Panera Bread 2011 Annual Report Download - page 4

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MyPanera Loyalty Program
As a reminder, the MyPanera Loyalty program is designed to surprise and delight our guests through a combination
of rewards and unique experiences that only Panera can provide, resulting in deeper relationships with our most
loyal customers. We rolled the program out at the end of 2010 and made it fully operational in 2011, doubling the
number of registered users during the year to more than 9.5 million members.
The real value of the loyalty program is the customer data that we have been able to collect. We have begun testing
the use of this data to increase frequency and are beginning the journey of moving to true one-to-one marketing. For
example, we are creating individual reward tracks for all 9.5 million members of our loyalty program, and expect to
send to our customers more than 6.5 million unique e-mails each month with dynamic content that changes based on
their interests and buying patterns.
Catering Growth
In 2011, we continued to invest in building the foundation for our long-term success in the catering business driven
by our national footprint and the loyalty of our customers. Catering sales increased by 29% over 2010 on top of
24% growth the previous year, due in large part to the strengthening of our sales force through the development of
new training programs and other tools, increasing awareness of our catering offering through catering-specific
marketing and improving the catering customer experience through the rollout of an on-line catering ordering
system that provides greater ease of use for our customers and improves order accuracy. We believe that 2012 will
again be another year of strong catering growth.
Quality of Operations and People
Great bakery-cafes run by great people have always been Panera’s greatest competitive advantage and we are proud
that we again saw improvement in our key operating metrics, including customer satisfaction, speed of service, order
accuracy and associate turnover. It is a testament to the quality of our operators that these improvements occurred at
the same time as the expansion of several initiatives designed to improve the convenience of the customer
experience. We upgraded and expanded table delivery service testing in several markets, making it now available in
346 cafes. We continue to believe that table service will be a true differentiator for the Panera customer. We also
added 51 new drive-thru cafes, through remodels and new openings, bringing our total to 119, with more planned for
2012.
Capital Utilization
Another of the great strengths of our company is our balance sheet and the cash flow we generate from operations.
We ended 2011 with $223 million of cash on our balance sheet and no debt. We have been able to deploy more
than $400 million in excess capital since the first half of 2010 to increase shareholder value and drive EPS.
As we have often said, we believe the best use of our capital is to build new high return on investment (ROI) Panera
Bread bakery-cafes. In 2011, we increased our number of bakery cafes by 8%, by opening 112 new bakery-cafes
system-wide. Our Company-owned new unit average weekly sales (AWS) volume was $41,637 for the full year
2011. This represented the highest new unit AWS in our history, topping last year’s record year. 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.
In early 2012 we achieved another significant milestone, the opening of our 1,500th Panera bakery-cafe. This is an
achievement that few organizations reach and we are very proud of this accomplishment. What makes this 1,500th
bakery-cafe opening even more significant is that it’s our first bakery-cafe opening in Manhattan. Our entry into
Manhattan is building on the success that we have had with our urban openings in the District of Columbia, Boston
and Chicago.
Our Board of Directors continues to have a disciplined focus on our use of capital. In 2011, we were able to acquire
25 bakery-cafes from our franchisee in the Milwaukee market at a multiple that made this transaction accretive to
our earnings in 2011 and beyond. Also, under our Board-approved share repurchase program, we repurchased
approximately $91 million of our shares at an average price of approximately $104 per share. We believe these uses
of capital will provide a good long-term return for our shareholders.