In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Panera Bread franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Panera Bread franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Panera Bread franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Panera Bread’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average net sales for the 832 company-owned Panera Bread Bakery-Cafes open during the entire fiscal year ending December 27, 2016
- 2016 average net sales for the 1,039 franchised Panera Bread Bakery-Cafes open during the entire fiscal year ending December 27, 2016
- 2016 average net sales for the 832 company-owned and 1,039 franchised Panera Bread Bakery-Cafes open during the entire fiscal year ending December 27, 2016
- 2016 average gross revenues, discounts, net sales, cost of sales, gross profit, labor, operating expenses, advertising expenses, fixed expenses, occupancy expenses, net profit, depreciation and amortization, and EBITDA for the 832 company-owned Panera Bread Bakery-Cafes open during the entire fiscal year ending December 27, 2016
Section I – Background Information
19 Things You Need to Know About the Panera Bread Franchise
Panera Bread to be Acquired for $7.5 Billion
1. Recently, JAB, the parent company of Caribou Coffee and Peet’s Coffee, announced that it would buy Panera Bread in a deal valued at $7.5 billion. JAB will also assume Panera’s $340 million of net debt.
2. JAB Holdings offered $315 in cash per Panera share, representing a 20.3 percent premium to the stock’s closing price on March 31, the last trading day before media reports of a potential deal. JAB Holdings continues to build its restaurant chain portfolio, as the company purchased Krispy Kreme for $1.35 billion last year.
Plans to Add 10,000 Jobs by the End of 2017
3. Panera Bread recently announced that the chain will continue to expand its delivery services to more of its locations. The company intends to hire 10,000 new employees by the end of the year in order to grow the delivery service. According to Blaine Hurst, President of Panera Bread, 75 percent of the new hires will be delivery drivers while the remaining 25 percent will be in-cafe jobs.
4. Fifteen percent of Panera’s total locations already have delivery service, including 20 percent of its company-owned locations. Panera hopes to expand its delivery service to 35 to 45 percent of its locations by the end of the year.
5. Hurst says that each cafe will have to hire 7 to 12 drivers and staff, and that it will cost about $25,000 to add delivery capabilities, the majority of which will go toward hiring and training.
6. According to Hurst, the initial investment will pay off as deliveries make up about 10 percent of sales at locations that already offer the service. Panera estimates that delivery will add $250,000 per year to each store’s annual revenue of $2.6 million.
7. Rather than using its own fleet of cars for the new delivery service, Panera will require delivery drivers to use their own vehicles. Panera says that each driver will be be vetted by the company and that their insurance, driving record, and car will be thoroughly inspected before becoming certified to work. Hurst says that drivers’ cars will undergo routine inspections and that drivers will be compensated for mileage.
8. To go along with the new delivery service, Panera has released an order tracking system for customers to use. Customers are able to see their meals’ expected arrival time, a map of the driver’s progress, and a photograph of the driver.
Menu is Now 100% Clean
9. At the start of the year, Panera Bread announced that its entire U.S. food menu and portfolio of Panera at Home products are now free from all artificial flavors, preservatives, sweeteners, and colors from artificial sources as defined by the company’s “No No List,” inclusive of 96 separate ingredients and additive classes.
10. This latest step toward a 100% clean menu comes as a result of the company’s decades-long journey to offer better, higher quality food to its customers. According to CEO Ron Shaich, “Panera’s clean food is foundational to serving food as it should be.”
11. To reach its clean food goal, Panera:
- Reviewed more than 450 ingredients, delving several levels into the supply chain to ensure the removal of all artificial flavors, preservatives, sweeteners, and colors from artificial sources.
- Reformulated 122 ingredients, resulting in changes to the majority of Panera’s bakery-cafe recipes.
- Partnered with more than 300 food vendors on the clean food journey to innovate solutions, ranging from ingredient replacements to rethinking how foods are prepared.
First National Restaurant Chain to Post Added Sugars and Calories for All Self-Serve Beverages
12. In early April, Panera Bread rolled out a series of new 100% clean, non-carbonated craft beverages made with no no artificial sweeteners, preservatives, flavors, or colors from artificial sources. The new teas, lemonades, and frescas were released in select cities along with signage posting the calories and added sugar in each drink.
12. The release of this information positions Panera as the first national restaurant company to make this type of nutritional information available to the public. In a letter written to the Washington Post, CEO Ron Shaich urges the restaurant and beverage industries to join Panera in its efforts to increase transparency to guests.
13. Panera plans to serve the new drinks at all of its locations by the end of September. The new drinks will be made fresh daily and with less sugar than Panera’s current offerings. The drinks will also range in sweetness levels:
- The new Iced Black Tea and Plum Ginger Hibiscus Tea are unsweetened.
- The new Prickly Pear Hibiscus Fresca is lightly sweetened with fruit juice.
- The new Passion Papaya Green Tea, Blood Orange Lemonade, and Agave Lemonade contain less than 35g of added sugar per 20-ounce cup.
14. Panera Bread Co. began in 1981 as Au Bon Pain Co., Inc. which was founded by Ron Shaich and Louis Kane. Throughout the 80s and 90s, the company thrived along the east coast of the U.S. and internationally.
15. In 1993, Au Bon Pain Co., Inc. purchased St. Louis Bread Company, a chain of 20 bakery-cafes located in the St. Louis, Missouri area. In 1997, St. Louis Bread Company was renamed Panera Bread and the 20 locations were renovated. Two years later, Au Bon Pain Co., Inc. sold all of its other chains except for Panera Bread so that it could focus on growing the new company.
16. In 2007, Panera Bread purchased a majority stake in Paradise Bakery & Cafe, a Phoenix-based concept with over 70 locations primarily located in the west and southwest regions of the U.S.
17. Today, there are over 2,000 bakery-cafe locations in the U.S. and Canada operating under the Panera Bread, St. Louis Bread Co., and Paradise Bakery & Cafe names.
Entrepreneur’s Franchise 500
18. Panera Bread has not ranked on Entrepreneur’s annual Franchise 500 list in the past decade.
Section II – Estimated Costs
- Please click here for detailed estimates of Panera Bread franchise costs, based on Item 7 of the company’s 2017 FDD (updated).
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Panera Bread’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.