Panera Bread apparently wants to go it alone again.
The bakery/café chain’s parent company, Panera Brands, is looking to sell its non-Panera concepts, including Caribou Coffee and its various bagel chains, notably Einstein Bros. and Bruegger’s, according to Reuters.
The news service said that Panera hopes to fetch a multiple of 10 times EBITDA, or earnings before interest, taxes, depreciation and amortization, which would amount to $1.5 billion total.
But it’s the timing that is notable: Panera Brands, owned by the Luxembourg investment firm JAB Holdings, is giving up on its multibrand experiment after just three years.
And it also continues what has been an odd and seemingly desperate effort by Panera to return to the public markets.
JAB folded Panera with Caribou and its bagel brands to create “a new powerhouse platform in fast-casual” in 2021. That same year, the newly-named Panera Brands sought to go public in partnership with Danny Meyer’s special purpose acquisition company, or SPAC.
The collapse of the IPO markets late that year ultimately ended that proposal. Panera Brands has been seemingly waiting for its chance to go public ever since then—and has been clear about that plan.
Yet in the meantime, Panera Brands’ flagship brand has faltered. The company’s sales averaged 2.5% annual growth over the past five years, according to data from Restaurant Business sister company Technomic. That’s less than half the average for fast-casual sandwich concepts over that period.
(Caribou has averaged 3.7% sales growth and Einstein 4% over that period, according to Technomic.)
Panera was hit with a bunch of lawsuits over its caffeinated “Charged Lemonade” beverages. Panera Brands overhauled leadership, adding former Starbucks executive Patrick Grismer and former Krispy Kreme CEO Mike Tattersfield to its board of directors.
The company has laid off workers, struggled with a data breach in which hackers accessed corporate files and is overhauling its menu.
And then, what had seemed to be a thawing IPO market froze for restaurants again as Wall Street turned its back on industry stocks.
All of which has made Panera’s planned return to the public markets that much more difficult.
According to Reuters, Panera could pursue that listing, finally, once it divests those ancillary chains.
Panera Brands would not comment on the Reuters report.
Investors in any Panera Brands IPO were likely to focus on Panera Bread at the expense of the other brands. Panera Bread is one of the largest chains in the U.S. and dwarfs the other concepts.
But that was just as true three years ago as it is today. In many respects, the apparent planned sale of Caribou and Einstein effectively demonstrates just how odd that merger was in the first place.
The brands are all effective competitors, particularly in the morning when customers more frequently consume bagels and coffee. Panera makes a lot of money selling coffee—it even has a coffee subscription program—as well as bagels.
Panera Bread on its own is worth more than the 10x multiple it hopes to get for Caribou and Einstein and company. At least in theory, that is: Valuations have come down, and the perception of Panera in the market right now just isn’t what it was when JAB took the brand private in 2017 for a multiple of 19x EBITDA.
The lesson in all this is simple: The best way to take a company public is to make sure investors will get excited about investing in it, and the best way to get them excited is to ensure its financial performance is stellar.
What doesn’t get them excited is cobbling together a bunch of brands that seem similar but are in reality competitors.