In this FDD Talk 2016 post, you’ll learn the following:
- Section I – Background information on the Panera Bread franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Panera Bread franchise, based on Item 7 of the company’s 2016 FDD
- Section III – Presentation and analysis of Panera Bread’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
- 2015 average net sales for the 800 company-owned Panera Bread Bakery-Cafes open during the entire fiscal year ending December 29, 2015
- 2015 average net sales for the 915 franchised Panera Bread Bakery-Cafes open during the entire fiscal year ending December 29, 2015
- 2015 average net sales for the 800 company-owned and 915 franchised Panera Bread Bakery-Cafes open during the entire fiscal year ending December 29, 2015
- 2015 average gross revenues, discounts, net sales, cost of sales, gross profit, labor, operating expenses, advertising expenses, fixed expenses, occupancy expenses, net profit, depreciation and amortization, and EBITDA for the 800 company-owned Panera Bread Bakery-Cafes open during the entire fiscal year ending December 29, 2015
Section I – Background Information
Panera Bread Has Become Digital Leader
Panera Bread, which in 2014 introduced its innovative Panera 2.0, announced in February 2016 that the initiative has helped Panera become an industry leader in digital performance.
“Our 2.0 cafes are demonstrating that restaurants can leverage technology – not just to improve a stand-alone function like payment – but throughout the customer journey to heighten and differentiate the total experience,” founder and CEO Ron Shaich said in a news release.
According to Panera, 16 percent of company sales are ordered and paid for digitally, and the company expects that number to rise to 20 percent by the end of the year. More than a third of the brand’s retail sales in its top-performing markets come from digital channels. Systemwide digital sales could reach $1 billion in annual sales by 2017.
Brand Got Its Start in Texas
Panera Bread got its start in 1981 when Louis Kane and Ron Shaich opened Au Bon Pain Co. in Forney, Texas. The company, which grew both on its own and through acquisitions, changed its name in 1998. Panera Bread has been headquartered in Sunset Hills, Missouri, since 2010.
Panera doesn’t sell single-unit franchises, but rather sells market areas in which franchisees open multiple units. Typically, 15 bakery-cafes are opened in a six-year period by a franchisee who signs with the company.
The bakery-cafes sell breads, pastries and other baked goods, as well as a wide variety of soups, sandwiches, pasta and salads. The bakery element of the restaurants enables them to have numerous baked goods, both individually and as restaurant menu items.
While guests can order a traditional sandwich, they can also order flatbread and panini, and the breads come in many varieties: sprouted grain roll, French baguette, sea salt focaccia, and ciabatta, as well as classic flavors such as white, wheat and sourdough, among others. Even the chain’s soups can be sold in bread bowls.
More Plant-Based Proteins on Menu
The chain added more plant-based proteins, such as organic quinoa and edamame, to the menu in November 2015. For those looking for ingredients such as these, Panera Bread is a pioneer, and the market may see other healthful restaurants making similar commitments as time passes.
Stock Repurchase Program Announced
Panera Bread Company announced in May 2015 that its board of directors had approved a new three-year share repurchase program of as much as $600 million. It will replace the current program, which was set to expire on June 4, 2017, and has been terminated by the board because of the approval of the new program.
Soup Menu at Panera Goes Natural
Panera announced in January 2016 that all artificial colors, flavors, sweeteners and preservatives have been removed from its U.S. soup menu. In addition, Panera chefs have focused on improvements in overall ingredient quality; for example, switching from conventional bleached flour to unbleached wheat flour.
Chain Makes Progress in Treatment of Animals
Panera Bread announced in November 2015 its plans for reduction of confinement of livestock and use of antibiotics in poultry.
At the time of the announcement, the brand’s pork was 100 percent gestation-crate free (for pregnant sows), 100 percent of its chicken and roasted turkey in sandwiches and salads was raised without antibiotics and 89 percent of beef cattle was grass-fed and free range in 2015. Panera announced its eggs would be 100 percent cage-free by 2020.
Section II – Estimated Costs
- Please click here for detailed estimates of Panera Bread franchise costs, based on Item 7 of the company’s 2016 FDD (updated).