As consumers have increasingly demand their brands be socially-responsible and health-conscious, the Panera Bread franchise has been at the forefront of this new awakening.
Boasting over 2,000 locations across the United States and Canada, Panera Bread has grown considerably from its humble beginnings and, more often than not, been a true trendsetter in the market as customers’ tastes have shifted. The fast casual chain’s recipe for success includes a mix of artisanal and healthy food options, such as soups, salads, desserts, and baked goods, as well as a focus on social responsibility.
We take an in-depth look at the popular fast casual chain below.
The Panera Bread Story
Panera Bread was founded in Kirkwood, Missouri in 1987 by Ken and Linda Rosenthal as The St. Louis Bread Company after investing $150,000 of their own money and receiving a $150,000 loan from the Small Business Administration.
The business was later purchased by Au Bon Pain in 1993 and renamed Panera Bread in 1997. After relocating its headquarters to Richmond Heights, Missouri in 2000, Panera bread expanded to Canada in 2008, opening a number of locations around Toronto before relocating its headquarters again to Sunset Hills, Missouri in 2010.
In 2014, the brand unveiled “Panera 2.0,” an innovative system of integrated digital technology for customer ordering and payment, which, as of 2017, accounts for more than $1 billion in sales. Also in 2014, the company unveiled its new food policy which placed renewed emphasis on clean ingredients, promising to remove all artificial additives from its U.S. locations by the end of 2016, a promise it ultimately kept.
Panera Bread continued to expand, opening its 2,000th location in Elyria, Ohio in 2016, also introducing delivery services to almost 900 cities in 2018.
Today, Panera Bread continues to expand and boasts a growing popularity among health-conscious consumers, hitting $2 billion in digital sales alone in 2018.
Why are Franchisees Eating Up Opportunities at Panera Bread?
1. Thorough Training
Entrepreneurs looking to own a Panera Bread franchise can benefit from the comprehensive training regimen offered by the company. Franchisees are required to complete both Baking Training and Retail Training courses offered by the company. Together, these courses offer a mix of classroom and hands-on training that teaches franchisees equipment operation and maintenance, food preparation, inventory control, and much more, giving them a well-rounded view and extensive preparation on how to operate a business
2. Access to Entire Franchise Territory
Unlike most other franchisors, Panera Bread doesn’t sell single-unit franchises, meaning that entrepreneurs can’t open just one location. Instead, the company sells market areas which require that franchisee to open a number of units within a certain amount of time, usually 15 restaurants within a 6 year span.
While this may seem more complex and time-consuming at first, the rights to an entire market area limits the competition a franchisee faces and also boosts their revenue potential under this unique model.
3. Great Brand Recognition
Panera Bread has become recognized across the United States as a socially-responsible brand that offers healthy foods. This has helped them grow in a market in which consumers increasingly expect brands to be socially-conscious and prioritize healthy ingredients in their diet.
4. Large Customer Base
As of 2015, Panera Bread serves almost 8.3 million customers on a weekly basis, making it one of the largest food franchises in the United States.
5. Opportunity for Social and Health-Conscious Entrepreneurs
The Panera Bread franchise is also a prime opportunity for entrepreneurs who are looking to own a business that’s social and health-conscious. The brand has become well-known to customers across the U.S. for its healthy food options and socially-responsible ethics, supporting charitable programs and prioritizing animal welfare.
Initial Franchise Fee: $35,000
According to the 2019 Panera FDD, all franchisees are required to pay a $35,000 initial franchise fee when opening up a restaurant. The payment is due as a lump sum at least 30 days prior to the scheduled opening of the franchise location.
Monthly Royalty Fees: 5%
The monthly royalty fee for Panera Bread franchisees is 5% of monthly net sales, defined as the aggregate amount of all food, beverage, merchandise, and other products sold at franchise locations. The fee is payable by electronic withdrawal on the first business day immediately following each reporting period, defined as Wednesday to Tuesday or another timeframe as determined by the franchisor.
Estimated Initial Investment Costs: $1,117,000 to $3,464,000 (excluding real estate and related costs, and landlord allowances)
|Name of Fee||Low||High|
|Initial Franchise Fee||$35,000||–|
|Real Estate and Building (3 months rent)||Varies||Varies|
|Supplies & Inventory||$19,000||$25,000|
|Miscellaneous Opening Expenses||N/A||N/A|
|Travel and Living Expenses while training||N/A||N/A|
|Additional Funds (3 months)||$175,000||$245,000|
Average Revenue Per Location: $2,599,432
Per Item 19 of the 2019 Panera Bread FDD, the average net sales of franchisee-owned units was $2,599,432 for the prior fiscal year ending in December 2018.
It’s important to stress that this figure represents only the average net sales, and is not a guarantee or estimate of projected sales or revenue in any way at all.
The Panera Bread Franchise: A Healthy Business Opportunity for Entrepreneurs
From its modest beginnings years ago, Panera Bread today stands as one of the most popular fast casual restaurant chains in the United States today.
The brand’s focus on artisanal food and healthy ingredients is likely to continue its success in the future as more and more customers become health-conscious and seek out more boutique dining experiences that focus on quality over quantity.
The company’s social responsibility focus is also a plus for Millennial and Generation Z consumers, who tend to place high value on brands who engage in socially-conscious missions. The company started using free-range eggs in 2015 and also publishes an animal welfare progress report annually.
More broadly, Panera Bread has prioritized food that’s free of GMOs and artificial preservatives as part of its aim to promote healthier food. Panera Bread also donates unsold bread and baked goods to local charities and hunger relief organizations.
Popular among customers for its focus on healthy food and social responsibility, Panera Bread offers a tasty opportunity for socially-conscious and health-minded entrepreneurs hungry for a shot at owning a fast casual restaurant of their own.
By Steve Longo, Tyler Dikun and Jim Notaris