Dive Brief:
- Panera Brands filed its intent to go public on Tuesday, but did not provide details on pricing or timing of its IPO, according to a press release.
- Danny Meyer's special purpose acquisition company USHG Acquisition Corp. (HUGS) will become a cornerstone partner in Panera Brands, according to a separate press release. Meyer will also invest directly in Panera Brands and become lead independent director of its board following the completion of the IPO.
- Earlier this year, JAB Holdings combined its Caribou Coffee, Einstein Bros. Bagels and Panera Bread brands under the arm of Panera Brands amid rumors that Panera Bread would go public.
Dive Insight:
Panera's return to the public market comes almost five years after it was acquired by JAB Holdings for over $7 billion. When Panera was public, its stock did twice as well as Starbucks and six times as well as Chipotle, founder Rob Shaich said in 2019. But Shaich sold the company after it came under pressure from activist investors. Those investors had plans for Panera that didn't align with Shaich's long-term goals for the company. For example, the investors wanted Panera to outsource technology development instead of creating its technology in-house.
The fast casual chain is likely to face a somewhat more favorable investment environment compared to Panera's final days as a public company. With the exception of Krispy Kreme, investors have also been favorable to recent restaurant IPOs, including First Watch, Portillo's and Dutch Bros, all of which are trading above their IPO prices.
Going public with the help of an SPAC isn't unusual — BurgerFi went public last year through a merger with Opes Acquisition Corp. and has since gone on to acquire Anthony's Coal Fired Pizza & Wings for $161 million. But Panera Brands' agreement is different.
Meyer will use HUGS to invest in Panera, and the SPAC is expected to survive the merger as a subsidiary of Panera Brands. Traditionally, SPACs hit the public market, raise money and then merge with a private company that then goes public — these entities typically don't live on past the merger. Following the IPO, HUGS shareholders will become direct shareholders in Panera Brands alongside current and future shareholders. JAB Holdings, Panera's current parent company and primary shareholder, will make a dollar-for-dollar investment in shares of Panera common stock and remain a shareholder in the company.
This latest transaction also shows that Meyer's commitment to the restaurant space is only expanding. Outside of his SPAC, Meyer's equity firm Enlightened Hospitality Investments led $21.5 million in Series B funding in labor management platform 7shifts in May and also headed up $65 million in Series F funding in vegetable-centric restaurant group Dig in October.
Panera would go public from a position of strength relative to other chains thanks to its innovative investments. The company pivoted its business model to incorporate more off-premise business amid the ongoing pandemic and continued to lean into technology, which has become a cornerstone strategy across just about every major public restaurant company to improve efficiency and the customer experience. The company rolled out GPS-enabled curbside pickup last year and is building and remodeling its stores to include double drive-thrus and smaller dining rooms. In July, it expanded virtual catering to its more than 40 million loyalty members. Panera has also built a successful coffee and tea subscription program that grew to over 500,000 members within the first few months of its launch. Panera sold Au Bon Pain in June.
