We have reverted to a Neutral recommendation on Panera Bread from
Underperform, based on the company's improved year-over-year
earnings, revenues and comps growth. Despite missing the Zacks
Consensus Estimate, both earnings and revenues increased year over
year reflecting comps growth. The company also raised the lower end
of its comps guidance for 2014, reflecting the comps growth. In our
view, the Panera 2.0 program has begun yielding results, with
improved revenues and comps. However, we are concerned that the
company is spending heavily to improve operational capabilities,
enhance guest experience and strengthen the overall position.
Additionally, rising food costs that have affected the restaurant
industry at large would further dent Panera's margins.
Based in Richmond Heights, MO and founded in 1981, Panera Bread
Co. is engaged in the ownership and franchising of bakery-cafes in
the United States under the Panera Bread, Saint Louis Bread Co. and
Paradise Bakery & Caf brands. As of Sep 30, 2014, the company
had 1,845 bakery-cafes operating under the Panera Bread, Saint
Louis Bread Co. and Paradise Bakery & Caf brands.
Its bakery cafes primarily offer baked goods, dough items,
custom roasted coffees, and cafe beverages. The company's bakery
cafes are located in suburban, strip mall, and regional mall
The company operates through three business segments: company
bakery-cafe operations, franchise operations, and fresh dough and
other product operations. As of Sep 30, 2014, the company had 903
company-owned bakery cafes and 942 franchise operated bakery-cafes
located throughout the United States and in Ontario, Canada. Panera
Bread's 24 fresh dough facilities supply fresh dough and other
products daily to most company-owned and franchise operated
Panera Bread Company (PNRA): Read the Full Research
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