Panera Bread 2008 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2008 Panera Bread annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 99

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99

we acquired 12 bakery-cafes, as well as one bakery-cafe still under construction, and the area development rights
from a franchisee in certain markets in Iowa, Nebraska and South Dakota. In September 2006, we acquired one
bakery-cafe in Pennsylvania from a franchisee.
(2) In February 2007, we acquired 51 percent of the outstanding capital stock of Paradise Bakery & Café, Inc.,
which then owned and operated 22 bakery-cafes and franchised 22 bakery-cafes, principally in certain markets
in Arizona and Colorado.
(3) In June 2007, we sold one bakery-cafe and the area development rights for certain markets in Southern California to
anewareadeveloper.
(4) Bakery-cafes at December 30, 2008 include 73 system-wide Paradise bakery-cafes (35 company-owned and 38
franchise-operated bakery-cafes).
CONCEPT AND STRATEGY
Panera’s restaurant concept focuses on the “Specialty Bread/Bakery-Cafe” category. Panera’s artisan breads,
which are breads made with all natural ingredients, a craftsman’s attention to quality and detail, and overall
award-winning bakery expertise, are at the heart of the menu. The concept is designed to deliver against consumer
desire for a more responsive and special dining experience than that offered by traditional fast food restaurants.
Panera’s goal is to maintain recognition of Panera as a leading brand. Panera’s menu, prototype, operating systems,
design, and real estate strategy allow us to compete successfully in several segments of the restaurant business:
breakfast, AM “chill,” lunch, PM “chill,” dinner, or the evening daypart, and take home bread, through both
on-premise sales, and Via Panera»catering.
The distinctive nature of Panera’s menu offerings (centered around fresh artisan bread products), the quality of
Panera’s bakery-cafe operations, Panera’s signature bakery-cafe design, and the bakery-cafe locations are integral
to Panera’s success. We believe Panera’s concept has significant growth potential, which Panera hopes to realize
through a combination of Company and franchisee efforts. Franchising is a key component of Panera’s success.
Franchising has enabled Panera to grow more rapidly because of the added resources and capabilities franchisees
provide to implement the concepts and strategies developed by Panera. As of December 30, 2008, there were
725 Panera franchised bakery-cafes operating and signed commitments to open an additional 256 Panera franchised
bakery-cafes.
Panera believes providing bakery-cafe operators the opportunity to participate in the success of the
bakery-cafe enables Panera to attract and retain experienced and highly motivated personnel, referred to as
associates, which results in a better customer experience. As a result, Panera’s compensation, subject to annual
minimums, provides some general managers and multi-unit managers compensation based upon a percentage of the
cash flows of the bakery-cafe they operate and participation in a multi-year bonus structure also based on
bakery-cafe cash flow. This compensation structure is referred to as the Joint Venture Program.
Paradise’s concept focuses on broad and diverse products and services that appeal to retail consumers who visit
shopping malls, downtown and village office and shopping districts, and other areas where Paradise bakery-cafes
are located. Paradise believes its competitive advantages are the high quality of its freshly prepared food products
and the exceptional service provided by its associates.
MENU
Panera’s menu is designed to provide its target customers with products that build on the strength of Panera’s
bakery expertise. The key menu groups are fresh baked goods, including a variety of freshly baked bagels, breads,
muffins, scones, rolls, and sweet goods, made-to-order sandwiches on freshly baked breads, hearty, unique soups,
salads, and custom roasted coffees and cafe beverages such as hot or cold espresso and cappuccino drinks. Panera’s
concept emphasizes the sophisticated specialty and artisan breads that support each daypart and Panera’s take-home
bread and Via Panera»businesses. In fiscal 2008, our Crispani»hand-crafted pizza product line was removed from
Panera Company-owned bakery-cafes and most franchise-owned bakery-cafes.
Panera regularly reviews and revises its menu offerings to satisfy changing customer preferences. Product
development focuses on providing food and beverages that customers crave and trust. New menu items are
3