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Panera lowers wheat costs for part of ‘09

RICHMOND HEIGHTS Mo. Panera Bread Co. said it has locked into a cost of $10 per bushel for 95 percent of the wheat it expects to purchase during the first half of fiscal 2009, or a third less than the company paid on average during the comparable periods of the current year.

The franchisor or operator of 1,185 bakery-cafes also said Wednesday that it had raised its projections for company restaurants’ second-quarter comparable sales. Panera said same-store sales are now expected to fall between 6.1 percent and 6.4 percent, compared with an earlier target range of 5 percent to 6 percent. It increased its second-quarter earnings per diluted share to between 48 cents and 50 cents, compared with earlier expectations of 40 cents to 44 cents.

In setting the new targets, Panera noted that profit margins had been improved by growth in gross profits per transaction.

The company said wheat suppliers were not willing to lock into a price for the third and fourth quarter of 2009. It also noted that the savings on wheat would be tempered by rises in the costs of proteins, dairy products, packaging and gasoline.

The $10-per-bushel price is a total cost, or the sum of the futures and basis costs, Panera said.

The company attributed a 17-percent decline in profits for the first quarter ended March 25, to $12.4 million, largely to higher wheat costs and other expenses.

In addition to operating or franchising Panera Bread and Saint Louis Bread Co. restaurants, Panera owns a 51-percent stake in Paradise Bakery & Café, parent of the 67-unit namesake restaurant brand.

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