Panera Bread 2003 Annual Report Download - page 4

Our 32 franchisee area developers represent a cadre of
in-market specialists in development and operations,
and as such account for the majority of our planned
unit growth in 2004. At the end of 2003, our franchisee
area developers had commitments in place for 409
additional units. In 2003, our franchisees essentially met
all of their annual development commitments and
opened 102 bakery-cafes, representing a nearly
30% increase.We expect that level of franchisee area
developer commitment to continue in 2004. Given the
potential for far greater penetration rates than
originally contemplated, many of our existing
franchisees are also committing to second- and even
third-generation development in their existing market
areas. In addition, we continue to sell markets to new
franchisees in a disciplined fashion and to utilize our
significant cash resources, along with our Joint Venture
Partnership Program, to access new markets.
To ensure this development is executed properly, we
continue to make significant improvements in our
development infrastructure. In 2003, our development
team doubled in size to 55 people. In 2004, we expect
the department to grow by another 30%. As a result
of our expanded development capabilities and the
demand for the Panera Bread experience, we are
confident that we can successfully grow our unit count
in excess of 20% each year over the next few years.
Maintaining Our Competitive Advantage
Although we are already the definitive leader in our
category, we plan to continue to raise the competitive
bar. Our most significant initiative in 2004 is Via Panera,
a program that will bring the Panera Bread concept
and branded experience to off-site locations. In
addition, 2004 will see increased focus on product
development with the introduction of several new
salads, sandwiches and other products to support our
lunch business.We will support our gathering place, or
“chill out” business, with enhanced environments
and the continued rollout of free Wi-Fi service to
our bakery-cafes.We also will continue with our
quality-of-service initiative and our effort to increase
our lunch throughput capabilities.The objective of
these initiatives is straightforward: to maintain our
industry-leading average unit volumes and build
comparable store sales.
Growing the Bottom Line
Panera Bread has a history of consistent earnings
growth and achievement of our earnings targets.
We are committed to delivering another year of
rapid expansion and utilizing the scale inherent in
our system-wide sales to drive operating margin
expansion, thereby achieving our EPS target of
$1.28 to $1.30 per diluted share.
CONCLUDING THOUGHTS
George Kane, a longtime Director of our company
and a role model to many of us at Panera, will retire
from our Board in June at the age of 99 and will
become an Honorary Director. I want to use this
occasion to extend my appreciation to George
for decades of wise counsel and good judgment.
Let me conclude by stating that we strive to provide
our customers with something very special. Every
level of our organization is focused on bringing the
traditions of artisan baking to life in everything we
do.This commitment is the cornerstone of our
company, upon which our award-winning menu,
customer loyalty, remarkable growth and financial
success are built.
Our franchisees and team members must deliver
on that commitment every day; and, on behalf of
our stockholders, I thank them for their willingness
to engage in our shared vision. On behalf of the
management team at Panera, I also thank our
stockholders for their faith and confidence in us.
Rest assured, we intend to do all in our power to
continue to build this very special enterprise.
Ronald M. Shaich
Chairman and Chief Executive Officer
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