Panera Bread 2010 Annual Report Download - page 3

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Although this program has already resulted in increased purchase frequency of our members, the primary
purpose of the program is to capture the actual purchasing behavior of our customers which will allow us to get as
close to one to one marketing with our customers as possible.
Catering Growth
In 2010, we continued to make investments in building the foundation for our long-term success in the catering
business. We strengthened our sales force through increased staffing as well as the development of training
programs and other tools. These investments were a key driver in our 26% sales increase over the prior year. In 2010,
we also invested substantial resources in developing our on-line catering system, which is currently in the process of
being rolled out across our system.
For many years, we have concentrated on becoming the best competitive alternative for our eat in customers at
breakfast, lunch, chill periods and dinner. We are now focusing on how we provide the same high quality Panera
experience to our off premise customers. We believe that continued development of our off premise solutions
provides us opportunity for significant growth in the future.
Quality of Operations
2010 brought a lot of exciting innovation to our bakery-cafes as we continued investing in our customers’
overall experience. One of the things we are most proud of is at the same time a number of new initiatives were
implemented by our operators, our key operating metrics (customer satisfaction, speed of service, order accuracy
and turnover) improved in 2010. We continue to believe that one of the cornerstones of our operating success has
been our joint venture program. This program is designed to treat our key operators like owners of the business. At
year-end, nearly all of our Regional Operators and approximately 50% of our General Managers have earned their
way into participating in this program.
Capital Utilization
Another of the great strengths of our company is our Balance Sheet and the cash flow that we generate each
year. We ended 2010 with $229 million of cash on our Balance Sheet and no debt. We generated approximately
$238 million of cash flow from operations in 2010.
As we have often said, the best use of excess capital for us is to build new high return on investment (ROI)
Panera Bread bakery-cafes. In 2010, we opened 76 new bakery-cafes system-wide. Our Company-owned new unit
average weekly sales (AWS) volume was $40,808 for the full year 2010. This represented the highest new unit AWS
in our Company’s history. We believe these sales volumes are first and foremost a reflection of how well Panera is
resonating with our customers as we continue to build on our national footprint. Additionally, we believe that the
discipline that our Real Estate Group has brought to site selection over the last few years has continued to pay
dividends for us.
Utilizing our capital wisely is a key focus of management and our Board of Directors. In 2010, we were able to
acquire 37 bakery-cafes from our franchisee in the New Jersey market at a multiple which we expect will make this
transaction accretive to our earnings in 2011 and beyond. Also, under our Board approved share repurchase
program, we repurchased approximately $150 million of our shares at an average price of approximately $79 per
share. We believe these uses of capital will provide a good long-term return for our shareholders.
Transition
I am also pleased to report that the transition of Ron Shaich to the role of Executive Chairman and me to Chief
Executive Officer has gone very smoothly. Ron has been my friend and mentor for more than 13 years and he
continues to play an active strategic role at Panera. Ron primarily focuses on how we can continue to be the best
competitive alternative in the businesses we serve. The fact that the transition has gone so smoothly is a reflection of
the quality of Ron’s vision that Panera has operated by for the past two decades and the passion and commitment of
our Board of Directors, our Leadership Team, our Franchisees and the almost 60,000 associates that work at Panera
system-wide. I want to thank all of them and all of you, our shareholders, for the support that you have shown Ron,
me and Panera during this transition.