Has Panera Bread sold out?
That may be how some longtime fans of the 36-year-old bakery and café chain react, as Panera’s business continued to boom thanks to its healthy fare and social mission. What was once a solo shop in suburban St. Louis exploded into a chain of over 2,000 restaurants, which serve healthy soups, salad, sandwiches, pastries and gooey mac-n-cheese.
But for founder and CEO Ron Shaich, leading a company that has been public since 1991 comes with its share of headaches.
“I spend about 20 percent of my time explaining what I do and what I’m going to do,” he recently told Fortune magazine. “I think being private, for Panera, doesn’t give us anything other than it frees us up.”
On Wednesday, Shaich agreed to sell Panera Bread to Luxembourg-based food giant JAB Holding Co. for $7.2 billion. With the assumption of Panera’s debt, the acquisition’s total value soars past $7.5 billion.
JAB, which is owned by a wealthy German family, also outright owns or has a major stake in Krispy Kreme, Caribou Coffee, Keurig Green Mountain, Peet’s Coffee and Tea, Stumptown Coffee Roasters, and Einstein Bagels. Fashionistas will also note that JAB owns a bevy of luxury brands, including Bally, Jimmy Choo and Belstaff.
Longtime Panera Bread stockholders will profit handsomely as JAB plans to pay about $315 a share. Shaich often tells the media that Panera has been the best-performing American restaurant stock over the past 20 years, with share prices increasing 8,000 percent – a rate far faster than previous food company rocks stars such as Starbucks, Chipotle and Buffalo Wild Wings. Recent buyers will not fare too poorly, either: In early November, shares of Panera were selling for $186. And Shaich will benefit as well, as he reportedly owns about 5 percent of Panera’s Series A shares.
But fears that Panera will change its ways as stockholders cash out may be unfounded. The company has built itself into a juggernaut that reaps $5 billion in sales annually because of what it says is a commitment to sourcing the freshest and best possible ingredients. Over the years, Panera has gone against the U.S. food industry’s conventional wisdom, with one example being a “no-no list” of additives and preservatives the company pledged to remove from its menu items. And JAB has a reputation for maintaining a hands-off approach toward the popular consumer brands it buys.
Shaich told Panera fans as much during his interview with JAB, saying his company and the food conglomerate shared a long-view approach. "They are very committed to long term decision-making," he said of JAB. "And very committed to a hands-off approach."
So while the newest addition to the JAB family means we may see Peet’s or Caribou coffee in Panera locations, the odds are high that those tempting but noxious Krispy Kreme glazed doughnuts will not take over the chain’s menu.
Consumer tastes have changed, which explains the recent struggles for fast-food chains such as McDonald’s and beverage companies including Coca-Cola and Pepsi. The world’s largest food companies know that tinkering with a profitable business venture could sour if consumers realize their favorite upstart brands have changed ingredients or shied away from their social agenda.
Coca-Cola, for example, let Honest Tea run its own show after purchasing the beverage upstart in 2011; the same goes for Unilever’s ownership of Ben & Jerry’s, along with General Mills' management of brands such as Annie’s, Cascadian Farm and Muir Glen. The odds are high that regulars who frequent a Panera location will not notice any difference.
Image credit: Flickr/Samantha Celera
Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.
Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.