According to "people with knowledge of the matter," the fast-casual restaurant company is studying options with the help of advisors. The company has reportedly received takeover interest from a potential suitor (rumored to be Domino's Pizza (DPZ - Get Report) , Starbucks (SBUX - Get Report) , or JAB Holding) and is weighing its options.
Panera rose to the forefront of the fast-casual segment after a foodborne-illness scandal ripped apart rival Chipotle Mexican Grill (CMG - Get Report) . Fast-casual restaurants offer the same quick service customers can expect from a fast-food chain such as McDonald's (MCD - Get Report) , but with higher prices and better-quality ingredients.
Panera is regarded particularly as a healthy choice among restaurants, despite its display case of pastries. That's because the company has vowed to adopt standards and practices to improve the quality of its food - using more humane practices for livestock, for example, and eliminating artificial ingredients.
That brought the company into the spotlight last week when Chipotle execs took issue against the rival chain's "clean" claims in a conversation with Business Insider. "If you look at other fast-food menus, they might have been successful in removing things that are labeled artificial flavors or artificial colors, or even artificial preservatives, but they have to end up replacing them with something else which performs essentially the same function," Chipotle CMO Mark Crumpacker said in a thinly veiled dig at Panera.
However, according to a study conducted by market research firm YouGov BrandIndex, consumers who self-identify as "healthy eaters" are nearly twice as likely to dine at Panera than at Chipotle.
Clearly, Panera's healthy image campaign is working. But the entire restaurant industry has recently been rocked by a recession that has seen sales fall at even the most beloved chains. Although Panera's 2016 revenue rose to nearly $3 billion, the company has watched its net income levels shrink.
This "restaurant recession" has led many fast-food and fast-casual chains to consolidate in recent months. For instance, Restaurant Brands (QSR - Get Report) , the parent company of Burger King and Tim Hortons, has just completed its purchase of Popeyes Louisiana Kitchen.
It would make sense for either of the three rumored suitors to gobble up Panera. Domino's Pizza has been nearly the only restaurant chain on a roll despite the restaurant recession. During the past few years, the company has revamped its image by improving its recipes and is even exploring high-tech drone and robot delivery. Having a sit-down, popular, and healthy restaurant in its portfolio would push the company's transformation even further.
Regarding Starbucks, the company is publicly exploring expanding its business into dining options. Aside from its gourmet, upscale Roastery, and Reserve restaurants, Starbucks is rolling out new, healthful lunch menus. Having an already-beloved soup and sandwich chain to pull from would benefit the coffee behemoth.
And as for JAB Holding, this private company already owns majority stakes in coffee chains such as Peet's, Caribou, and Keurig Green Mountain, as well as Dunkin' Brands (DNKN - Get Report) rival Krispy Kreme. Starbucks would complement its java empire.
Or Panera could continue to fly solo. Either way, it's a great company and worth keeping an eye on. However, investors should wait for its stock to settle off Monday's highs before taking a bite.
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