In the past 35 years, Panera has grown from one 400-square-foot cookie store into an enterprise with more than 2,000 bakery-cafes, 100,000 associates and annual systemwide sales of over $5 billion. So what’s the secret to Panera’s success? It’s been our ability to transform our business whenever necessary and pivot as appropriate. Panera’s journey so far has been punctuated by five major transformations – each of which positioned us for ever greater success. Here are the five transformations that created the Panera you see today:
In the 1980s, founder Ron Shaich merged his cookie store with a bakery, creating Au Bon Pain Co. Inc. Shortly thereafter, he and his late partner, Louis Kane, recognized the potential of transforming the company from a bakery selling croissants and bread to a bakery-cafe that used bread and croissants as a platform for selling upscale sandwiches. Au Bon Pain Co. Inc. became a publicly traded company in 1991 and opened hundreds of bakery-cafes, becoming a familiar fixture in cities along the East Coast and overseas.
After acquiring 19-unit Saint Louis Bread Company in 1993, Ron realized in the mid-1990s that a growing niche of people wanted something more than processed fast food. He saw they were hungry for an experience they respected: real food, served in an engaging environment by people with self-respect. In appealing to a guest’s self-esteem – a recognition that price, time and convenience were not the only currencies that mattered when people ate out – Ron created a new niche that would come to be called “fast casual” and forever alter the restaurant industry. Saint Louis Bread Company was renamed Panera to position it for national growth.
In 1998, Ron determined that Panera had the potential to be nationally dominant, but it would require all of our resources. As a result, in 1999 all of the Au Bon Pain Co. Inc. divisions were sold, and the remaining company was renamed Panera LLC. We then focused all of our time, treasure and talent on growing Panera.
The 2000s cemented what we call our Contrarian Philosophy. During the go-go years of the early 2000s, we maintained our steady, disciplined rate of growth. We invested in the customer experience – things like design and WiFi, which encouraged guests to linger – and turned Panera into a gathering place. During the recession in the late 2000s, when most restaurant companies were slowing growth and neglecting the guest experience, we invested in a better guest experience. The result: We built some of the most profitable cafes in our history, took market share from competitors and our stock price tripled. By the end of the decade, there were nearly 1,500 Panera bakery-cafes.
Recognizing growing consumer demand for craft offerings and convenience, we’ve worked since 2010 to reposition Panera as a better competitive alternative with expanded runways for growth. The themes we bet on – digital, clean food, loyalty and multiple channels of access to our products – are now redefining the restaurant industry and we are leading in each of these areas. Panera will hit $1.2 billion in digital sales this year. We are the first and only restaurant company to commit to and achieve 100% clean food. Our MyPanera loyalty program is the largest in the industry, with 28 million members. And we are leading in omni-channel through our delivery, catering, Rapid PickUp and Panera at Home options.
On July 18, 2017, Panera was acquired by JAB Holding Co., ending its 26-year run as a public company on a high note. Panera was 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, compared to a less than twofold increase for the S&P 500 during the same period. What’s more, Panera’s stock generated annualized returns of 25% in the same time frame, besting even the performance of Warren Buffet’s Berkshire Hathaway.
Our partnership with JAB will allow us to continue making the long-term decisions that lead to the industry-leading transformational work we have always excelled at and an ever brighter future for all of our stakeholders.