Panera Bread 2008 Annual Report Download - page 36

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focused on speed and accuracy to improve average weekly sales for new bakery-cafe openings, partially offset by a
decrease in transactions. The average weekly sales per Company-owned bakery-cafe and the related number of
operating weeks for the periods indicated are as follows:
December 30,
2008
December 25,
2007
Percentage
Change
For the Fiscal Year Ended
Company-owned average weekly sales ................ $38,066 $37,548 1.4%
Company-owned number of operating weeks ........... 29,062 23,834 21.9%
Including the impact from the additional week of franchise royalties and fees of approximately $1.5 million in
fiscal 2008, a 53 week year, franchise royalties and fees in fiscal 2008 increased 11.3 percent to $74.8 million
compared to $67.2 million in fiscal 2007. The components of franchise royalties and fees for the periods indicated
are as follows (in thousands):
December 30,
2008
December 25,
2007
For the Fiscal Year Ended
Franchise royalties ........................................ $72,565 $64,581
Franchise fees ........................................... 2,235 2,607
Total ................................................ $74,800 $67,188
The increase in royalty revenue in fiscal 2008 compared to the prior fiscal year can be attributed to the opening
of 67 new franchise-operated bakery-cafes, the impact of the extra week of revenue in fiscal 2008, and the
5.3 percent increase in comparable franchise-operated bakery-cafe sales in fiscal 2008, which includes the
additional week of sales. Franchise royalties and fees were also positively impacted by the consolidation of
royalties and fees from the 22 Paradise franchise-operated bakery-cafes acquired on February 1, 2007 and included
in our results prospectively from the acquisition date, partially offset by the sale of 36 bakery-cafes by franchisees to
us in fiscal 2007. Franchise-operated bakery-cafes included in comparable sales increases and not included in
comparable sales increases contributed 38.7 percent and 61.3 percent, respectively, of the $166.4 million increase in
sales from the prior fiscal year, which includes the additional week of sales in fiscal 2008. The average weekly sales
per franchise-operated bakery-cafe and the related number of operating weeks for the periods indicated are as
follows:
December 30,
2008
December 25,
2007
Percentage
Change
For the Fiscal Year Ended
Franchisee average weekly sales .................... $40,126 $39,433 1.8%
Franchisee number of operating weeks ............... 38,449 34,905 10.2%
As of December 30, 2008, there were 763 franchise-operated bakery-cafes open and commitments to open 265
additional franchise-operated bakery-cafes. The timetables for opening these bakery-cafes are established in the
various Area Development Agreements, referred to as ADAs with franchisees, which provide for the majority to
open in the next four to five years. In fiscal 2009, we expect our area developers to open approximately 48 to 54 new
franchise-operated bakery-cafes. An ADA requires a franchisee to develop a specified number of bakery-cafes on or
before specific dates. If a franchisee fails to develop bakery-cafes on schedule, we have the right to terminate the
ADA and develop Company-owned locations or develop locations through new area developers in that market. We
may exercise one or more alternative remedies to address defaults by area developers, including not only
development defaults, but also defaults in complying with our operating and brand standards and other covenants
under the ADAs and franchise agreements. Panera may waive compliance with certain requirements under its ADAs
and franchise agreements when it determines that such action is warranted under the particular circumstances.
Including the impact from the additional week of fresh dough sales to franchisees of approximately
$2.2 million in fiscal 2008, a 53-week year, fresh dough sales to franchisees in fiscal 2008 increased 12.6 percent
to $117.8 million compared to $104.6 million in fiscal 2007. The increase in fresh dough sales to franchisees was
primarily driven by the previously described increased number of franchise-operated bakery-cafes opened since the
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