The Panera Bread (PNRA, Financial) legacy began in 1981 as Au Bon Pain Co. Inc. Founded by Louis Kane and Ron Shaich, the company prospered along the East Coast of the U.S. and internationally through the 1980s and 1990s and became the dominant operator within the bakery-cafe category.
As of March 29, there were 1,997 bakery-cafes in 46 states and Ontario, Canada operating under the Panera Bread, Saint Louis Bread Co. or Paradise Bakery & Café names.
The company reported first-quarter growth in same-store sales and EPS. The company raised its full-year 2016 targets for same-store sales growth and earnings per share.
First-quarter results
Reported net income during the quarter was $35 million, or $1.45 per diluted share, which marked an increase of 21% from the prior-year quarter net income of $32 million, or $1.20 per diluted share.
Total revenue during the quarter was $685 million ($649 million during the prior-year quarter).
Company-owned comparable net bakery-cafe sales increased by 6.2%. Franchise-operated comparable net bakery-cafe sales increased by 3.3%. Systemwide comparable net bakery-cafe sales increased by 4.7% from the prior-year quarter.
Company-owned comparable net bakery-cafe sales increased by 6.2% in the first quarter and recorded year-over-year transaction growth of 2.4% and average check growth of 3.8%.
Operating margin for the first quarter increased by about 40 basis points as compared to that of the prior-year quarter.
During the quarter, the company opened 17 new bakery-cafes, and its franchisees opened 13 new bakery-cafes. As a result, there were 1,997 bakery-cafes open systemwide as of March 29.
Share repurchases
The company repurchased 613,335 shares at an average price of $197.63 per share for an aggregate purchase price of approximately $121.2 million. The company has approximately $162.3 million available under the current $750 million repurchase authorization as of the first quarter.
Expectations for 2016
| Â | Range |
| Comparable Net Bakery-Cafe Sales Growth | To be between 4.0% and 5.0%. |
| Diluted EPS | To be between $6.50 and $6.70. |
| Operating Margin | To decrease by 50 to 100 basis points. |
| New Bakery-Cafe Development and AWS | The company continues to expect 90 to 100 systemwide bakery-cafe openings in fiscal 2016 and is maintaining its average weekly net sales performance target for new company-owned bakery cafes of $45,000 to $47,000. |
Strong attributes of the company
- Over the last 20 years, Panera shares delivered a total return of more than 4,700% to shareholders, compared to about 200% for the Standard & Poor's 500.
- During the five-year period ended 2015, Panera delivered a total return to shareholders of more than 90%, compared to about 60% for the S&P 500.
- Thus far in 2016, shares of Panera are pushing all-time highs and significantly outperforming our high-growth peers.
Focus
- The company is focused on improving quality and convenience.
- It is restaging its business to fuel its growth.
- Multiyear marketing strategy.
- Innovating and modifying its menu.
- It is building the ecommerce and technology capabilities.
On a concluding note
2015 was a good year for Panera. The company had same-store sales and transaction growth that expanded throughout the year, even as others in the restaurant industry struggled. The company is working to once again redefine the restaurant industry and set Panera on a path of industry-leading performance.
The company’s MyPanera loyalty program continued to be a significant strategic asset in 2015. With more than 21 million members and about 50% of company transactions occurring on MyPanera cards, MyPanera is likely the largest loyalty program in the restaurant industry.
The company’s strategic investments have been significant, and Panera is working well as of now. Adding this company is going to create shareholder returns.
Disclosure: I do not hold any position in the company.
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