Panera profit climbs 27%

by Eric Schroeder
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ST. LOUIS — Net income at Panera Bread Co. in the first quarter ended March 29 totaled $32,774,000, equal to $1.10 per share on the common stock, up 27% from $25,845,000, or 83c per share, in the first quarter of fiscal 2010. The year-over-year increase marked the eleventh time in twelve quarters that the company’s income has risen more than 20%.

Sales during the first quarter rose 16% to $422,100,000 from $364,210,000 in the same period a year ago.

Also during the first quarter, Panera said system-wide comparable bakery cafe sales increased 3.3%, while company-owned comparable bakery cafe sales rose 3.3%. Panera said the company-owned comparable growth was comprised of year-over-year transaction growth of 1.7% and average check growth of 1.6%.

During the first quarter Panera opened 8 new bakery cafes and franchisees opened 11 new bakery cafes. Panera now operates 1,467 bakery cafes system wide.

“We are pleased to deliver 33% earnings growth in the first quarter, marking the eleventh out of the last twelve quarters of 20% plus growth,” said Bill Moreton, chief executive officer. “We believe the consistency of our results has been driven by the investments that we have made in the quality of our food, our people and the overall customer experience.”

In an April 27 conference call with financial analysts, Mr. Moreton expanded on the investments made in the company’s food, including the hot sandwich category, which he said is the “key focus area” for Panera in 2011.

“The rollout of our Generation 2 Panini Grill has been an approximately $7 million investment for company bakery cafes,” he said. “We believe that much as our new lettuce program in 2009 was a gateway to building our strong signature salads business, the Generation 2 Panini Grill is the key to our hot sandwich platform. The new grill allows us to make our paninis to order, and heats the sandwiches more evenly throughout, resulting in a much improved product.”

Bakery products also have performed well at Panera, Mr. Moreton said. He noted the company’s new Easter cookie has driven a 40% sales spike across the company’s entire cookie category since its introduction.

“The Easter cookie highlights the skill of our almost 200 certified bakers across the country,” he said. “We are going to continue to utilize our baking skills to develop new innovative bakery products in the coming quarters.”

Panera said it is targeting 23% to 25% earnings-per-share growth for the full year 2011, and expects e.p.s. to be $4.47 to $4.51.
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