Panera Ends IPO Plans With Danny Meyer’s SPAC, Citing Souring Economy


The year 2021 was a major year for restaurants and other food and beverage (F&B) businesses going public, with initial public offerings (IPOs) bringing in funds by the billions. This year, the tide has been turning.

Panera Brands, the fast-casual group comprised of Panera Bread, Caribou Coffee and Einstein Bagels, announced Friday (July 1) the end of its 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 cornerstone partner. The restaurant company attributed this decision to “unfavorable capital market conditions” such as the “deterioration of the market for initial public offerings” in recent months.

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

The initial agreement, announced in the fall of 2021, ended Thursday (June 30), and the two companies did not extend it. Still, Panera Brands maintained that it intends to go public at a more opportune time.

“[W]e will continue to prepare for and explore an IPO as market conditions improve, and there is no change to our conviction in Panera, which is as strong as ever,” Chaudhary said in the statement.

Last year, a wide range of restaurant brands hit the public market, seeing great success. For instance, when drive-thru coffee shop chain Dutch Bros. went public in September, its stock prices rose almost 60% on the first day of trading and an additional 30% on its second, and the IPO made Co-Founder Travis Boersma a billionaire.

Read more: Coffee Companies Perk up at Opportunity to Break Big on Public Market Following Dutch Bros.’ IPO Success

Moreover, Illinois-based hot dog chain Portillo’s saw share prices surge when it first went public in October, and fast-casual salad chain Sweetgreen saw the same in November.

See more: Hot Dog Chain Sees Hot IPO as Differentiated in-Restaurant Experience Offsets Mid-Tier Digital Efforts

Sweetgreen Reveals Higher-Than-Expected IPO Pricing

Since the start of the year, however, Dutch Bros.’ stock prices have fallen 36%, Portillo’s 57% and Sweetgreen’s 62%. These decreases are indicative of the broader market conditions impacting the restaurant business. A difficult labor market has many restaurants struggling to meet demand. Supply chain challenges are causing out-of-stocks and unpredictability, frustrating customers. Perhaps most importantly, soaring food inflation has many consumers tightening their belts, shifting from dining out to eating in.

“When we saw this in the last recession, the Great Recession, we saw that consumption of away-from-home eating was down and replaced by at-home eating,” General Mills CEO Jeff Harmening told analysts on an earnings call Wednesday (June 29). “We’re seeing the same kind of behavior starting now, … and that’s because customers want to get out more, but the cost of eating away from home is more than double the cost of eating at home.

Read more: Inflation Shifts Consumer Spending to Grocery, not Restaurants, Says General Mills