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Michael McLellan

Panera Bread Keeps Its Food Fresh and Revenue Rising

by Michael McLellan | Dun & Bradstreet Editor

April 8, 2015 | No Comments »

Panera-Bread-990pxPanera Bread Company has grown from serving about 60 customers per day at its first bakery/cafe to serving almost 8 million customers per week systemwide. The company is a leader in the quick-casual restaurant business, with more than $2.5 billion in annual sales and about 1,880 bakery/cafes located throughout the US and Ontario, Canada.

Most of the company’s bakery/cafes are located in urban, suburban, strip mall, and regional mall locations. Operating under the banners Panera Bread, Saint Louis Bread Co., and Paradise Bakery, the locations offer made-to-order sandwiches using a variety of artisan breads, including Asiago cheese bread, focaccia, and its classic sourdough bread. The chain’s menu also features soups, salads, and gourmet coffees.

Franchise and Supply Chain Strategy — Fresh Is Best

Like many other dining operators, Panera relies on a mix of corporate-run locations and franchising to expand and operate its restaurant chain. The company-owned stores give the chain a significant footprint from which to control the consistency of food and service quality.

Panera’s franchising efforts allow the company to expand into new markets without the expense of construction and operation. Local franchisees pay the company royalties and other fees in order to use the Panera brand and other intellectual property.

About 925 of the company’s locations are company-operated and roughly 955 units are operated by franchisees. Panera sells its products directly to customers and also acts as its own distributor by supplying most of its company-owned and franchised locations with fresh product.

Making a Bigger Name in a Crowded Space

The chain built significant brand loyalty by targeting suburban markets with its menu of European-inspired sandwich creations. It competes with other national fast-casual chains, La Madeleine, and #1 coffee house chain Starbucks.

Panera has been a pioneer in the quick-casual dining segment, which offers quick counter service but boasts higher-quality ingredients. The chain’s identity is rooted in handcrafted fresh-baked artisan bread. Panera’s values express a commitment to clean ingredients, transparency, and a positive impact on the food system. Even giant fast-food chains like McDonald’s are starting to copy quick-casual Panera and Chipotle’s chicken raised without antibiotics, along with using select organic and all-natural ingredients.

Raking in the Dough, Bringing Home the Bread

Panera’s revenue has been trending steadily up in recent fiscal years. The company reported $2.53 billion in revenue for fiscal 2014. That figure was an increase of 6% compared to the previous year’s revenue of $2.39 billion. The spike in total revenue during fiscal 2014 was primarily due to the opening of 114 new bakery/cafes systemwide during the year.

Despite the increased revenue, the company’s net income decreased by 9% in fiscal 2014 compared to fiscal 2013. The decrease was largely caused by a huge increase in operating expenses, depreciation, and amortization. Still, the company netted slightly more than $179 million in profit in 2014 after netting $196 million the prior year.

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