Panera Remains on Growth Track

St. Louis-based Panera Bread Co. (PNRA - Analyst Report) remains on its growth track with the opening of its first drive-thru St. Augustine restaurant on December 28 in Northeast Florida. We believe Panera’s new restaurant concept is on the right track for growth. Presently, the company operates 14 Panera Bread restaurants in the Northeast Florida region.

Earlier this week, the company opened its 4,400 square-feet bakery-cafe in Louisville, Kentucky, which was Panera’s eighth restaurant in that region. Panera has opened 46 outlets so far in Kentucky and Indiana since the company embarked on its expansion plan in these markets.  

During the third quarter of 2010, the company opened 22 new bakery cafes, 10 of these were company-owned stores and 12 were franchise operated. It brings the total unit count to 1,421 (605 company-owned and 816 franchised). Average weekly sales (AWS) for new units were $37,719 versus $35,680 in 3Q09.

The company continues to expect new unit openings for the full year at the low-end of its guidance for 80 to 90 system-wide bakery cafés, representing a growth of roughly 6%.

For 2011, management announced acceleration in new store development, with plans for 95 to 105 new units, representing a unit growth of approximately 7%. New openings will comprise both company-owned and franchised units with company-owned making up slightly more than 50% of the mix.

We believe that the opening of new restaurants is indicative of the company’s efforts to gain market share in a restaurant industry that is gradually turning around from the recent economic downturn.

Apart from this targeted expansion plan, Panera continues to open non-profit community cafes in different locations, called 'Panera Cares.' Last month, it inaugurated its second ‘Panera Cares’ in Dearborn, Michigan. This new opening was followed by the concept’s success in Clayton, Missouri, where the first non-profit community cafe -- called Saint Louis Bread Co. Cares -- opened in May.

Panera plans to open the third one in Portland, Oregon, in early 2011. We believe this concept of non-profit Panera Cares Café along with the company’s loyalty program will enhance the company’s brand image, going forward.

Major competitors of the company include Cheesecake Factory Inc. (CAKE - Analyst Report) and Biglari Holdings Inc. (BH - Snapshot Report).

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