Panera ends IPO plans with Danny Meyer’s SPAC

2021 has been a major year for restaurants and other food and beverage (F&B) companies going public, with initial public offerings (IPOs) grossing billions of dollars. This year, the tide has turned.

Panera Brands, the fast-casual group made up of Panera Bread, Caribou Coffee and Einstein Bagels, announcement Friday (July 1) the end of his planned partnership with Danny Meyer’s Special Purpose Acquisition Company (SPAC) USHG Acquisition Corp. (HUGS) to go public via IPO with the latter as a key partner. The catering company attributed the move to “adverse capital market conditions” such as the “deterioration in the IPO market” in recent months.

“We have tremendous respect for Danny Meyer, HUGS and his management team and have enjoyed a very collaborative relationship since last fall,” said the CEO of Panera Brands. Niren Chaudhary said in a statement. “Unfortunately, deteriorating capital market conditions over the past few months have led to the realization that an IPO may not be imminent and, therefore, we felt it was appropriate not to extend our planned partnership.”

The original deal, announced in the fall of 2021, ended Thursday, June 30, and the two companies have not extended it. Still, Panera Brands maintained that it intended to go public at a more convenient time.

“[W]We will continue to prepare for and explore an IPO as market conditions improve, and our belief in Panera, which is stronger than ever, does not change,” Chaudhary said in the statement.

Last year, a wide range of catering brands entered the public market with great success. For example, when drive-thru chain Dutch Bros. went public in September, its stock price rose nearly 60% on the first day of trading and another 30% on the second, and the IPO made co-founder Travis Boersma a billionaire.

Read more: Coffee companies are taking the opportunity to break into the public market after Dutch Bros. IPO success

Additionally, Illinois-based hot dog chain Portillo’s saw its stock price surge in its first IPO in October, and casual salad chain Sweetgreen saw the same in November.

See more : Hot dog chain sees hot IPO as a differentiated in-restaurant experience that offsets mid-tier digital efforts

Sweetgreen Reveals Higher Than Expected IPO Price

Since the beginning of the year, however, Dutch Bros. the stock price fell by 36%, that of Portillo by 57% and that of Sweetgreen by 62%. These declines are indicative of broader market conditions impacting the restaurant industry. A tough labor market is forcing many restaurants to struggle to keep up with demand. Supply chain challenges lead to stock-outs and unpredictability, which frustrates customers. Perhaps more importantly, soaring food inflation is causing many consumers to tighten their belts, switching from restaurant to on-site dining.

“When we saw this in the last recession, the Great Recession, we saw out-of-home dining consumption had declined and was being replaced by at-home consumption,” the CEO of General Mills said. Jeff Harmoning told analysts on an earnings call Wednesday, June 29. “We’re seeing the same kind of behavior from now on, … and it’s because customers want to go out more, but the cost of eating out is more than double the cost of eating at home.

Read more: Inflation shifts consumer spending to groceries, not restaurants, says General Mills

——————————

NEW PYMNTS DATA: HOW UTILITIES AND CONSUMER FINANCE COMPANIES CAN IMPROVE THE BILL PAYMENT EXPERIENCE

About: More than half of utilities and consumer finance companies have the ability to digitally process all monthly bill payments. The kicker? Only 12% of them do. The Digital Payments Edge, a collaboration between PYMNTS and ACI Worldwide, surveyed 207 billing and collections professionals at these companies to find out why going digital remains elusive.