Franchise Costs: Detailed Estimates of Panera Bread Franchise Costs (2018 FDD)

Updated April 27, 2018.

Detailed Estimates of Panera Bread Franchise Costs Based on Item 7 (Estimated Initial Investment) of Panera Bread’s 2018 Franchise Disclosure Document

1.  Franchise Fee:  $35,000

• The franchisor will apply $5,000 of the Development Fee paid under an Area Development Agreement toward the initial franchise fee for each Bakery-Cafe.

2.  Real Property:  Not Specified

• The total estimated initial investment does not include real estate.

• Panera Bread Bakery-Cafes are typically located in malls, strip centers, and freestanding locations.

• The cost of purchasing or leasing and developing a site for a Panera Bread Bakery-Cafe will vary considerably depending on such factors as location, size, and the local real estate market.

• You will need to purchase or lease a building of approximately 3,000 square feet to approximately 5,100 square feet and pay the cost of site work and/or leasehold improvements.

• During 2017, 42 of the 51 U.S. sites (excludes five sites which were built on land purchased by Panera and four food court sites) developed by Panera were leased with lease costs (as averaged throughout the initial term of the lease plus one option period) ranging from approximately $8,100 to approximately $27,400 per month base rent, triple net, and with an allowance for tenant improvements ranging from $0 to $900,000.

• Leases may also require percentage rent.

3.  Leasehold Improvements:  $364,000 to $1,778,000

4.  Equipment:  $301,000 to $448,000

• The franchisor estimates the cost of purchasing equipment for your Bakery-Cafe, including ovens, to range from approximately $301,000 to approximately $448,000.

• This estimate includes a standard computerized POS cash register system, Bakery-Cafe computer hardware, and proprietary software.

5.  Optional Technology Systems:  $0 to $172,000

• This item covers the costs for the optional Panera Bread Bakery-Cafe POS Enterprise System support and the services related to the Panera 2.0 initiative.

• Panera currently estimates that costs (exclusive of fees) related to the implementation of Panera 2.0 range from $65,000 to $125,000.

• In addition, you may purchase from Panera optional technology products and services at a cost of up to $47,000, which includes the one-time base license fee.

6.  Fixtures:  $49,000 to $89,000

7.  Furniture:  $48,000 to $86,000

8.  Consultant Fees:  $30,000 to $183,000

• The consultant fees include an estimated impact fee, which may be imposed by the municipality. The franchisor estimates that the average amount of impact fee, if such fee is imposed, will be approximately $75,000.

• During 2016, impact fees ranged from $0 to $202,908.

9.  Supplies and Inventory:  $19,000 to $25,000

• Proprietary ingredients must be purchased from Designated Suppliers. Licensed ingredients may be purchased from the franchisor’s Approved Suppliers or other suppliers that the franchisor approves. Other items must meet the franchisor’s quality standards and/or purchased from an approved supplier.

• The cost of purchasing point-of-purchase (“POP”) materials, training materials, and forms is estimated to range from $6,150 to $7,350.

• The franchisor estimates the cost of the opening food, paper, chemicals, and uniforms orders will range from $13,000 to $17,000.

10.  Smallwares:  $23,000 to $62,000

11.  Signage:  $22,000 to $97,000

12.  Additional Funds (3 months):  $175,000 to $245,000

• This estimate includes working capital for the first 3 months and includes general operating expenses, such as lease payments, inventory, payroll expenses, facility expenses, insurance, pest control, security, repairs and maintenance, and complimentary sales and other costs.

• This estimate also includes your pre-opening expenses during the six months prior to opening and includes such items as professional fees, organizational expenses, utility deposits, and salaries and expenses during training of your Operating Partner and your other personnel whose training is required by the Franchise Agreement and/or the Area Development Agreement.

• Because you and/or your Operating Partner and your other personnel for your Bakery-Cafe, as well as personnel in management positions and personnel that will work in more than one Bakery-Cafe, are required to complete the training program prior to opening your first Bakery-Cafe, these expenses are included for your first Bakery-Cafe.

• Consequently, the additional funds necessary for your first Bakery-Cafe tend to be on the high end of the estimated range, while the additional funds required for subsequent Bakery-Cafes that you open will tend to fall on the lower end of the estimated range.

• These figures are estimates based upon the franchisor’s experience in opening and operating company-owned Bakery-Cafes, and the franchisor cannot assure you that you will not have additional expenses in starting your Panera Bread Bakery-Cafe.

13.  Total:  $1,066,000 to $3,220,000 (excluding real estate and related costs, and landlord allowances)

• Panera relied on its experience regarding openings of both company-owned Panera Bread Bakery-Cafes and franchisee-owned Panera Bread Bakery-Cafes to compile these estimates.