Panera Bread 2005 Annual Report Download - page 58

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52
15. Business Segment Information
The Company operates three business segments. The Company Bakery-Cafe Operations segment is comprised of the operating
activities of the bakery-cafes owned by the Company. The Company-owned bakery-cafes conduct business under the Panera Bread®
or Saint Louis Bread Co.® names. These bakery-cafes sell fresh baked goods, made-to-order sandwiches on freshly baked breads,
soups, salads, custom roasted coffees, and other complementary products through on-premise sales, as well as Via Panera® catering.
The Franchise Operations segment is comprised of the operating activities of the franchise business unit which licenses qualified
operators to conduct business under the Panera Bread® name and also of the costs to monitor the operations of these bakery-cafes.
Under the terms of the agreements, the licensed operators pay royalties and fees to the Company in return for the use of the Panera
Bread® name.
The Fresh Dough Operations segment supplies fresh dough items and indirectly supplies proprietary sweet good items through a
contract manufacturing arrangement to both Company-owned and franchise-operated bakery-cafes. The fresh dough is sold to both
Company-owned and franchise-operated bakery-cafes at a delivered cost not to exceed 27% of the retail value of the product. The
sales and related costs to the franchise-operated bakery-cafes are separately stated line items in the Consolidated Statements of
Operations. The operating profit related to the sales to Company-owned bakery-cafes is classified as a reduction of the costs in the
food and paper products line item on the Consolidated Statements of Operations.
The following table sets forth certain bakery-cafe data relating to Company-owned and franchise-operated bakery-cafes:
For the Fiscal Year Ended
December 27,
2005
December 25,
2004
December 27,
2003
Number of bakery-cafes:
Company-owned:
Beginning of period......................................................................................................... 226 173 132
Bakery-cafes opened ....................................................................................................... 66 54 29
Bakery-cafes closed......................................................................................................... (2) — (3)
Acquired from franchisee(1) ........................................................................................... 21 1 15
Transfer to franchisee(2) ................................................................................................. — (2) —
End of period ................................................................................................................. 311 226 173
Franchise operated:
Beginning of period......................................................................................................... 515 429 346
Bakery-cafes opened ....................................................................................................... 73 89 102
Bakery-cafes closed......................................................................................................... (1) (4) (4)
Sold to Company(1) ........................................................................................................ (21) (1) (15)
Transfer from Company(2) ............................................................................................. — 2 —
End of period ................................................................................................................. 566 515 429
System-wide:
Beginning of period......................................................................................................... 741 602 478
Bakery-cafes opened ....................................................................................................... 139 143 131
Bakery-cafes closed......................................................................................................... (3) (4) (7)
End of period ................................................................................................................. 877 741 602
__________
(1) In November 2005, the Company acquired 21 operating bakery-cafes and the area development rights from a franchisee in certain
markets in the Indiana area. In October 2004, the Company acquired one operating bakery-cafe in the Dallas, Texas market from a
franchisee. During fiscal 2003, the Company acquired 15 operating bakery-cafes and the area development rights from franchisees
in the Louisville/ Lexington, Kentucky; Dallas, Texas; Toledo, Ohio; and Ann Arbor, Michigan markets.
(2) In October 2004, the Company transferred two operating bakery-cafes to a new franchisee in the acquisition of the minority
interest. See Note 3 of the Company’s Consolidated Financial Statements for further information.