Panera profit up 28% on higher prices, sales
by Eric Schroeder
ST. LOUIS — Higher prices and better sales of more profitable menu items buoyed earnings at Panera Bread Co. in fiscal 2012. Net income in the year ended Dec. 25, 2012, totaled $173,448,000, equal to $5.94 per share on the common stock, up 28% from $135,952,000, or $4.59 per share, in fiscal 2011. Last year’s results included a one-time pre-tax charge of $5 million.
Total revenues in fiscal 2012 increased 17% to $2,130,057,000 from $1,822,032,000.
For the fourth quarter ended Dec. 25, net income was $51,612,000, or $1.77 per share, up 34% from $38,620,000, or $1.33 per share, in the same period a year ago. Revenues increased 15% to $571,549,000 from $495,765,000.
Panera opened 123 new bakery-cafes (59 company-owned and 64 franchise-operated) during fiscal 2012, bringing the total number of bakery-cafes operated system-wide to 1,652.
“During 2012, the partnership between our supply chain and culinary team resulted in continued growth in our signature and hot sandwich categories as well as in our signature salad category,” Ron Shaich, president and co-chief executive officer, said during a Feb. 6 conference call with financial analysts. “During the fourth quarter and for the full year, we saw the signature sandwich category continue to perform exceptionally well. Indeed, sales increased year-over-year by 34% in the quarter and 18% for the year.
“The strong growth in the quarter was primarily the result of the continued success of our roasted turkey and avocado BLT sandwich as well as the introduction of the Big Kid Grilled Cheese.”
Mr. Shaich said Panera initially thought the grilled cheese product would take share away from other hot sandwiches, but what the company experienced was consumers trading up out of cafe sandwiches to the Big Kid Grilled Cheese, which provided check growth.
Panera, following more than two years of development, will roll out several pasta offerings late in the first quarter, Mr. Shaich said. The restaurant chain initially will roll out three pasta dishes: tortellini alfredo, pesto sacchettini and rustic penne Bolognese. They will be available in large and small sizes and will include a half salad or a cup of soup.
“Our expectation is that the pastas will help both our lunch and dinner dayparts,” Mr. Shaich said. “However, let me add one note of caution. Please, please don’t expect dramatic sales increases from these new pasta products. Rather, you should expect our pastas will serve as a platform for sustained long-term growth at Panera.”
Looking ahead to fiscal 2013, Panera has set its full-year 2013 earnings-per-share growth rate at 17% to 19% and company-owned comparable bakery-cafe sales growth at 4.5% to 5.5%.
“2012 was our fifth consecutive year of growing our earnings 20% or greater,” said Bill Moreton, chairman and co-c.e.o. “In 2013, we are making substantial incremental investments to lay the foundation for our growth over the next three to five years. We believe that our multi-year strategy of continuing to invest in the quality of our customer experience will continue to drive earnings growth well into the future.”