Newspaper article St Louis Post-Dispatch (MO)

Why Is Panera Worth $7.5 Billion? Because It Made Food a Tech Business

Newspaper article St Louis Post-Dispatch (MO)

Why Is Panera Worth $7.5 Billion? Because It Made Food a Tech Business

Article excerpt

In the early weeks of this century, you could buy a share of Panera Bread for about the price of a meal at its restaurants.

Seventeen years later, with the fast-casual chain about to be bought by JAB Holding for $7.5 billion, one share will set you back at least a month's worth of chipotle chicken avocado melts. The shares have risen almost 9,000 percent since May 1999, when Panera assumed its current corporate form and moved its headquarters back to the St. Louis area.

That's a lot of yeast. The investment returns are a testament to a management team that saw a market for restaurants focused on fresh, healthy ingredients and then invested in technology to let busy customers order from their phones.

Such farsightedness enticed JAB, the Luxembourg-based parent of Krispy Kreme Doughnuts and Einstein Bagels, to pay a premium for Panera. The price amounts to 40 times this year's expected earnings.

"They are playing in the sweet spot in terms of trends and where the world is headed," says Scott Harrison, an analyst at Argent Capital Management in Clayton. "They have a strong brand and have been a leader in technology and healthy eating, so that's what made them so attractive."

Panera wasn't always an industry darling. The low-carb craze of the early 2000s was hard on a place with bread in its name, and a flatbread pizza was a costly flop.

Lately, though, Panera's trendspotters have been ahead of the competition. It was the first national chain to post nutritional information for all menu items. It banned trans fats in 2007, and removed all artificial food additives over the last two years.

Panera notched another industry first last month, posting information about soft drinks' calories and added sugar. Even for customers who don't read the fine print, such moves create a perception that the restaurant cares about their health. …

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