Krispy Kreme owner buys Panera for $7.5 billion
Talk about carb loading. Sandwich chain Panera has agreed to sell itself to JAB, a German conglomerate that owns Krispy Kreme and the Einstein and Noah bagel chains, for $7.5 billion.
Shares of Panera surged nearly 15% in early trading Wednesday. The stock soared on Monday as rumors surfaced that Panera was in merger talks.
JAB was named as a possible suitor, as were McDonald’s, Starbucks, KFC parent company Yum! and Domino’s.
In a statement Wednesday, Panera and JAB said they hope the deal would close in the third quarter of this year.
Panera founder and CEO Ron Shaich said in a statement that selling to JAB would allow Panera to increase its investments in its digital and mobile ordering technology as well as increase its focus on using healthier ingredients.
JAB partner and CEO Olivier Goudet added that he and the rest of his team “strongly support Panera’s vision for the future, strategic initiatives, culture of innovation, and balanced company versus franchise store mix.”
So fans of Panera’s soup and sandwiches probably shouldn’t expect any major menu changes as a result of the deal.
Panera has been a star of the so-called fast casual restaurant industry over the past few years, reporting strong sales and profits.
To that end, the company also said Wednesday that same-store sales at its restaurants (although Panera calls them ” bakery-cafes”) rose a healthy 5.3% in the first quarter from the same period a year ago.
Some have argued that Panera, which now has more than 2,300 restaurants in the United States and Canada, has even taken over the title as the leader of the rapidly growing fast casual segment from Chipotle.
The burrito chain stumbled due to an outbreak of E. coli at its restaurants in 2015. Chipotle’s sales still haven’t fully recovered.
It is interesting that Panera is agreeing to be taken over since it’s doing well. But the company has picked a partner that is rapidly emerging as a big player in the U.S. food industry.
In addition to Krispy Kreme and the Einstein Noah bagel chains, JAB also owns K-cup coffee king Keurig Green Mountain, the Gevalia brand of coffee as well as coffee chains Caribou, Peet’s and Stumptown.
JAB also owns a big stake in a fair number of non-food brands, such as shoe and handbag company Jimmy Choo, beauty products maker Coty and Reckitt Benckiser, the company behind Lysol. Woolite and the Durex brand of condoms.
The Panera-JAB deal may also put more pressure on other restaurant chains to look for bigger partners as well. If Panera, which actually has been thriving, decided to sell out, then how can less successful restaurant chains continue to go it alone?
There already has been a flurry of restaurant mergers lately. Burger King and Tim Hortons owner Restaurant Brands — which is backed by Warren Buffett — bought Popeyes Louisiana Kitchen earlier this year.
Bob Evans Farms sold its restaurant business to private equity firm Golden Gate Capital for $565 million in January. Golden Gate acquired Red Lobster from Olive Garden owner Darden Restaurants in 2014.
And Darden just announced last week it was buying casual dining chain Cheddar’s Scratch Kitchen for $780 million.
Popular sandwich chain Jimmy John’s sold a majority stake last September to investment company Roark Capital too.