In this FDD Talk 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 2019 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 2019 FDD
- Section IV – Number of franchised and company-owned Panera Bread outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Panera Bread’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average net sales for the 917 company-owned Panera Bread Bakery-Cafes open during the entire fiscal year ending December 25, 2018
- 2018 average net sales for the 1,099 franchised Panera Bread Bakery-Cafes open during the entire fiscal year ending December 25, 2018
- 2018 average net sales for the 917 company-owned and 1,099 franchised Panera Bread Bakery-Cafes open during the entire fiscal year ending December 25, 2018
- 2018 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 917 company-owned Panera Bread Bakery-Cafes open during the entire fiscal year ending December 25, 2018
Section I – Background Information
20 Things You Need to Know About the Panera Bread Franchise
Appoints New CEO
1. Near the end of April 2019, Panera Bread appointed Niren Chaudhary as president and chief executive officer, succeeding Blaine Hurst who retired from his role as CEO of Panera effective May 23, 2019. Hurst remains on the board of Panera and became vice chairman, and worked alongside Chaudhary after he joined the company in early May to help ensure a smooth transition into his new role.
2. Chaudhary joined Panera from Krispy Kreme, where he had been the chief operating officer and president of Krispy Kreme International since 2017. Previously Chaudhary spent 23 years with Yum! Brands in a variety of executive positions. Chaudhary has more than 25 years of international corporate leadership experience in the food retail and hospitality industry, and brings broad experience in building brands and driving value through long-term growth.
3. Oliver Goudet, Panera chairman and JAB managing partner and CEO, said, “We are delighted that Niren will become the new CEO of Panera Bread. Niren is a recognized industry leader with an impressive track record of establishing brands and leading companies to achieve growth in markets around the world. He is passionate about serving the people he works with as well as his customers, and has shown a keen ability to develop growth strategies that appeal to consumer needs no matter where they reside. These qualities make him perfectly suited to lead Panera into the next phase of global growth in the US and abroad, while maintaining its mission of doing good in the world and serving food as it should be.”
Launches First-Ever Unlimited Coffee Subscription
4. At the end of February 2020, Panera Bread announced a new way to buy coffee with an unlimited subscription program. With the introduction of the subscription, Panera is the first national restaurant company to offer unlimited high-quality hot drip coffee, iced coffee, and hot tea for just $8.99 per month, making it accessible to all.
5. According to Niren Chaudhary, CEO of Panera, “Coffee is an important daily ritual for so many – it can give you a dose of optimism – it lifts you up. We kept asking ourselves, why can’t it be more accessible, more affordable? Moreover, could unlimited coffee translate to unlimited optimism? Today, we’re changing the game for coffee drinkers across the country with our no compromises, unlimited subscription service – great coffee at an amazing value. We are eliminating the price barrier and the false choices between convenience and quality – between good coffee and craveable food. At Panera, there’s no more compromise – and your cup is always full.”
6. A great cup of coffee can make a positive difference in your day – and now with MyPanera+ unlimited coffee – Your Cup Is Always Full. The new coffee subscription is available to members of MyPanera, Panera’s free loyalty program. MyPanera members can register for the subscription via the Panera website and mobile app. Sign-up via QR code also became available in Panera bakery-cafes nationwide beginning Monday, March 2.
7. Chaudhary added, “From helping create the fast-casual category, to technology breakthroughs with Panera 2.0, to clean food – Panera has a history of industry-leading innovation that creates value for and adds to the guest experience. Panera is a challenger brand and with unlimited coffee we are disrupting the coffee business. We are challenging the status quo because we believe everyone deserves a full cup, literally and figuratively.”
8. In the last year, Panera revamped and expanded its drip and iced coffee offerings, introducing new coffee blends, freshly ground every day and made from 100% Arabica whole beans including:
- Light Roast – a blend of Central and South American beans with hints of citrus, roasted nuts, and chocolate;
- Dark Roast – a blend of Costa Rican and Colombian coffee beans that give this slightly sweet coffee a rich, mellow finish.
9. Both coffee blends are available, along with Decaf and Hazelnut, as part of the new coffee subscription program. In addition to its revamped coffee offerings and in line with its commitment to plant-based options, Panera has also removed the upcharge for plant-based milk in all U.S. Panera bakery-cafes. Almond milk is now available on the coffee station free of charge, and the company is actively exploring adding other non-dairy alternatives.
Expands Delivery Capabilities Through Partnerships with DoorDash, Grubhub, and Uber Eats
10. In late August 2019, Panera Bread announced the availability of its national delivery service for the first time through DoorDash, Grubhub, and Uber Eats. In addition to being able to order from Panera’s own app and website, consumers are now able to use all three apps to order Panera for lunch or dinner.
11. Whether customers order via Panera’s app or through one of its partners, their orders will be delivered to them by Panera’s own delivery drivers in most markets. Through these new partnerships, Panera is creating more ways for guests to access their Panera favorites while still ensuring the quality Panera delivery experience the company has honed over the last three years.
12. Delivery via the Panera app and ecommerce platforms remains in place and will continue to be a strong point of access for both new and existing Panera customers. Year to date, Panera’s platforms have driven more than 28 million delivery orders, resulting in delivery becoming 7% of Panera’s overall sales. In fact, the “bring your own courier model” is only possible because of the strong infrastructure Panera has established through its own delivery platform.
13. According to Dan Wegiel, EVP, chief growth and strategy officer for Panera, “Panera has been a leader in the delivery market as one of the first fast casual concepts to offer its own delivery service. Today, through these partnerships, we are pioneering once again by being the first fast casual to launch the ‘bring your own courier’ model nationwide. The most important consideration for Panera is owning the guest experience – and making sure it’s a great one. These new partnerships are possible because we already have a fleet of delivery drivers and the infrastructure created to support increased demand. We believe this partnership model helps differentiate us from our competitors and will take our already successful delivery business to new heights.”
14. Panera is now working to connect the brand’s industry-leading loyalty program – MyPanera – to delivery orders placed through the delivery partner sites. In the coming months, customers signed up for the MyPanera program will be able to earn visit credits toward MyPanera rewards when ordering through DoorDash, Grubhub, and Uber Eats. Panera and the three partners have also committed to supporting the partnership through robust marketing efforts in 2019.
15. Panera Bread’s history began in 1993 when Au Bon Pain Co. purchased The St. Louis Bread Company for $23 million. Au Bon Pain Co. began in 1976 after Pavailler, a French baking equipment manufacturer, opened a store (Au Bon Pain) at Faneuil Hall in Boston, Massachusetts to showcase its ovens. Au Bon Pain sold croissants, pastries, and bread produced by French bakers using the Pavailler ovens.
16. Au Bon Pain continued to grow slowly over the next decade. To further Au Bon Pain’s growth, the company purchased The St. Louis Bread Company in 1993. A few years later, Au Bon Pain Co. changed its name to Panera (Panera’s locations in the Greater St. Louis area are still operated under The St. Louis Bread Company name).
17. In 1999, Au Bon Pain Co. sold its Au Bon Pain division to focus solely on Panera Bread. For several decades, the two companies were separate entities, but Panera Bread ended up repurchasing Au Bon Pain in 2017.
18. During the early 2000s, Panera Bread continued to grow across the U.S. and in 2007, it expanded even further by purchasing a 51% stake in Paradise Bakery & Café, a Phoenix metropolitan area-based concept with over 70 locations in 10 states. While a few Paradise Bakery & Café stores were rebranded as Panera Bread, there are still Paradise Bakery locations around the country.
19. In the late 2000s, Panera Bread expanded into Canada and its North American growth continued over the next decade. By 2016, Panera Bread had 2,000 locations in operation and a year later the company and all of its assets were acquired by JAB Holding Company for $7.16 billion.
Entrepreneur’s Franchise 500
20. Panera Bread did not rank on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Panera Bread franchise costs, based on Item 7 of the company’s 2019 FDD.
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 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 1,045
- Outlets at the End of the Year: 1,099
- Net Change: +54
- Outlets at the Start of the Year: 1,099
- Outlets at the End of the Year: 1,112
- Net Change: +13
- Outlets at the Start of the Year: 1,112
- Outlets at the End of the Year: 1,131
- Net Change: +19
- Outlets at the Start of the Year: 862
- Outlets at the End of the Year: 901
- Net Change: +39
- Outlets at the Start of the Year: 901
- Outlets at the End of the Year: 931
- Net Change: +30
- Outlets at the Start of the Year: 931
- Outlets at the End of the Year: 963
- Net Change: +32
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
Part 1 – Statement of Average Net Sales of Panera Bread Bakery-Cafes for the 52-Week Fiscal Year Ending December 25, 2018
- The Statement of Average Net Sales consists of the mean averages of the reported annual Net Sales of 917 company-owned Bakery-Cafes and 1,099 franchisee-owned Bakery-Cafes open during the entire fiscal year ending December 25, 2018, excluding any acquisitions or dispositions that occurred during the year.
- The 917 company-owned Bakery-Cafes include 13 delivery and carryout locations and exclude 27 delivery only locations.
- The information provided does not include the results of any Panera Bread/St. Louis Bread Cares Bakery-Cafes operated by Panera Bread Foundation, Inc.
- The Net Sales of franchisee-owned Bakery-Cafes were derived from unaudited financial reports submitted by franchisees for the purpose of computing royalties. Panera compiled the Net Sales of company-owned Bakery-Cafes on the basis of generally accepted accounting principles.