 $4.5 $3.8 $0.0 $0.0 $0.0 $3.8 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other, net ($11.5) ($1.8) $1.2 $1.9 $1.2 ($1.6) $2.8 $0.2 $0.0 $0.0 $0.0 $0.2 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Changes in working capital: Restricted cash $2.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Accounts, notes and other receivables, net $40.5 ($17.5) $15.5 ($23.0) ($5.0) ($7.3) ($19.8) $25.2 $18.4 $0.7 ($5.9) $38.4 ($2.0) $5.0 $0.7 ($5.8) ($2.2) ($2.2) ($2.4) Prepaid income taxes, prepaid expenses and other current assets ($1.5) ($6.2) ($18.3) $13.7 $5.7 ($7.6) ($6.6) $3.8 $0.0 $0.0 $0.0 $3.8 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Accounts payable ($6.3) $2.7 $7.9 $8.0 ($13.6) $24.7 $27.0 ($27.9) $0.0 $0.0 $0.0 ($27.9) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other current liabilities $5.4 $27.3 ($82.7) $11.4 $12.9 $92.5 $34.1 ($67.9) $0.0 $0.0 $60.0 ($7.9) ($60.0) $0.0 $0.0 $60.0 $0.0 $0.0 $0.0 Liabilities of advertising funds, net $1.2 ($0.5) ($0.5) $0.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Income taxes payable, net $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Deferred revenue $0.4 $3.0 $0.0 $3.9 ($12.2) ($32.8) ($41.1) ($9.5) $0.0 $0.0 $0.0 ($9.5) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other, net $6.0 $4.6 ($2.4) ($0.3) ($0.8) $0.8 ($2.7) ($4.4) $0.0 $0.0 $0.0 ($4.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Operating Cash Flows $276.2 $276.9 ($16.2) $83.9 $58.8 $142.4 $269.0 ($16.0) $95.1 $76.4 $119.4 $274.9 $3.8 $85.4 $80.1 $122.9 $292.3 $306.3 $318.3 Year-to-date ($16.2) $67.7 $126.5 $269.0 ($16.0) $79.1 $155.5 $274.9 $3.8 $89.3 $169.4 $292.3

Investing Cash Flows Additions to property, plant and equipment ($15.2) ($14.6) ($5.8) ($27.1) ($8.5) ($10.4) ($51.9) ($1.9) ($10.0) ($12.5) ($15.0) ($39.4) ($8.0) ($8.0) ($8.0) ($8.0) ($32.0) ($32.0) ($32.0) Proceeds from sale of JV $0.0 $0.9 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Proceeds from sales of real estate and co-owned units $20.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Other, net ($4.0) ($0.1) $0.0 $0.0 $0.0 $0.0 $0.0 ($0.3) $0.0 $0.0 $0.0 ($0.3) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Investing Cash Flows $1.3 ($13.9) ($5.8) ($27.1) ($8.5) ($10.4) ($51.8) ($2.3) ($10.0) ($12.5) ($15.0) ($39.8) ($8.0) ($8.0) ($8.0) ($8.0) ($32.0) ($32.0) ($32.0) Year-to-date ($5.8) ($32.9) ($41.4) ($51.8) ($2.3) ($12.3) ($24.8) ($39.8) ($8.0) ($16.0) ($24.0) ($32.0)

Financing Cash Flows Proceeds from issuance of long-term debt $0.0 $1,400.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Repayment of long-term debt ($25.0) ($754.4) ($7.9) ($7.9) ($7.9) ($7.9) ($31.6) ($7.9) $0.0 $0.0 $0.0 ($7.9) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Proceeds from issuance of short-term debt $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Proceeds from issuance of common stock $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Repurchase of common stock ($55.0) ($127.2) ($650.4) $0.0 $0.0 ($30.0) ($680.4) ($0.1) ($70.0) ($20.0) ($20.0) ($110.1) ($45.0) ($45.0) ($45.0) ($45.0) ($180.0) ($200.0) ($200.0) Payment of deferred financing and other debt-related costs $0.0 ($18.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Change in restricted cash $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Exercise of stock options $10.6 $36.3 $18.2 $12.3 $41.2 $23.7 $95.3 $3.8 $0.0 $0.0 $0.0 $3.8 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Excess tax benefit from exercise of stock options $2.7 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Cash dividends paid ($109.7) ($117.0) ($28.6) ($28.8) ($28.6) ($28.8) ($114.8) ($31.0) ($30.7) ($30.7) ($30.7) ($123.0) ($33.6) ($33.4) ($33.2) ($33.1) ($133.3) ($143.6) ($154.5) Other, net ($0.1) ($0.7) ($0.7) ($0.2) ($0.2) $0.2 ($0.9) ($5.1) $0.0 $0.0 $0.0 ($5.1) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Financing Cash Flows ($176.3) $418.6 ($669.4) ($24.6) $4.5 ($42.8) ($732.4) ($40.3) ($100.7) ($50.7) ($50.7) ($242.3) ($78.6) ($78.4) ($78.2) ($78.1) ($313.3) ($343.6) ($354.5) Year-to-date ($669.4) ($694.0) ($689.5) ($732.4) ($40.3) ($141.0) ($191.6) ($242.3) ($78.6) ($157.0) ($235.2) ($313.3) Effect of exchange rates ($0.2) $0.6 $0.1 ($0.3) ($0.1) ($0.2) ($0.5) $0.1 $0.0 $0.0 $0.0 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Change in cash and equivalents $101.0 $682.3 ($691.4) $32.0 $54.6 $89.0 ($515.8) ($58.4) ($15.6) $13.2 $53.8 ($7.0) ($82.7) ($1.0) ($6.2) $36.8 ($53.0) ($69.2) ($68.2) Cash at beginning of period $260.4 $361.4 $1,018.3 $338.5 $367.9 $428.2 $1,018.3 $517.6 $458.7 $443.1 $456.3 $517.6 $510.1 $427.4 $426.4 $420.2 $510.1 $457.0 $387.8 Less: change in restricted cash $25.4 ($11.5) $2.5 ($5.6) ($0.4) ($15.1) $0.5 $0.0 $0.0 $0.0 $0.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Cash at end of period $361.4 $1,018.3 $338.5 $367.9 $428.2 $517.6 $517.6 $458.7 $443.1 $456.3 $510.1 $510.1 $427.4 $426.4 $420.2 $457.0 $457.0 $387.8 $319.7

Restricted cash $69.7 $94.0 $82.6 $85.0 $79.4 $79.0 $79.0 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 $79.6 Restricted cash incl in other assets $0.7 $1.7 $1.7 $1.8 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 Change in restricted cash $25.4 ($11.5) $2.5 ($5.6) ($0.4) ($15.1) $0.5 $0.0 $0.0 $0.0 $0.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Change in cash and cash equivalents excl restricted cash $656.9 ($679.9) $29.5 $60.2 $89.4 ($500.7) ($58.9) ($15.6) $13.2 $53.8 ($7.508) ($82.7) ($1.0) ($6.2) $36.8 ($53.0) ($69.2) ($68.2)

Cash on Balance Sheet $361.4 $1,018.3 $338.5 $367.9 $428.2 $517.6 $517.6 $458.7 $443.1 $456.3 $510.1 $510.1 $427.4 $426.4 $420.2 $457.0 $457.0 $387.8 $319.7 Difference ------0.0 ------

Free Cash Flow 2016 2017 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19E 3Q19E 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E 2022E Operating Cash Flow $276.2 $276.9 ($16.2) $83.9 $58.8 $142.4 $269.0 ($16.0) $95.1 $76.4 $119.4 $274.9 $3.8 $85.4 $80.1 $122.9 $292.3 $306.3 $318.3 Less: Capex ($15.2) ($14.6) ($5.8) ($27.1) ($8.5) ($10.4) ($51.9) ($1.9) ($10.0) ($12.5) ($15.0) ($39.4) ($8.0) ($8.0) ($8.0) ($8.0) ($32.0) ($32.0) ($32.0) Free Cash Flow $261.0 $262.3 ($22.0) $56.8 $50.2 $132.0 $217.1 ($17.9) $85.1 $63.9 $104.4 $235.5 ($4.2) $77.4 $72.1 $114.9 $260.3 $274.3 $286.3 FCF/Share $2.41 $2.46 ($0.22) $0.59 $0.52 $1.40 $2.24 ($0.19) $0.92 $0.69 $1.13 $2.54 ($0.04) $0.84 $0.79 $1.25 $2.82 $3.23 $3.46

Source: Company data, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 34 25 June 2019

Credit Suisse HOLT® Analysis DNKN's current price implies expectations of 5.8% sales growth. DNKN’s valuation is more sensitive to top-line growth, with every 100bps adding ~$15 per share, and every 100bps of EBITDA margin adding ~$2 per share. Figure 59: HOLT Market Implied Scenario

DUNKIN' BRANDS GROUP INC (DNKN) Illustrative "What's Priced In" Assumptions Valuation Sensitivity Analysis at Current Share Price of $80

EBITDA Margin (%) Long-Term Sales growth 2019-2029 based on CS Research, then assumed constant CS Research 56.7 -200 bps -100 bps 0 bps +100 bps +200 bps 60 56.8 56.8

50 3.8% 4.8% 5.8% 6.8% 7.8% 40 -200 bps 54.8% $51 $63 $76 $92 $110 30 20 -100 bps 55.8% $53 $65 $78 $94 $113 10 0 0 bps 56.8% $55 $67 $80 $97 $116 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Historical margins Forecast Historical median +100 bps 57.8% $57 $69 $83 $99 $119

Long-Term EBITDA Margin Sales Growth (%) +200 bps 58.8% $58 $71 $85 $102 $122 2019 based on CS Research, then solved long term sales growth required to get to current price 10 CS Research 5.8 > 10% Within > 10% 4.8 5 downside 10% upside

0 DNKN's valuation is more sensitive to top line growth with every 100bps increment adding ~15 per share vs. ~$2 per share (5) added for 100bps incremental margins (10) 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Historical sales growth Market implied Historical median Assumptions and Methodology - EBITDA margins: 2019-2029 based on CS Research, then assumed constant Asset Turns (x): Sales/ Invested Capital - Sales growth: 2019 based on CS Research; then solved for the sales 0.8 CAGR required to get to the current price 0.7 - 0.6 After the 10-year explicit forecast, the HOLT methodology calculates 0.6 0.6 0.6 the terminal value by fading returns on capital and growth towards cost 0.5 of capital and GDP growth respectively HOLT market implied scenario 0.4 For this analysis, we have made two adjustments consistently across 0.3 our coverage: first, we are using the US Country discount rate 0.2 (3.83%) for all companies and second, we have adjusted the final fade 0.1 rate from 10% to 5% to account for the sector's longer sustainability 0.0 - ofNote returns that HOLT on capital EBITDA margins differ from reported margins as 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 HOLT excludes Advertising fees ad related income from Revenues Historical asset turns Forecast Historical median

CFROI (%) Asset Growth (%) 35 29.5 29.9 29.6 12 30 10 7.3 25 8 6 20 4.0 15 4 2.5 2 10 0 5 (2) 0 (4) 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Historical CFROI Forecast CFROI Discount rate Historical median Historical asset growth rate Forecast asset growth

Source: Credit Suisse HOLT®. CFROI and HOLT are trademarks or registered trademarks of Credit Suisse Group AG or its affiliates in the United States and other countries. Source: Credit Suisse HOLT

Dunkin’ Brands Group, Inc. (DNKN) 35 25 June 2019

Company Overview Dunkin’ Brands (DNKN) is one of the largest global franchisors of quick service restaurant brands, serving hot and cold coffee and baked goods, as well as hard serve ice cream. DNKN franchises restaurants under the Dunkin’ and Baskin-Robbins brands. DNKN is 100% franchised with ~21,000 points of distribution in more than 60 countries as of the end of 2018. As of the end of 2018, DNKN’s points of distribution included: Dunkin’ US 9,419, Dunkin’ International 3,452, Baskin-Robbins International 5,491 and Baskin- Robbins US 2,550. DNKN reports its business in five segments including: Dunkin’ US, Dunkin’ International, Baskin-Robbins International, Baskin-Robbins US and US Advertising Funds. In 2018, total revenue was ~$1.3BN (~$830MM excluding advertising revenue), with ~$630MM generated from Dunkin’ and ~$163MM from Baskin-Robbins. Dunkin’ US generates 75%+ of system revenue and ~85% of operating profit, making it the most meaningful segment in the portfolio.

Figure 60: DNKN Units by Segment Figure 61: DNKN Unit Composition 2018

25,000

20,000 Baskin-Robbins International 15,000 26%

Units 10,000 Dunkin' US 45% 5,000 Baskin-Robbins - US

12%

2009

2010

2011

2012

2013

2014

2015

2016

2017 2018 Dunkin' Dunkin' US Dunkin' International International Baskin-Robbins US Baskin-Robbins International 17%

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Figure 62: DNKN Operating Income by Segment Figure 63: DNKN Operating Income 2018

$600 Baskin-Robbins $500 International, 6% $400 Baskin-Robbins $300 US, 6%

$200 Dunkin' International,

$100 3% Operating Operating Income ($MM) Dunkin' US, $0

85%

2011 2012 2013 2014 2015 2016 2017 2018

Dunkin' US Dunkin' International Baskin-Robbins US Baskin-Robbins International

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

DNKN generates revenue from five primary sources including: 1) royalty income and franchise fees associated with franchised restaurants; 2) rental income from restaurant properties leased/subleased to franchisees; 3) sales of ice cream and other products to franchisees in select international markets; 4) other income including fees for licensing of the Dunkin’ and Baskin-Robbins brands sold in certain retail channels and other sources; and 5) advertising fees from Dunkin’ and Baskin-Robbins franchisees and breakage and other revenue related to the gift card program.

Dunkin’ Brands Group, Inc. (DNKN) 36 25 June 2019

Figure 64: DNKN Revenue by Segment Figure 65: DNKN Revenue by Segment 2018

$900 $800 $700 Baskin-Robbins $600 International, $500 14% $400

$300 Baskin-Robbins Revenue Revenue ($MM) $200 US, 6% Dunkin' US, $100 77% $0 Dunkin' International,

3%

2011

2012

2013

2014

2015

2016

2017 2018

Dunkin' US Dunkin' International Baskin-Robbins US Baskin-Robbins International

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: Excludes US Advertising Revenue. Note: Excludes US Advertising Revenue.

Figure 66: DNKN Revenue by Source Figure 67: DNKN Revenue by Source 2018

$900 $800 $700 Other revenues, 6% $600 $500 Sales of ice cream & other $400 products, 11% $300 Franchisee fees

Revenue Revenue ($MM) & royalty $200 income, 70% $100 $0 Rental income,

13%

2011

2012

2013

2014

2015

2016

2017 2018 Franchisee fees & royalty income Rental income Sales of ice cream & other products Other revenues Company sales Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Note: Excludes US Advertising Revenue. Note: Excludes US Advertising Revenue.

Properties As of the end of 2018, DNKN owned 102 properties and leased 960 across the US and Canada, with a majority leased or subleased to franchisees. In 2018, DNKN generated $104.4MM of rental income from franchisees. Of the 11,969 US properties at the end of 2018, 97 sites were owned by DNKN and leased to franchisees and 929 were leased by DNKN and subleased to franchisees. Of the sites owned or leased by DNKN in the US, 17 were “surplus properties” that no longer have a Dunkin’ or Baskin-Robbins restaurant. Dunkin’ traditional restaurant formats include free standing, end-caps and gas and convenience locations. A freestanding building is typically 1,200 to 2,500 square feet and may include a drive-thru window. An end-cap is typically 1,000 to 2,000 square feet and may include a drive-thru window. The majority of Dunkin’ restaurants have their fresh baked goods delivered from franchisee-owned-and-operated CMLs. Baskin-Robbins traditional restaurant formats include free standing and end-caps. A free standing building is typically 600 to 1,200 square feet and end-cap is typically 800 to 1,200 square feet, both of which may have a drive-thru window. In the US, there are 1,328 combination restaurants with both a Dunkin’ and Baskin- Robbins. Combos count as both a Dunkin’ and Baskin-Robbins point of distribution and typically are 1,400 to 3,500 square feet.

Dunkin’ Brands Group, Inc. (DNKN) 37 25 June 2019

Fiscal Year End/Reporting Period DNKN’s fiscal year ends on the last Saturday in December. Each of DNKN’s fiscal quarters ends on the 13th Saturday of each quarter (or 14th Saturday of fourth fiscal quarter when applicable). FY22 is the next fiscal year with 53 weeks in the reporting period.

Dunkin’ Brands Group, Inc. (DNKN) 38 25 June 2019

Management & Board of Directors

Figure 68: Management & Board of Directors Management Profile Executive Position Years at DNKN

David Hoffman Chief Executive Officer & President, Dunkin’ US 2 Kate Jaspon Chief Financial Officer 13 David Mann SVP & Chief Legal Officer Joined Mar 2019 Tony Weisman Chief Marketing Officer, Dunkin' US 1 Jack Clare Chief Information & Strategy Officer 7 Karen Raskopf Chief Communications & Sustainability Officer 10 Scott Murphy SVP, Chief Operating Officer, Dunkin’ US 15 John Varughese SVP, International 16 Jason Maceda SVP, Baskin-Robbins US & Canada 21

Mangement Compensation Stock & Option Non-Equity Executive Position Salary Total Awards Incentive & Other David Hoffman CEO & President, Dunkin’ US $794,491 $3,479,482 $559,571 $4,833,544 Nigel Travis Chairman and former CEO $1,000,000 $3,318,570 $772,447 $5,091,017 Kate Jaspon CFO $420,673 $742,240 $171,221 $1,334,134 Tony Weisman CMO, Dunkin’ US $625,000 $742,240 $262,502 $1,629,742 Richard Emmett Former Chief Legal & HR Officer $525,000 $742,240 $210,171 $1,477,411 Scott Murphy SVP, COO, Dunkin’ US $477,212 $643,312 $189,541 $1,310,065

Management Compensation Metrics

CEO David Hoffman Tenure as CEO Since Jul 2018 Total Compensation ~$4.8MM Short-term Incentive Metrics Weight Global Adjusted Operating Income 25% Dunkin' US SSS 25% Dunkin' US Traffic Growth 10% Dunkin' Brands Global Total Revenue 15% Dunkin' US Net Development 25% Long-term Incentive Metrics Vesting Period PSUs 3-yrs 3-yr Adjusted Operating CAGR TSR relative to S&P 500 Stock Options 4-yrs RSUs 1-yr

Board of Directors Director Experience Joined Board

Anthony DiNovi Co-President of Thomas H. Lee Partners; Director of West Corporation 2006 Mark Nunnelly Special Advisor to the Governor & Executive Director of MassIT 2006 Nigel Travis Non-Executive Chairman of the Board; former CEO of Dunkin' Brands 2009 Michael Hines Former CFO of Dick's Sporting Goods; Director of GNC & TJX 2011 Raul Alvarez Lead Independent Director; Chairman of the Board at Skylark 2012 Carl Sparks Former CEO of Academic Partnerships & Travelocity Global 2013 Irene Chang Britt Former President, Pepperidge Farm 2014 Linda Boff CMO for General Electric 2017 Roland Smith Former Chairman & CEO of Office Depot 2017 David Hoffman Dunkin' Brands CEO & President, Dunkin' US 2018 Source: Company data, Credit Suisse estimates

Dunkin’ Brands Group, Inc. (DNKN) 39 25 June 2019

Companies Mentioned (Price as of 21-Jun-2019) Bain Capital Specialty Finance, Inc. (BCSF.N, $19.0) Carlyle Group (TCGP.OQ, $24.43) Dunkin’ Brands Group, Inc. (DNKN.OQ, $79.54, UNDERPERFORM, TP $70.0) Grubhub Inc. (GRUB.N, $71.17) McDonald’s Corporation (MCD.N, $204.26) Nestle (NESN.S, SFr101.52) PepsiCo (PEP.OQ, $133.96) Restaurant Brands International Inc (QSR.N, $69.99) Starbucks Corporation (SBUX.OQ, $83.82) The Coca-Cola Company (KO.N, $51.55) The Wendy’s Company (WEN.OQ, $19.37) Yum! Brands, Inc. (YUM.N, $110.27)

Disclosure Appendix Analyst Certification I, Lauren Silberman, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Dunkin’ Brands Group, Inc. (DNKN.OQ)

DNKN.OQ Closing Price Target Price Date (US$) (US$) Rating 30-Jun-16 43.62 51.00 O 20-Sep-16 48.29 52.00 21-Oct-16 48.93 53.00 29-Nov-16 54.19 57.00 10-Feb-17 55.92 61.00 28-Jul-17 52.75 59.00 06-Sep-17 52.26 62.00 27-Oct-17 54.82 61.00 21-Dec-17 65.01 68.00 14-Mar-18 59.30 NC OUTPERFORM NOT COVERED * Asterisk signifies initiation or assumption of coverage. Effective July 3, 2016, NC denotes termination of coverage. As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s t otal return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s tot al return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and Asia stocks (excluding Japan and Australia), ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark (India - S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to it s current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stoc ks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not over lap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. Dunkin’ Brands Group, Inc. (DNKN) 40 25 June 2019

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors. Credit Suisse's distribution of stock ratings (and banking clients) is:

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Target Price and Rating Valuation Methodology and Risks: (12 months) for Dunkin’ Brands Group, Inc. (DNKN.OQ) Method: Our $70 target price and Underperform rating are based on ~16x our NTM EBITDA in 12 months, implying a P/E multiple of ~22x our NTM EPS in 12 months. Our ~16x EBITDA multiple is a ~0.5x turn premium to DNKN’s three-year average multiple given the run-up in valuations in the sector, though a discount to its current multiple of ~18.5x. DNKN’s multiple has expanded in-line with peers in recent years, despite lowered growth estimates and increased peer multiples warranted from now enhanced business models. Risk: Key risks to our $70 target price and Underperform rating include: M&A, an acceleration in traffic and SSS, and an acceleration in unit growth. Based on recent deals, DNKN would likely be acquired at a premium to its stock price and multiple. Accelerating traffic, SSS and unit growth would provide upside to numbers.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures/view/selectArchive for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names Credit Suisse currently has, or had within the past 12 months, the following as investment banking client(s): BCSF.N, YUM.N, PEP.OQ, KO.N, NESN.S, QSR.N Credit Suisse provided investment banking services to the subject company (BCSF.N, YUM.N, PEP.OQ, KO.N, NESN.S, QSR.N) within the past 12 months. Within the last 12 months, Credit Suisse has received compensation for non-investment banking services or products from the following issuer(s): BCSF.N, MCD.N, KO.N Credit Suisse has managed or co-managed a public offering of securities for the subject company (BCSF.N) within the past 12 months. Within the past 12 months, Credit Suisse has received compensation for investment banking services from the following issuer(s): BCSF.N, YUM.N, PEP.OQ, KO.N, NESN.S, QSR.N Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (DNKN.OQ, BCSF.N, YUM.N, WEN.OQ, KO.N, NESN.S, QSR.N) within the next 3 months. Credit Suisse currently has, or had within the past 12 months, the following issuer(s) as client(s), and the services provided were non-investment- banking, securities-related: BCSF.N, MCD.N Credit Suisse currently has, or had within the past 12 months, the following issuer(s) as client(s), and the services provided were non-investment- banking, non securities-related: BCSF.N, KO.N Credit Suisse or a member of the Credit Suisse Group is a market maker or liquidity provider in the securities of the following subject issuer(s): BCSF.N, DNKN.OQ, MCD.N, NESN.S, PEP.OQ, QSR.N, SBUX.OQ, KO.N, WEN.OQ, YUM.N

Dunkin’ Brands Group, Inc. (DNKN) 41 25 June 2019

A member of the Credit Suisse Group is party to an agreement with, or may have provided services set out in sections A and B of Annex I of Directive 2014/65/EU of the European Parliament and Council ("MiFID Services") to, the subject issuer (BCSF.N, YUM.N, PEP.OQ, KO.N, NESN.S, QSR.N) within the past 12 months. As of the date of this report, Credit Suisse beneficially own 1% or more of a class of common equity securities of (NESN.S). Credit Suisse is acting as an agent in relation to Nestle’s (NESN.S) ongoing share buy-back program. Credit Suisse is acting as Financial Advisor to Nestlé in their sale of Nestlé Skin Health to a consortium of EQT Partners, Abu Dhabi Investment Authority and Public Sector Pension Investment Board. For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=437996&v=nln4tctqofvnq3d4b3yl2lu . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit- suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. This research report is authored by: Credit Suisse Securities (USA) LLC ...... Lauren Silberman Important Credit Suisse HOLT Disclosures The HOLT methodology does not assign ratings or a target price to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the HOLT valuation model, that are consistently applied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms available in the HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variables may also be adjusted to produce alternative warranted prices, any of which could occur. The warranted price is an algorithmic output applied systematically across all companies based on historical levels and volatility of returns. Additional information about the HOLT methodology is available on request. CFROI, CFROE, HOLT, HOLT Lens, HOLTfolio, "Clarity is Confidence" and "Powered by HOLT" are trademarks or registered trademarks of Credit Suisse Group AG or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse. © 2019 Credit Suisse Group AG and its subsidiaries and affiliates. All rights reserved. Important disclosures regarding companies that are the subject of this report are available by calling +1 (877) 291-2683. The same important disclosures, with the exception of valuation methodology and risk discussions, are also available on Credit Suisse’s disclosure website at https://rave.credit-suisse.com/disclosures . For valuation methodology and risks associated with any recommendation, price target, or rating referenced in this report, please refer to the disclosures section of the most recent report regarding the subject company.

Dunkin’ Brands Group, Inc. (DNKN) 42 25 June 2019

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Dunkin’ Brands Group, Inc. (DNKN) 43