How Much Does It Cost to Open Panera Bread Franchise?

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Do you want to open a bakery business by buying Panera bread franchise? If YES, here is how much it cost to open a Panera bread franchise successfully. Due to the company’s carefully crafted reputation for health food served up fast, coupled with warm, comfortable surroundings, Panera Bread has become one of the fastest-growing franchise brands in America.

With savoury baked breads, soufflés and sweets, as well as a full offering of café fare, including Panini sandwiches, hand-tossed salads, delectable soups and a kids’ menu that ranks among the best, Panera Bread draws a crowd from morning to night.

Additionally, the friendly coffeehouse-type atmosphere in Panera Bread locations encourage customers to relax, sip coffee and chat, read or work online. With its emphases on health, wellness, fresh ingredients, delicious recipes and excellent service, Panera Bread has built a solid reputation nationally as a strong, dependable business with a conscience.

In 2010, Panera Bread’s non-profit foundation created Panera Cares, a non-profit “Pay what you can” restaurant in St. Louis. The concept has since expanded to Dearborn, Michigan, and Portland, Oregon. Panera Bread is also one of the largest providers of free Wi-Fi in the country.

Panera Bread was formally the Au Bon Pain Co., which acquired the St. Louis Bread Company in 1993 as its headquarters, then changed the company name to Panera Bread and began a nationwide expansion. The St. Louis Bread Company retains its brand name.

Today, Panera Bread oversees 1,453 locations nationwide, all franchise-owned and operated, in addition to 17 facilities that bake and deliver fresh dough to the bakery-café locations every day.

Panera Bread is known to have the vantage point of being able to identify a market trend years before other quick-service restaurants. The idea that consumers wanted healthier food choices was just peaking on the horizon–when in 2004–Panera introduced chicken raised without antibiotics to their menus. Note that this was unheard of at the time—before many restaurants jumped on the nutritional bandwagon.

The Panera Bread franchise was also the first restaurant to post calorie information on their menu boards exercising company values of transparency. According to reports, the company have also stayed ahead of the digital curve by including mobile ordering and kiosks within their business concepts.

With over 2,000 locations establish, becoming part of the Panera Bread franchise team is not as simple as establishing a single-unit bakery. According to reports, the company has a development plan that sells market areas. This requires prospect franchisees to become a franchise developer. All Panera Bread franchise developers establish multiple units. On average, a Panera franchise owner establishes 15 bakery-cafes within six years.

Financial Requirements of Establishing a Panera Bread Franchise in the United States

If you are considering a Panera Bread franchise, below are very important fees to have in mind, according to the company’s FDD.

1. Development Fee: $5,000 for each Panera Bread Bakery-Café that may be established under the Area Development Agreement

Under the Area Development Agreement, you are expected to pay a development fee of $5,000 (the “Development Fee”) for each Panera Bread Bakery-Café that may be established under the Area Development Agreement.
The number of Panera Bread Bakery-Cafes that you may develop under a particular Area Development Agreement is determined by mutual agreement. The number of Panera Bread Bakery-Cafes will vary depending upon a variety of factors, including: (1) existing population and anticipated population growth within the Development Area; (2) competition within the Development Area; (3) the availability of acceptable locations; and (4) the number of Panera Bread Bakery-Cafes the franchisor estimates can be developed within the Development Area.
Note that the initial franchise fee payable for each Panera Bread Bakery-Café you are required to develop under an Area Development Agreement is $35,000.
Panera Bread will apply $5,000 of the Development Fee paid under the Area Development Agreement against the initial franchise fee payable under each Franchise Agreement entered into under the terms of the Area Development Agreement.
Have it in mind that no portion of the Development Fee is refundable if you fail to develop the cumulative number of Panera Bread Bakery-Cafes that may be developed in accordance with the terms of the Area Development Agreement.

2. Initial Franchise Fee: $35,000

The initial franchise fee is $35,000, which is due and payable, less $5,000 of the Development Fee paid pursuant to the Area Development Agreement as described above, at least 30 days prior to the scheduled establishing of a Panera Bread Bakery-Café.
Note that after a Franchise Agreement has been signed, the initial franchise fee is not refundable in whole or in part.
Except as noted above with respect to the application of a portion of the Development Fee due and payable under an Area Development Agreement, and possibly in connection with the conversion of a Paradise Bakery & Café to a Panera Bread Bakery-Café and with the sale of company-owned Panera Bread Bakery-Cafes and/or non-traditional locations, the $35,000 franchise fee is uniform to all franchisees presently purchasing a franchise.

3. Renewal Fee: 50% of Panera Bread’s then-present franchise fee

A franchise fee equal to 50% of Panera Bread’s then-present franchise fee is payable in connection with the renewal of a Franchise Agreement.
Due immediately the successor Franchise Agreement is signed.

4. Transfer Fee: $7,500, plus costs

This transfer fee of $7,500, plus costs, is payable in connection with the transfer of a Franchise Agreement.
Except in the case of a transfer to a legal entity formed solely for the convenience of ownership, you must pay Panera Bread a transfer fee.
Due upon sale or transfer.

5. Initial Inventory: $300 to $500

Note that before establishing a Panera Bread Bakery-Café, you are expected to acquire your initial inventory of certain frozen dough and fresh dough products from Panera Bread, which you will acquire on a daily basis, at a cost of approximately $300 to $500, which amount is non-refundable.

6. Development Services Fee: presently $110,000

Panera Bread may enter into Development Services Agreements with franchisees, which provide that Panera Bread may from time to time, at its discretion and on a nonexclusive basis, offer to sell to existing franchisees Panera Bread Bakery-Café locations to be developed by Panera Bread.
Note that the acquire price for such proposed locations are the total development costs incurred by Panera Bread, plus an additional Development Fee (presently $110,000 under existing contracts, nonetheless this fee may be modified based on location, services rendered, changes in actual costs, and other factors determined from time to time by Panera Bread).
All these costs are in addition to any franchise fees payable in connection with franchisee’s acquisition of the location.
Panera Bread reserved the rights to issue a Bill of Sale in connection with any items transferred to franchisees in connection with the Development Services Agreement, which will provide the extent to which such items shall be covered by any warranties. Howbeit, Panera Bread would expect that such items will remain subject to any applicable manufacturer’s warranties but shall otherwise be transferred by Panera Bread without any additional express or implied warranties.

7. Real Estate Selection and Construction Management Services Fee: presently $110,000

Panera Bread also reserves the right to enter into Real Estate Selection and Construction Management Services Agreements with franchisees, which provide that Panera Bread may from time to time, at its discretion and on a nonexclusive basis, offer to provide real estate assistance services to franchisees (such as real estate selection and construction management services).
Note that the fees for these services are presently $110,000; nonetheless this fee may be adjusted based on location, services rendered changes in actual costs, and other factors determined from time to time by Panera Bread.
All these costs are in addition to any franchise fees payable in connection with the franchisee’s acquisition of the location.
Unlike the Development Services Agreement described above, Panera Bread will offer consulting or advisory services only, rather than developing the Bakery-Café and transferring possession of the Bakery-Café assets to the franchisee.

8. Franchisee Software and Services Master Supply Fee: This tend to vary under circumstances

Franchisees are expected to enter into Software and Services Agreement for certain Panera owned or licensed software and other technologies to support the operation of Panera Bread Bakery-Cafes. The specific software or services to be supplied and the fees payable will be set forth in an applicable Statement of Work on a project by project basis.
Fees for Panera 2.0 are generally structured as initial start-up fees, periodic subscription fees, percentage of sales fees, or a combination of each depending upon the nature of the services or materials provided.
Presently, you may acquire from Panera Bread optional technology products and services at a cost of approximately $40,000.

9. Royalty: 5% of Net Sales

Due Date: Payable on 1^st business day immediately following each “Reporting Period.”
Payment made by automatic electronic withdrawal.
“Reporting Period” is more or less the period from Wednesday to Tuesday (or as determined by Panera Bread).

10. Advertising

National Advertising Fund (“NAF”): 6% of Net Sales
Local Advertising Funds (“LAF”): 0% of Net Sales
Marketing Administration Fee (“MAF”): 4% of Net Sales
Advertising Association: Proscribed by Advertising Association
Due Date: NAF, MAF and LAF (to the extent collected by Panera Bread) are payable on the 1^st business day immediately following each “Reporting Period.”
To the extent collected by Panera Bread, payment is made by automatic electronic withdrawal.
“Reporting Period” is simply the period from Wednesday to Tuesday (or as determined by Panera Bread).

11. Miscellaneous Administrative Fees: This fee is clearly determined by Panera Bread from time to time

Due Date: Upon demand.
Presently, miscellaneous fees involves a special $50 handling charge for each incomplete or non-electronically received order from your Bakery-Café for Panera Bread’s bakery products, and a $30 fee if you do not submit Periodic Reports timely.

12. Proprietary Ingredients: In terms of dough, the price is not to pass 27% of “Retail;” for other Proprietary Ingredients, the price is established by the supplier thereof from time to time

Due Date: For dough sales, 21 days following the end of the sales week for franchisees not in default; otherwise as ordered.

13. Licensed Ingredients: Note that the prices are established by approved suppliers from time to time

Due Date: As ordered.

14. Other Food Products and Supplies and Distribution Fees: This fees tend to vary under circumstances

Due Date: As ordered.
Note that you may acquire other food products, paper supplies, uniforms, and promotional material from approved suppliers (including Panera Bread) and/or in accordance with Panera Bread’s standards and specifications.

15. Quality Control Program: This fee tend to vary under circumstances

Expected to contribute pro-rata share of costs of any program implemented, such as Interactive Voice Response (“IVR”) Customer Satisfaction Measurement, “customer intercept,” or other programs Panera Bread may implement.u

16. Re-Inspection Fee: $3,500

Due Date: Upon demand.
Once the inspection is conducted by Panera Bread or its designated agents reveals that your Bakery-Café fails to meet Panera Bread’s minimum standards (as it determines from time to time), Panera Bread may charge its then-present standard re-inspection fee for any follow-up inspection relating to such failure.

17. Interest on Late Payments: 2% over prime rate

Note that this interest rate applies to any money you owe Panera Bread, or any of its Affiliates (as defined in the Franchise Agreement), after the due date.

18. Fee for Insufficient Funds in Bank Account: Presently $30 (bank fee, plus administrative fee)

Due Date: Within 14 days of notice from Panera Bread of the insufficient funds.
Applies to any insufficient fund payment made by electronic transfers or checks to Panera Bread or its Affiliates.

19. Fees to Evaluate and Approve Alternative Suppliers: Panera Bread’s reasonable costs and expenses, which presently are expected to range between $2,500 and $7,500, although costs could greatly exceed those amounts depending on the product and the proposed alternative supplier

Due Date: Upon receipt of Panera Bread’s bill.
Panera Bread reserves the right to impose reasonable inspections and supervision fees to cover its costs in evaluating and maintaining alternative brands or suppliers you propose in accordance with the Franchise Agreement.

20. Audit: Note that the cost of audit, which is expected to range between $30,000 and $70,000 assuming you have maintained adequate books and records

Due Date: Completion of audit.
This fee is payable once you fail to furnish required information or if Panera Bread finds an understatement of Net Sales greater than 2%. The estimated range is for an audit of a multi-unit franchisee, not for a single Panera Bread Bakery-Café.

Site Selection Costs: Panera Bread’s reasonable expenses, which are expected to range between $1,500 and $4,000

Due Date: As incurred.
You are expected to reimburse Panera Bread for its reasonable expenses, including the costs of travel, meals, and lodging incurred in site evaluation for each visit after the initial visit.
All expenses associated with site evaluation will not be refundable and will vary depending on various factors.

Insurance: This cost tend to vary under circumstances

Due Date: As incurred.
Once you fail or refuse to obtain the required insurance coverage for the Panera Bread Bakery-Café, Panera Bread may obtain coverage at your expense.

Maintenance Costs: This cost tend to vary under circumstances

Due Date: As incurred.
Once you fail or refuse to maintain the Panera Bread Bakery-Café as required, Panera Bread has the right to do so on your behalf and at your expense.

Attorneys’ Fees and Other Costs: This fees tend to vary under circumstances

Due Date: As incurred.
These fees are payable if Panera Bread prevails in any legal dispute with you or in connection with an indemnification.

Indemnification: This fee tend to vary under circumstances

Due Date: As incurred.
You are expected to reimburse Panera Bread if it incurs any expense, including attorneys’ fees and other costs, or are held liable for claims arising out of your breach of the Franchise Agreement or the development and operation of your Bakery-Café.

All Optional Panera IS Services: Note that the cost tend to vary under circumstances

Due Date: Payable on the 1^st business day of each calendar month, billed one month in advance.
Every payment to be made by automatic electronic withdrawal.

Panera IS Proprietary Enterprise Software, eLearning Baguette University (“BU”), and Back of the House (“BOH”) PC Hardware and System Support Fees: This fee also vary under circumstances

Due Date: As incurred.

Charting Services (Optional): This fee is not yet determined:

Every payment to be made by automatic electronic withdrawal.

Steps on How to Buy a Panera Bread Franchise

Panera Bread sells franchise rights for specific geographic areas directly to franchisees. The outlets are popular and their number is growing at a steady pace. So, if you are interested in acquiring a Panera Bread Franchise, below are steps to take:

Start by visiting the Panera Bread consumer website and click “About Us” on the left-hand side of the site. Click “Franchise Information” on the menu that appears on the main “About Us” page.
Take your time to review the Qualification Criteria listed on the Franchise Information page to determine if you qualify for a franchise.
Then scroll down the page to the “More Information” section and click the “Franchise Information Overview” link to download the “Franchisee’s Initial Investment Fee & Agreement Structure.”
Carefully review to ascertain if you are able to meet the necessary financial commitments and if you are comfortable with the fees and related requirements for a franchise.
Then click the “Franchise Information Request Form” link in the “More Information” section and fill out the form that appears in a new browser window or tab.
It is advisable you pay adequate attention to the section that asks you to describe your experience and include as much relevant detail as possible. Emphasize your current successes as well as your dedication to the Panera concept in the section that asks you why Panera Bread should select you over other applicants.
Carefully review your application and click “Send Request” at the bottom of the form.
Wait up to 15 days for a call or email response from Panera headquarters. Review the additional information that you receive from them once you are approved for further consideration.
At this point, prepare to visit Panera headquarters and spend time speaking to present franchisees before you come to a final decision.
Analyze and review any final information you are presented with and sign a final franchise agreement. Transfer initial funds to Panera from the business entity under which you will hold the franchise.
Designate a partner or manager to attend training sessions if you are unable to, and make any locations you are considering for your first Panera outlet available to corporate representatives for inspection and approval.

Conclusion

Panera’s aggressive development plans calls for seasoned franchise owners with a hefty price tag. But the payout could make it all worth it. According to Forbes Magazine, the average Panera bread makes $2.47 million annually.