To intensify growth in new real estate channels, including hospitals, universities, transportation centers and urban locations, Panera Bread entered into a definitive agreement to acquire Au Bon Pain Holding Co. Inc., parent company of Au Bon Pain. The Boston-based bakery-cafe chain has 304 units worldwide.
The acquisition will bring Au Bon Pain and Panera together again. Ron Shaich, Panera’s founder, Chairman and CEO, and his late partner Louis Kane created Au Bon Pain Co. Inc. in 1981. The company went public in 1991 and acquired Saint Louis Bread Company in 1993. Saint Louis Bread was renamed Panera and, in 1999, Au Bon Pain was sold so that all human and capital resources available at that time could be focused on Panera.
“With the acquisition we are announcing today, we are bringing Au Bon Pain and Panera together again," said Schaich. "This acquisition offers the strategic opportunity for us to grow in several new real estate channels, including hospitals, universities, transportation centers and urban locations, among others.”
Additionally, Shaich will step down as CEO effective Jan. 1, 2018, allowing him to better allocate his time between Panera; initiatives for JAB, which acquired Panera in July; and his personal investments and interests. Shaich, who will be a significant investor in the company, will remain chairman of Panera’s Board of Directors and will continue to work on strategy, communications and acquisitions for Panera. He will also pursue investments and causes important to him, with particular focus on working to reduce the pervasive short-term thinking in our capital markets and national debate. Blaine Hurst, Panera’s president and company veteran who has led many of the company’s most significant innovations over the last half decade, will assume the position of CEO.
Hurst joined Panera in January 2011 as Senior Vice President of Technology and Transformation, charged with building the digital capabilities that would enable Panera 2.0 and Panera’s e-Commerce platform. He was elected Executive Vice President of Technology and Transformation in May 2013, and EVP and Chief Transformation and Growth Officer in October 2014. Hurst was named President in December 2016 when his responsibilities were expanded to include Panera’s core café business as well as Panera’s technology, delivery and catering organizations.
“This is the right time for me to step down as CEO while still staying involved in the business as Chairman," added Shaich. "I returned in 2011 because our growth was slowing and we needed to reposition Panera as a better competitive alternative with expanded growth opportunities. And I’m happy to say we’ve done just that."
“Our company comps showed strong growth again in the third quarter, outperforming the Black Box all-industry composite by more than 800 basis points. What’s more, the themes we bet on and executed successfully over the last half decade - digital, clean food, loyalty, delivery and new formats for growth - are shaping the restaurant industry today. Panera is a leader in digital, executing about 1.3 million digital transactions per week, representing about 28% of our sales. Our omni-channel approach leads the industry, with delivery now available in more than 50% of the system and catering sales growing well over double-digits yearly. We are the first national restaurant chain with a 100% clean menu, and our loyalty program is the largest in the industry at 28 million members, with more than half of our transactions occurring through the program.”
“I’ve now completed 36 years as a leader of our company and I’m particularly pleased to be able to say that Panera has been the best-performing restaurant stock of the last 20 years, delivering a total shareholder return up 86-fold from July 18, 1997, to July 18, 2017, when our deal with JAB closed, compared to a less than twofold increase for the S&P 500 during the same period. I would like to recognize the phenomenal number of guests we have been able to serve during this time and I would like to thank my team members, franchisees and suppliers for contributing to this extraordinary success.”
Hurst added, “I’m very excited about the future of Panera. The past seven years have given me the opportunity to learn from an industry icon. And I have been fortunate to lead and be a part of many of the initiatives that are now driving Panera’s success. We’ve built a great team – in fact, it’s the best team I know of in the restaurant industry. I’m looking forward to continue working with them and our partners at JAB as we take Panera forward. With exciting new initiatives underway to better serve our customers and improve their dining experience, I believe our opportunity is even brighter. I thank Ron and JAB for their confidence in me.”
Terms of the transaction, which is expected to close during the fourth quarter, were not disclosed. ABP was advised by North Point Advisors LLC and Kirkland & Ellis LLP, and Panera was advised by Skadden, Arps, Slate, Meagher & Flom LLP.
As of Sept. 26, 2017, there were 2,050 bakery-cafes in 46 states and in Ontario, Canada, operating under the Panera Bread®, Saint Louis Bread Co. ® or Paradise Bakery & Cafe® names.