Panera Bread 2005 Annual Report Download - page 9

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3
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, we acquired 21 operating bakery-cafes and the area development rights from a franchisee in certain markets in
Indiana. In October 2004, we acquired one operating bakery-cafe in the Dallas, Texas market from a franchisee. During fiscal
2003, we 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, we transferred two operating bakery-cafes to a new franchisee in connection with the acquisition of the
remaining minority membership interest. See Note 3 of our Consolidated Financial Statements for further information.
CONCEPT AND STRATEGY
Our restaurant concept focuses on the “Specialty Bread/Bakery-Cafe” category. Our artisan breads, which are breads made with all
natural ingredients and a craftsman’s attention to quality and detail, and overall award-winning bakery expertise are at the heart of our
menu. The concept is designed to deliver against consumer desire for a more responsive and more special dining experience than that
offered by traditional fast food. Our goal is to make Panera Bread a leading national brand. Our menu, prototype, operating systems,
design, and real estate strategy allow us to compete successfully in several segments of the restaurant business: breakfast, lunch, PM
“chill out,” lunch in the evening, and take home bread. In addition, we began our Via Panera® catering business in 2004.
The distinctive nature of our menu offerings (centered around the fresh artisan bread products), the quality of our bakery-cafe
operations, our signature cafe design, and the locations of our cafes are integral to our success. We believe our concept has significant
growth potential, which we hope to realize through a combination of Company and franchisee efforts. Franchising is a key component
of our success. Utilization of franchising has enabled us to grow more rapidly because of the added resources and capabilities
franchisees provide to implement the concepts and strategy developed by Panera. As of December 27, 2005, there were 566 franchised
bakery-cafes operating and signed commitments to open an additional 416 franchised bakery-cafes.
We believe that providing bakery-cafe operators the opportunity to participate in the success of the bakery-cafe enables us to
attract and retain experienced and highly motivated personnel, which results in a better customer experience. As a result, our
compensation, subject to annual minimums, provides general managers and multi-unit managers compensation based upon a
percentage of the cash flows of the units they operate and participation in a multi-year bonus structure also based on unit cash flow.
This compensation structure is referred to as the JV program.