How Panera Bread Navigated Covid, the Labor Market, Inflation and More
Panera Bread’s board of directors, in what may turn out to be a pivotal moment for the business, met this week to decide whether to hold off on investing their new $9 billion cash injection into the business.
“This is a big deal,” says Tom Stroup, an investment analyst in TheStreet. “They are going to invest now, they are going to grow and they are going to do it in a way that will have the biggest impact.”
The decision to push off the move was to avoid an earnings call that would have allowed the company to announce losses from the coronavirus, and in turn, the economic slowdown that has been reverberating across the country in recent days.
“I don’t think the management is thinking about the big question here,” says Michael A. Schooner, an analyst in TheStreet. “They don’t care about a recession. They are concerned with the long term and they are worried that they don’t have long term growth in this business.”
But Stroup sees the move on Thursday by the board to call off this investment as a crucial decision.
“What they have to do is have management tell this board what they think the next 10, 15, 20, 25 years are going to look like,” says Schooner. “I do not think that they are thinking forward at that point. They are thinking about the short term.”
That’s because the company has been facing a fundamental challenge in the past few days: How does it manage to hold the line on product pricing while the business is running at a substantial loss?
To that end, Schooner says, this is an important test for the board.
“Right now,” he says. “Panera has to have the board say: What is the future of this company’s pricing strategy?”