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PART I
ITEM 1. BUSINESS
GENERAL
Panera Bread Company (including its wholly and majority owned subsidiaries) may be referred to as the
""Company,'' ""Panera Bread'' or in the Ñrst person notation of ""we,'' ""us,'' and ""ours'' in the following
discussion.
The Company was originally formed in March 1981 under the name Au Bon Pain Co., Inc. and consisted
of three Au Bon Pain bakery-cafes and one cookie store. The Company continued to grow the Au Bon Pain
concept domestically, primarily on the east coast, and internationally throughout the 1980's and 1990's. On
December 22, 1993, the Company purchased the Saint Louis Bread Company. At the time, the Saint Louis
Bread Company consisted of 19 Company-owned and one franchised bakery-cafe primarily located in the
Saint Louis, Missouri area. In August 1998, the Company entered into a Stock Purchase Agreement to sell
the Au Bon Pain Division to ABP Corporation for $73.0 million in cash before contractual purchase price
adjustments of $1.0 million. The sale was completed May 16, 1999. At that time, the Company changed its
name to Panera Bread Company. As of December 27, 2003, the Company operates, directly and through area
development agreements with 32 franchisee groups, bakery-cafes under the names Panera Bread and Saint
Louis Bread Company. See Note 16 of the Company's Consolidated Financial Statements for segment
information.
As of December 27, 2003, the Company's retail operations consist of 173 Company-owned bakery-cafes
and 429 franchise-operated bakery-cafes. The Company specializes in meeting consumer dining needs by
providing high quality food, including fresh baked goods, made-to-order sandwiches on freshly baked breads,
soups, salads, custom roasted coÅees, and other cafe beverages, and targets suburban dwellers and workers by
oÅering a premium specialty bakery and cafe experience with a neighborhood emphasis.
Bakery-cafes are principally located in suburban, strip mall, and regional mall locations and currently
operate in 35 states. The Company's revenues were $355.9 million, consisting of $265.9 million of bakery-cafe
sales, $36.2 million of franchise royalties and fees, and $53.7 million of fresh dough sales to franchisees, and
franchisees' bakery-cafe sales were $711.0 million for the Ñscal year ended December 27, 2003.
The following table sets forth certain bakery-cafe data relating to Company-owned and franchise-
operated bakery-cafes:
For the Ñscal year ended
December 27, December 28, December 29,
2003 2002 2001
Number of bakery-cafes (includes majority-owned):
Company-owned:
Beginning of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 132 110 90
Bakery-cafes opened ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29 23 21
Acquired from franchisees(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15 3 Ì
Bakery-cafes closed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (3) (4) (1)
End of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 173 132 110
Franchise operated:
Beginning of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 346 259 172
Bakery-cafes opened ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 102 92 88
Sold to Company(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (15) (3) Ì
Bakery-cafes closed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4) (2) (1)
End of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 429 346 259
2