JAB Holding Company — the parent company of Panera Bread and Krispy Kreme — announced last month that it would be diversifying its portfolio “beyond consumer goods and services” to build a global insurance platform. The holding company has hired Anant Bhalla as a senior partner and chief investment officer to head this initiative.
While insurance is nothing new for JAB Holding Company — the company had already built a strong pet insurance business with more than 20 pet insurance brands under its umbrella — this represents a major shift for JAB. Previously, the holding company had been primarily known for its foodservice and other consumer goods brands, but now JAB appears to be shifting its focus away from that sector.
Peter Harf, managing partner and founder of JAB said that this announcement is the first step becoming a “more diversified firm” and that the company wants to “expand on [its] success in insurance to become “one of the most successful veterans in the industry.”
While representatives for JAB Holding Company did not respond to requests for further comment on what this might mean for the future of the consumer goods sector of the JAB portfolio, financial performance and stability of the company’s foodservice brands (which are almost exclusively coffee, sandwich and bakery café brands) has been mixed.
Two of JAB’s most high-profile foodservice brands, Panera and Krispy Kreme, have notably shifted their brand focus over the past few years. Krispy Kreme changed its operational model to a hub and spoke model that prioritizes doughnut distribution through many avenues, rather than keeping all of its doughnut bakeries open. For the most part, this strategy has worked with Krispy Kreme reporting 6.7% sales growth despite only 0.6% unit growth, according to the latest Technomic data. This steady growth has, however, paled in comparison with the performance of some of the superstars within the highly competitive quick-service snack and beverage segment, like Crumbl and Smoothie King.
Panera Bread, meanwhile, has received criticism for its menu overhaul, shift toward par-baked bread and other baked goods, and rollback of some of its sourcing standards. Despite some of these identity-related challenges, Panera’s performance remains at a steady rate, with 2.6% sales growth and 2.2% unit growth last year. Technomic data reveals that Panera does lag far behind its competitors in the equally crowded fast-casual sandwich sector, where average sales growth of 11.7% from 2022 to 2023 was more than quadruple Panera’s growth.
An unassuming winner in the JAB portfolio is Einstein’s Bagels, which had 12.4% sales growth in 2023, despite closing more stores than the brand opened last year. Other sandwich and coffee brands in JAB’s portfolio did not fare quite as well, with Pret a Manger experiencing moderate success with 3.1% sales growth last year, behind many of its competitors. Peet’s Coffee had both negative sales and unit growth from 2022 to 2023, which further showcases the tight competition in the coffee sector.
With most of JAB’s foodservice brands delivering mixed or stagnant results in 2023, it’s unclear how the company’s new investment in the global insurance sector will affect these brands moving forward:
“As we expand beyond consumer, our priorities include creating a global insurance business and thematic asset management capabilities, significantly diversifying JAB’s investment portfolio for the benefit of our shareholders,” Frank Engelen, managing partner and CFO of JAB, said in a statement.
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