There is strength in numbers (in this case, in the number three). JAB Holding Company, parent company of a range of food and drink brands, has combined three of its subsidiaries — Panera Bread, Caribou Coffee and Einstein Bros. Bagels — into Panera Brands, the combined company announced on Thursday (Aug. 5).
The news release noted the quick growth of the fast-casual space relative to other restaurant industry categories, describing the new company as a “powerhouse platform” in the space. Indeed, a March analysis conducted by Technavio reveals that the fast-casual space will grow almost 8 percent each year in the next several years, rising by $28 billion between 2021 and 2025.
As Niren Chaudhary, CEO of Panera Bread and now group CEO of Panera Brands, said in a prepared statement, “We believe Panera Bread, Caribou Coffee and Einstein Bros. Bagels together will leverage each company’s unique expertise and services to build an unrivaled fast-casual platform with a tremendous runway for growth.”
The new company combines Panera Bread’s 2,156 locations, Caribou Coffee’s 713 locations across 10 countries, Einstein Bros. Bagels’ 1,005 stores total (a figure that includes Einstein Bros. Bagels-branded locations as well as Bruegger’s Bagels), Noah’s New York Bagels and Manhattan Bagel locations. In terms of unit count, this puts the chain well ahead of other leading U.S.-based fast-casual chains, with Chipotle totaling just over 2,800, Panda Express over 2,200 and Five Guys under 1,700.
The release stated that the combined company will be “anchored in Panera Bread’s distinctive competencies, including its broad omnichannel retail network, strong digital infrastructure, industry-leading loyalty program [and] robust food innovation pipeline,” in addition to the strength of its supply chain and its base of franchise owners.
To that point, the company noted that 45 percent of Panera Bread’s sales are eCommerce orders, and that the loyalty program has 44 million members. In fact, the PYMNTS Provider Ranking of mobile order-ahead (MOA) apps rated Panera as the fifth-best mobile app out of all major restaurant chains’ apps, and the single best fast-casual MOA experience.
Given the café-bakery chain’s leadership, Caribou Coffee and Einstein Bros. Bagels’ CEOs will report to Chaudhary, though they will continue to run their respective brands. Chaudhary told Reuters that the companies will also work together on developing menu items, and they will share customer data and supply chain information. He noted that all the brands have evolved since the start of the pandemic, adding that they now aim to “collectively leverage” their growth.
Additionally, he indicated that the group not only intends to open new locations soon, but also to establish ghost kitchens. It is likely that some of the upcoming brick-and-mortar locations will be co-branded, given the clear synergies between the bakery chain, the bagel chain and the coffee chain. Panera Brands has the opportunity to stand out against the competition in the breakfast daypart, becoming something of a one-stop shop.
The ghost kitchens will almost certainly prepare all three brands in one kitchen, given the similarity of the chains’ offerings, with the prominence of coffee on Panera Bread and Einstein Bros’ menus and the presence of bagels and baked goods on Caribou’s. Since the start of the ghost kitchen trend, the ability to fit several restaurant brands into one small space has been part of the appeal.
“Food brands are beginning to realize … that current dining spaces are being severely underutilized and can generate a staggering amount of additional revenue through the ghost kitchen model,” food tech platform C3’s CEO Sam Nazarian told PYMNTS in a recent interview. “As we move into a post-pandemic era, we’re going to see many more brick-and-mortar concepts operating eight to 10 additional delivery-only brands via ghost or digital kitchens.”