Panera Bread 2006 Annual Report Download - page 2

Dear Shareholder,
All told, full year 2006 was another very good year for Panera Bread. Earnings per share (EPS) came in at $1.84, placing us once
again among the highest growth companies in our industry. We opened 155 bakery-cafes (70 Company-owned locations and 85
franchise-operated locations), delivering 17% unit growth. We surpassed the 1,000 bakery-cafe mark in 2006, and finished the year
with 1,027 bakery-cafes in 38 states. Our existing bakery-cafes produced 4.1% comparative store sales growth (comps), driving
average weekly sales to $39,150—or just over $2 million per bakery-cafe annually. System-wide bakery-cafe sales reached $1.9
billion ($0.7 billion for Company-owned locations and $1.2 billion for franchise-operated locations).
BUILDING OUR BUSINESS IN 2006
Among the noteworthy events in 2006 was our entry into the evening daypart, with a hand-crafted pizza called Crispani. Crispani
represents the opening act in our mission to build an evening business that is as robust as our lunch business is in the afternoon. We
based Crispani on our bread expertise and the strength of our artisan bread heritage. Like our popular sandwiches, soups, and salads, it
represents food that our customers can trust and we are proud to serve. Crispani is built on a platform of fresh, hand-rolled dough,
topped with select all natural and organic toppings, and baked to perfection by our artisan Crispani makers in most of our bakery-
cafes. We offer it after 4 pm in a variety of exciting flavors that we rotate seasonally to always give our customers something new and
even better to try. If you haven’t already, we encourage you to try Crispani. And we’d love to know your thoughts. Feedback from our
customers often spurs the best kinds of internal discussions, and ultimately drives real progress in product development here at Panera.
Our Via Panera fresh catering business continued its strong growth in 2006. Like the evening daypart business, catering represents
another stream in the development of the Panera brand. With catering, we are continuing to deliver a truly distinctive Panera
experience to groups of customers in their own environments. As we iterate it yet again, we’re looking at the product offerings, the
ways we engage our customers, and even the packaging of our product to create a convenient and fulfilling experience that makes
people turn to Panera first for their catering needs. We think we’re doing well so far. Catering grew to be an approximately $100
million system-wide business in 2006.
In 2006, we also celebrated the launch of the Panera Kids Menu. We heard from many of our customers that while they loved
Panera Bread, they were hard-pressed to find items that their kids would love. So we created a new, artisan, white whole grain bread
especially for kids, and used it as a platform for a menu of items tailored specifically to kids’ tastes. Kids love the sandwiches, organic
dairy products, and healthy snacks that we are proud to serve. Parents love the choices and the peace of mind of knowing that they are
buying quality meals for their kids. (And, I’m told, some parents like me have been seen sneaking bites from their kids’ meals.)
OUR VISION: 2007 AND BEYOND
When we started building the artisan bread tradition fourteen years ago, what we really set out to do was to change what multi-unit
restaurants stood for in this country. Commoditization was on the rise in America. As a byproduct of becoming more economically
and operationally efficient, retail companies of all kinds had become large and impersonal to customers. Pay and go. Restaurants
started to resemble gas stations. Fill and go. We were all moving through life more quickly, but as our interactions became more
transactional, restaurants lost their sense of experience and what made them feel “special.”
It may sound a bit hokey to hear this from the CEO of a 1,000-plus location restaurant concept, but our vision for Panera Bread has
always been to buck this trend. We wanted Panera Bread to be a place where people slowed down to enjoy “real food you crave and
trust” with friends and family. We wanted it to be a warm gathering place where our customers hung out when they weren’t at home,
work, or school. We wanted our associates to engage our customers—by name—and serve them the best bread in America. Just like
every hometown bakery used to do.
Did we achieve what we intended to do—did we change what a multi-unit restaurant organization can stand for? Our customers have
spoken, and so far, we think we’ve done well.