Panera Bread 2005 Annual Report Download - page 4

This past year also marked the first full year of our Via Panera Fresh Catering program. Via Panera allows
our customers to enjoy our quality sandwiches, salads, soups, and breakfast items in the workplace, at
school, and at home. It gives us the opportunity to grow our lunch sales without expensive investments in
large physical plants. Our catering division is now almost an $80 million business in its own right,
delivering over 5% of our system-wide sales today. Via Panera has considerable momentum, and we see
opportunity for significant growth in the future.
At Panera, we believe that crave-able products you can trust ought to be enjoyed in environments that
engage you, such as our new G2 bakery-cafe design. Central to the G2 format is our bread heritage, which
is expressed through a brighter, more open bakery display case, and original, bread-focused artwork. The
G2 design also enhances our traditional environment with higher quality furniture in a bakery-cafe full of
defined, intimate spaces that meet the various needs of our customers. If you haven’t already, we invite you
to experience this exciting new format in a bakery-cafe near you.
When you visit us, please try our free Wi-Fi. By year-end 2005, almost all of our 877 bakery-cafes (311
Company-owned and 566 franchise-operated) were Wi-Fi hot spots, making Panera Bread one of the
nation’s leading providers of managed, free Wi-Fi Internet access. We are proud that these efforts have
made us the only major restaurant business distinguished as a “2005 Technology Innovator” by Fast
Company magazine. We’ve always considered free Wi-Fi part of our commitment to making our bakery-
cafes the open community gathering places that we envision them to be. So we were very pleased when the
New York Times identified Panera Bread bakery-cafes as the work environment of choice for traveling
businesspeople and students nationwide.
We believe great service is the third key to our track record of success. We are particularly proud of our
high performance in the prestigious Sandelman & Associates survey of more than 62,000 consumers,
which ranks 120 restaurant concepts on overall customer satisfaction. For four years running, Panera has
been in either first or second place in customer satisfaction. Last year, 56% of Panera’s guests rated their
last visit to Panera “Excellent” on the Sandelman survey.
2006 OUTLOOK
For 2006, we are targeting earnings per share of $1.91 to $1.95 including the impact of expensing options,
which we adopted effective December 28, 2005. If we attain these targets, we would generate EPS growth
of 26% to 28% including the expensing of options in both 2005 and 2006.
Our EPS target is based on our individual targets for key metrics. In 2006 we are targeting 150 to 160 new
bakery-cafe openings (70-75 Company-owned and 80-85 franchise-operated), average weekly sales of
$39,200 to $40,200, and comparable bakery-cafe sales of 4% to 6%. I am pleased to say we are off to a
great start in the first quarter of 2006, with system-wide same store sales growth of 9% (8.9% for
Company-owned locations and 9.1% for franchise-operated locations).
At Panera, we believe that strong earnings are simply a product of our focus on delighting our guests. In
2006, we hope to delight our customers across the country with a new selection of winning products,
innovative environments, and industry-leading great service.
Our goal is to continually provide our guests with crave-able foods they trust. As such, we pay close
attention to their—and their children’s—dietary needs. This year, we are excited to announce a new Panera
Kids Menu full of products that cater to children’s palates. Crafted from all-natural, organic ingredients,
and featuring a new artisan white whole grain bread, these menu items will be food that kids really enjoy,
and parents can trust.
In 2005, we became aware of our customers’ growing concern for the potentially harmful health effects of
consuming trans-fatty acids. So we made a commitment to offer a menu free of trans-fatty acids, and
achieved this goal in early 2006. With the exception of trace elements and those that occur naturally in
certain foods like roast beef, we have eliminated trans-fatty acids from the foods we serve. Achieving this