Further Expansion Planned for 375-Unit Chain
- The private equity firm Levine Leichtman Capital Partners has acquired Shipley Do-Nuts from Peak Rock Capital.
- Levine Leichtman could be aiming to repeat the franchise success it achieved with Tropical Smoothie Café, which it grew into a $2 billion brand.
- Houston-based Shipley’s, currently with about 375 units in 14 states, is on track to open 40-plus units in 2025.
Levine Leichtman Capital Partners (LLCP) announced Monday that it has bought Shipley Do-Nuts from Peak Rock Capital. Peak Rock had acquired Shipley Do-Nuts in early 2021 and accelerated its expansion while achieving 18 consecutive quarters of same-store sales growth, according to a Peak Rock news release about the sale. Founded in 1936, Houston-based Shipley – known for its doughnuts, kolaches, coffee, cinnamon rolls and other pastries – has about 375 units in operation.
Levine Leichtman has a history of accelerating growth in its restaurant brands and then selling them for a nice profit, RestaurantDive.com reported. For instance, after adding almost 500 stores to the Tropical Smoothie Cafe system, Levine Leichtman sold the brand to Blackstone for a reported $2 billion in 2024. The price that LLCP paid for Shipley Do-Nuts was not disclosed.
Peak Rock’s History with Shipley Do-Nuts
When Peak Rock Capital acquired Shipley a little over four years ago, the chain had more than 300 shops in nine states. By January 2023, Shipley had 337 units, according to its Franchise Disclosure Document. The brand, which now has locations operating in 14 states, expects to open 40-plus units this year and has a pipeline that exceeds 200 units, RestaurantDive.com said.
Under Peak Rock’s management, Shipley expanded its geographic footprint, added products, created a marketing cooperative with franchisees, and established a new corporate headquarters and a research and development lab, the Peak Rock news release said. Shipley also launched a rewards program in 2023, according to RestaurantDive.com, adding that when the program launched nationally, Shipley said members at pilot locations spent about 60% more than nonmembers. Membership in the loyalty program grew 50% last year, the publication said.
Shipley generated $320 million in systemwide sales last year, an 8.1% increase from 2023, according to Restaurant Business. RestaurantDive.com noted that Shipley’s Franchise Disclosure Document states that the nine company-operated stores have average gross sales of approximately $1.47 million, but franchised units’ sales totaled significantly less, with gross sales averaging only about $930,000. By comparison, the 2024 average unit volume for competitor Dunkin’ was about $1.3 million, per its Franchise Disclosure Document, RestaurantDive.com pointed out. A large majority of Dunkin’s roughly 9,800 U.S. stores are franchisee-owned; Dunkin’ is part of the Inspire Brands franchise portfolio.
Executives Praise the Deal
Shipley Do-Nuts CEO Flynn Dekker, who will stay on, said Levine Leichtman Capital Partners plans to continue expanding the brand. The Peak Rock news release quoted him as saying, “We are committed to supporting our franchisees’ businesses and serving our customers the world’s greatest doughnut as we continue to introduce our iconic brand to more and more communities across the nation.”
Dekker, in an LLCP news release, said that “partnering with LLCP presents an outstanding opportunity for Shipley to accelerate our growth… Their extensive expertise in franchise food brands will be pivotal in driving future growth and supporting our franchisees while preserving our commitment to fresh-made quality and our original recipes that have made our brand the icon it is today.”
Also in the LLCP news release, the private equity firm’s managing director, Greg Flaster, said, “Shipley has delivered robust recent growth and continues to build upon a strong reputation for fresh products and customer service that it established over its nearly 90-year operating history. Flynn and the rest of the management team have had tremendous success, and we are excited to leverage our extensive experience investing in the franchising space to pursue various growth initiatives alongside them.”
Shipley has many competitors, including Dunkin’ and Krispy Kreme, but doughnut demand is expected to grow steadily. The U.S. doughnut market reached about $12.8 billion in 2024 and is expected to grow 3.8% annually from 2025 through 2032, when it is projected to exceed $17.2 billion, according to Stellar Market Research.
About LLCP and Peak Rock
Levine Leichtman Capital Partners (LLCP) is a 41-year-old middle-market private equity firm that invests in business services, franchise and multi-unit brands, education and training companies, and engineered products and manufacturing concerns. LLCP has managed roughly $18.1 billion in capital assets and invested in about 120 companies. It is headquartered in Southern California.
Founded in 2012, Peak Rock Capital is a middle-market private investment firm that makes equity and debt investments in companies in North America and Europe. After Peak Rock takes equity stakes in companies, it supports their leaders to achieve rapid growth and enhanced performance, the company stated in its news release. Peak Rock is based in Austin, Texas.
