Rolling In Dough: Potential Sale Of Panera Bread

The financial news is humming with the reports that Panera Bread is exploring a potential sale. The news from sources at Bloomberg and CNBC among others, is that the company is exploring a potential sale after garnering interest by other companies looking to purchase their burgeoning business.

The reputation of Panera Bread throughout the industry is very positive due to the wonderful public perception of their product lines in meeting the demand for fresh, natural food. The company hits the mark on speed, staying casual, serving quality products, and remaining at a reasonable price point.

The rumors are that Starbucks, Domino’s, and a private equity firm are all interested in potentially acquiring the company. These entities have not confirmed their interest publically, which is to be expected, but speculation abounds in the financial markets regarding a potential deal.

The purchase would make sense for Starbucks as they are looking increasingly at providing expanded food offerings at their locations. The strength of Panera Bread with soups, sandwiches, breakfast items, and pastries would be a good synergy with the expertise of Starbucks in coffee as well as other beverages.

The move would be a bold one for Domino’s which is seeking to reinvent themselves and diversify beyond pizza. The company has strengths in technology with online ordering and order tracking that is appealing to millennials, which is also a target market for Panera Bread. The potential acquisition of Panera Bread would expand the reach of Domino’s into new markets. The opportunity to cross-brand pizza and sandwiches with Panera Bread’s core strengths in the bread and prepared dough areas could be an interesting combination.

The sale of companies to private equity firms is not as exciting but it does generally mean that the company or the brand will be left unchanged. The private equity purchase usually equates to them keeping most or all of the same management if the brand is strong and performing well. The purchase of Panera Bread in this type of arrangement would most likely mean that they will just continue on with business as usual.

The purchase of a company by another competitor, or some other company within the same industry space could create some increased new value or new experiences for the consumer. That same purchase could also create conditions where the consumer could lose value or see a negative change in the quality of a brand.

The staff at Barron’s put together an excellent piece on the Panera Bread rumors with the overarching theme that it is too early to state with certainty that they will be sold. It went on to state their case on their rationale behind that sentiment.

The fast casual restaurant segment is where the action is right now in the industry. The mergers involving Darden Restaurant group with the purchase of Cheddar’s Kitchen. The purchase of Popeye’s recently by the parent company of Burger King, Restaurants International was a huge transaction of over one billion dollars. It is a rapidly consolidating industry segment which lends credibility to the rumors around Panera Bread.

The shares of Panera Bread jolted to an all-time high point on Monday. The company has reconfigured their menu to remove artificial colors, flavors, and preservatives. They have embraced transparency of the caloric values of their menu items, and just announced that they will provide the sugar content of their soft drinks and other beverages.

These changes all connect well with the consumer and with the “clean eating” trend which Panera Bread has been able to capitalize upon. This is all despite the fact that their staple product: bread, is inherently unhealthy.

The next few weeks or months could see a shift in the casual dining landscape if Panera Bread is sold to another entity. The process and the successful bid will be interesting and will have a significant impact on the industry in the years to follow.