How to Invest in Panera Bread

Panera Bread started as a single bakery in St. Louis in 1987. It has grown into one of the largest fast-casual restaurant concepts in the country. There are now more than 2,100 Panera Bread bakery-cafes across the U.S. and Canada.

The company is now part of Panera Brands, one of the world's biggest fast-casual restaurant operators, with more than 4,000 locations across 10 countries. Other notable brands under that umbrella are Caribou Coffee (more than 700 stores in 10 countries) and Einstein Bros. Bagels (more than 1,000 locations across the U.S. that also include Bruegger's Bagels, Noah's New York Bagels, and Manhattan Bagel).

Panera Brands has grown under the watchful eye of JAB Holdings. The leading investment management company took Panera Bread private in 2017 and merged it with Caribou Coffee and Einstein Bros. Bagels to create Panera Brands in 2021.

However, Panera is contemplating completing an initial public offering (IPO), which could come as soon as 2024. That has many investors beginning to salivate at the possibility of buying shares in the restaurant stock, which was a very profitable investment its first time around.

Here's a look at what you need to know about Panera and how to invest in its stock if it completes an IPO next year.

Is it publicly traded?

Is Panera Bread publicly traded?

Panera Bread wasn't a publicly traded company as of late 2023. JAB Holdings took the restaurant operator private in a $7.5 billion deal in 2017. The investment manager owns several other consumer brands, including Keurig Dr Pepper (KDP -0.35%) and Krispy Kreme Doughnuts (DNUT -0.84%).

IPO

When will Panera Bread IPO?

Panera Bread didn't have an IPO on the calendar as of late 2023. However, the company did start the process of going public again in December 2023, and its IPO could come as soon as 2024.

Panera has tried to rejoin the public markets before. The company struck a deal with a special purpose acquisition company (SPAC) to go public in 2021. However, it scrapped the deal in 2022 due to challenging market conditions.

How to buy

How to buy Panera Bread stock

Because Panera Bread still hasn't completed an IPO, you can't buy shares of the restaurant operator in a brokerage account. Private investment fund JAB Holdings currently owns the company, so investors can't buy pre-IPO shares of Panera.

However, they could consider buying a Panera alternative. Here are three restaurant stocks to consider investing in while you await the Panera IPO:

Cava Group

Cava Group (CAVA 10.5%) is a fast-casual Mediterranean restaurant chain. The company went public in mid-2023 in one of the hottest IPOs of the year. Cava is growing fast. Its revenue has surged 49.5% over the past year, driven by new restaurant openings and strong same-store sales growth. It had 290 restaurants at the end of the third quarter of 2023, with plans to continue growing its store count. The company also had turned the corner on profitability, reporting positive net income during the third quarter of 2023.

Domino's Pizza

Domino's Pizza (DPZ 0.87%) is the largest pizza purveyor in the world. It has more than 20,000 locations in more than 90 global markets. Domino's generated over $17.5 billion in sales in 2022, split evenly between its U.S. and international businesses. The company sees more growth ahead. It expects to add more than 1,100 new locations each year through 2028, which should help drive 7%+ annual sales growth and 8%+ annual profit growth.

Chipotle Mexican Grill

Chipotle Mexican Grill (CMG 2.41%) is a fast-casual Mexican restaurant chain. The company currently has over 3,300 stores across North America and Europe. It differs from many restaurant chains by owning and operating all its locations instead of franchising. Chipotle continues to grow at a decent clip. Revenue was up 11.3% to $2.5 billion in the third quarter of 2023, driven by new store openings (62 in the quarter) and growing same-store sales. The company plans to continue opening new locations (it signed a partnership deal in mid-2023 to accelerate its international expansion into the Middle East) and launch innovative new products to grow its sales and shareholder value.

Investors who want to buy one of these Panera alternatives can purchase shares in any brokerage account. Here's a step-by-step guide on how to invest in stocks like Panera.

Step 1: Open a brokerage account

You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.

Step 2: Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.

Step 3: Do your research

It's essential to thoroughly research a company before buying its shares. You should learn how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (CAVA for Cava Group, DPZ for Domino's Pizza, and CMG for Chipotle Mexican Grill).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.

Once you complete the order page, click to submit your trade and become a shareholder in one of these restaurant stocks while you await Panera's IPO.

Investors would follow a similar process to buy an IPO stock like Panera when it goes public. Once shares become available, fill out the order page at your brokerage account with Panera's selected stock ticker and submit your trade.

Profitability

Is Panera Bread profitable?

Profitability is crucial for a company's long-term success. Companies eventually need to make money to fund their operations and expansion. Meanwhile, profit growth tends to be the biggest driver of value creation for a company's investors over the long term.

As a privately held company, Panera doesn't need to disclose its financial results publicly, so there wasn't any publicly available information on the company's profitability in late 2023.

However, Panera did report in mid-2023 that it generated more than $4.8 billion in revenue in fiscal year 2022. Meanwhile, a Wall Street Journal report in late 2023 said that the company was laying off 17% of its corporate workforce in a bid to reduce costs ahead of a potential IPO. This information suggests the company will likely be profitable when it completes its IPO.

People interested in investing in its stock will need to review the company's IPO prospectus when it comes out and analyze its profitability. Ideally, Panera should be growing its earnings, which would continue as a publicly traded company.

Should I invest?

Should I invest in Panera Bread?

It's important to consider whether Panera will be the right investment for you before buying shares when it goes public. Here are a few factors to consider that might lead you to decide it's a good stock for you to buy:

• You're a fan of Panera's food and want to invest in a company you'd enjoy researching by trying more of its products.
• You think the company can continue growing its restaurant count and same-store sales at a healthy rate.
• You believe Panera's growing scale and cost-cutting moves will enable it to deliver strong profit growth.
• You think Panera will create lots of value for investors like it did the last time it was a publicly traded company.
• You understand that IPO stocks can be risky and more volatile.
• Adding Panera would help diversify your portfolio by adding a restaurant stock to the mix.

On the other hand, here are some reasons why you might opt against buying Panera stock:

• You're not really a big fan of Panera's food or beverage offerings.
• You already own several other fast food stocks.
• You're concerned that a potential recession could greatly impact discretionary spending on things like restaurants, which could slow Panera's growth.
• You're a more conservative investor and prefer investing in less volatile stocks than recent IPOs.

Related investing topics

ETFs

ETFs with exposure to Panera Bread

Since Panera is still a privately held company, investors can't passively invest in its stock through an exchange-traded fund (ETF).

However, those interested in investing in the restaurant sector have a couple of restaurant ETF options to consider, including:

• AdvisorShares Restaurant ETF (EATZ 1.8%): This ETF is the only one focused exclusively on the restaurant and food service industry. It held more than two dozen restaurant stocks in late 2023, including Domino's and Chipotle in the top 10 at 6% and 5.2%, respectively, of its net assets. The ETF had a 0.6% management fee.
• Invesco Leisure and Entertainment ETF (PEJ 0.36%): This fund focuses on companies in the leisure and entertainment industry. The fund held hotels, restaurants and leisure companies (54.3% of its holdings in late 2023), entertainment stocks (19.2%), airline stocks (15.1%), interactive media and services companies (5.9%), food and staples retailing operators (2.8%), and media companies (2.7%). Chipotle Mexican Grill was its third-largest holding in late 2023 at 5.1%. The fund had a 0.58% total ETF expense ratio.

The bottom line on Panera Bread

Panera could once again become a publicly traded company. The company's brand power, large scale, and growth potential already have many investors salivating for its potential IPO, so it could be one of the tastiest IPOs of 2024.