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Panera Bread details recipe for success in '09

Panera Bread details recipe for success in '09

RICHMOND HEIGHTS Mo. Panera Bread Co., looking to maintain its sales momentum, said it plans to unveil this year several new menu items and combo deals designed to drive add-on, bulk and impulse purchases across all dayparts.


In a conference call Friday with analysts, officials of the parent company to 1,252 bakery-cafes operating under the Panera Bread and St. Louis Bread Co. brands, said that they are testing both a spicy and healthful breakfast sandwich, as well as steel-cut oatmeal, which they plan to roll out later in the year. Both Starbucks and Jamba Juice have introduced oatmeal to their menus in the past few months.




Panera officials said they also are working on a chopped Cobb salad and an improved chicken salad with grapes, antibiotic-free chicken and almonds, which are expected to be available for lunch this summer. Other new entrees currently in test include oven-baked macaroni and cheese and an open-face beef brisket sandwich.




The company also is testing an extension of its popular You Pick Two option. The You Pick Four offer would allow patrons to order a soup, salad or sandwich, a beverage and a baked good at an attractive price, said Ron Shaich, Panera’s chairman and chief executive. And, along with bulk bagels already available, Panera is testing four-packs of muffins and scones intended as an add-on or gift purchases.




“You will see us focus on selling more seasonal breads at retail,” Shaich said. “We will regularly celebrate our gift-worthy breads, things like Panettone, holiday bread, Irish soda bread, hot cross buns and a variety of sweet breakfast breads. We will also merchandise our breads to our guests for everyday use.”




Shaich also noted that Panera was positioned to take advantage of several opportunities created by the economic downturn, including real estate available at attractive prices and lower media costs. Shaich said this year the company would begin testing a smaller store prototype that would reduce the company’s capital investment by about $200,000.




The company also expects this year to test its first TV advertising in three markets as well as an online advertising effort. Shaich said the company also would pilot a loyalty program later in the year.




Shaich laid out Panera’s game plan for 2009 after Panera reported a 43-percent jump in fourth-quarter net income that was aided by a calendar shift and price increases.




Net income for the 14-week quarter ended Dec. 30 was $25.5 million, or 84 cents per share, up from $17.8 million, or 56 cents per share, from the year-earlier quarter, which was only 13 weeks. The fourth–quarter results included 3 cents per share for write offs related to a strategic cash investment, the rollout of the company’s new coffee program and an increase in reserves associated with legal settlements.




Revenue for the fourth quarter was $357.8 million, up 19 percent over the year-ago quarter.




In the fourth quarter, systemwide same-store sales rose 2.7 percent, reflecting a 1.9-percent increase at company-owned stores and a 3.3-percent increase at franchise-operated units. The company said that at company-owned stores a 6.1-percent price hike had helped to offset the negative impacts of slowing transactions and severe weather.




For the 53-week fiscal year ended Dec. 30, net income was $67.4 million, up 17 percent from the 52-week year earlier. Revenues were more than $1.29 billion, up 22 percent from the prior year.




Systemwide same-store sales for the year rose 3.4 percent, reflecting a 3.6-percent increase at company-owned stores and a 3.4-percent increase at franchised units.




Officials warned that the company had begun to see a slowdown in business, noting that transactions declined between 2 percent and 3.5 percent at the start of the first quarter of 2009. Executives blamed most of the dip on severe weather in its markets in the East and Midwest, and said the company, nonetheless, would stick to its target of earnings between $2.55 and $2.70 a share for the full year, compared with the $2.22 per share achieved in 2008.




“In 2009 we are again committed to executing programs that serve to blunt the impact of the recession and build transactions,” Shaich said.




Panera said it expects to open 80 to 90 bakery-cafes in 2009.




Contact Dina Berta at [email protected].



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