Panera Bread 2009 Annual Report Download - page 9

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also added to complement the breakfast menu and Macaroni & Cheese was added to complement our kid’s menu, as
well as our lunch and dinner dayparts. We also introduced a new line of brownies and blondies, along with our
Cinnamon Crunch Bogels.
We believe our menu innovation is one reason our value scores with customers remain so strong. Zagat’s 2009
consumer-generated National Restaurants Chains Survey for eating on-the-go rates us number one among chain
restaurants with fewer than 5,000 locations in the following categories: Most Popular, Best Healthy Option, Best
Salad and Best Facilities. In 2009, we were also named number one Healthiest for Eating on the Go by Health
magazine.
OPERATIONAL EXCELLENCE
We believe operational excellence is the most important element of Panera Warmth. We believe without strong
execution and operational skills, it is difficult to build and maintain a strong relationship with our customers. To
develop a strong connection with our customers, we need energized associates who are skilled at and love their jobs.
Additionally, we believe high-quality restaurant management is critical to our long-term success and, as such, we
provide detailed operations manuals and training to each of our associates. We train our associates both in small
group and individual settings. Our systems have been created to educate our associates so each one is well prepared
to respond to a customer’s questions and create a better dining experience. Furthermore, we believe our commit-
ment to maintaining staffing levels and competitive compensation for our associates is fundamental to our current
and future success.
We believe in providing bakery-cafe operators the opportunity to share in the success of the bakery-cafe.
Through our Joint Venture Program, we provide selected general managers and multi-unit managers with a multi-
year bonus program (subject to annual minimums) based upon a percentage of the cash flows of the bakery-cafe
they operate. The program’s five-year period creates team stability, generally resulting in a higher level of
consistency for that bakery-cafe. It also leads to stronger associate engagement and customer loyalty. Currently,
approximately fifty percent of our Company-owned bakery-cafe operators participate in the Joint Venture Program.
We believe this program is a fundamental underpinning of our low management turnover.
MARKETING
We are committed to improving the customer experience in ways we believe few in our industry have done. We
use our scale to execute a broader marketing strategy, not simply to build name recognition and awareness but also
to build deeper relationships with our target customers who we believe will help promote our brand.
To reach our target customer group, we use a mix of the following mediums: radio, billboards, social
networking, television and in-store sampling days. We expect to continue to increase media impressions as we strive
to build deeper relationships with our customers. We believe marketing represents an opportunity for us to further
leverage our scale with our target customers and create additional competitive advantage.
Our franchise agreements generally require our franchisees to pay us advertising fees. In fiscal 2009, our
franchise-operated bakery-cafes contributed 0.7 percent of their sales to a national advertising fund, paid us a
marketing administration fee of 0.4 percent of their sales, and were required to spend 2.0 percent of their sales on
advertising in their respective local markets. We contributed the same sales percentages from Company-owned
bakery-cafes towards the national advertising fund and marketing administration fee. For fiscal 2010, we increased
the contribution rate to the national advertising fund to 1.1 percent of sales. Under the terms of our franchise
agreements, we have the ability to increase national advertising fund contributions from current levels up to a total
of 2.6 percent of sales. The national advertising fund and marketing administration contributions received from our
franchise-operated bakery-cafes are consolidated in our financial statements with amounts contributed by us.
We have established and may in the future establish local and/or regional advertising associations covering
specific geographic regions for the purpose of promoting and advertising the bakery-cafes located in that
geographic market. If we establish an advertising association in a specific market, the franchise group in that
market must participate in the association, including making contributions in accordance with the advertising
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