Panera Bread 2012 Annual Report Download - page 4

put to work in direct media, we still spend at a relatively low level (1.4% of system-wide sales in direct media expenses in 2012)
compared with many national restaurant companies that spend in the 3% to 5% range. As we carefully increase our spending, we
continue to monitor its effectiveness and gain understanding into the optimal mix of media by market. We plan to increase our media
spending in 2013 as we continue on our path of increasing awareness and reinforcing brand connection, including the continued
testing of national media.
Early in 2013, we launched a new advertising campaign which gives voice to what makes Panera special in the eyes of so many
customers. We think the campaign is differentiated and unique enough to stand out in the clutter of competitive advertising. This new
campaign is titled ‘Live Consciously, Eat Deliciously’ and it speaks to the quality of our ingredients and to the values that consumers
identify with Panera. The advertising also speaks to the intent Panera brings to everything it does. To be clear, this campaign is
intended to drive a deeper affiliation between Panera and our customers and we believe such an effort has the potential to deliver a
greater, long term return on investment from advertising than more promotional messaging.
Another element of our marketing strategy is our MyPanera loyalty program. The MyPanera program currently has more than 13.8
million members, an increase of more than 45% from the roughly 9.5 million members at this time last year. 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. For Panera the power of the loyalty program is the customer data that we have been able to collect
relative to convey each customer’s unique purchasing patterns. This data is already allowing us to understand our business in ways we
never did before, enabling us to more smartly evolve our product offerings and tailor both the MyPanera rewards as well as the
efficiency of our marketing. While our analysis of this data is in its early days, if we utilize our learnings wisely, we believe we may
be able to drive frequency and ultimately transaction growth in a way many of our peers – who do not have this individualized insight
into their customers – cannot.
Expanding the Reach of Our Cafes Through Catering
In 2012, we continued to invest in building the foundation for our long-term success in the catering business. The result of that effort
was a 21% increase over 2011 in catering sales, net of acquisitions. Specifically, our catering performance in 2012 is due in large part
to the strengthening of our sales force, new training programs, increased awareness of our catering offering through marketing and an
improved catering experience enabled by the rollout of an on-line ordering system.
We should note that 2012 growth in catering came on top of 29% year over year growth in 2011. The multi-year success of our
catering operations highlights the strength of our brand, the power of our national footprint and the potential growth available to
Panera outside of our cafes. Indeed, we believe that we have only just begun to tap into the demand for Panera outside of our four
walls and we plan on continued innovation to capture that demand in the future. To that end, we are making investments in catering in
2013 by increasing the number and quality of our regional catering sales managers, rolling out a new sales force management system
and enhancing our web-based catering ordering system. As a result, we expect that 2013 will again be another year of strong growth in
catering.
Maintaining and Elevating the Quality of Our Operations
2013 will see material investments in our operational capabilities. The intent of this investment is to significantly expand access to
Panera, improve the operational capabilities of our cafes and strengthen our core enterprise systems. By doing so, we believe that we
can improve the customer experience and better support new culinary innovation – all while reducing the administrative burdens of
our managers. By doing so we hope to enable our managers to focus even more intently on delivering the Panera experience (and
ultimately growing sales and profits) every day.
Strengthening Our Team
Over many years Panera has invested in our organization and our people. In March 2013, Roger Matthews joined Panera as Executive
Vice President and Chief Financial Officer. We have known Roger for more than 15 years and are very excited to have him join the
senior leadership team. Roger was a senior investment banker at Goldman Sachs and, because he ran the restaurant practice at
Goldman, brings a deep knowledge of our industry. As a result, he brings significant strategic and financial skills that will serve
Panera well. In addition, Diane Hessan joined our Board in November 2012. Diane brings to Panera valuable leadership and a keen
understanding of consumer research and marketing.
In December 2012, Panera had more than 75,000 associates system-wide. They are the face of Panera and they define the Panera
experience for millions of customers each and every day. These associates are the reason why we can generate the sales we do and we
thank them for their hard work. We also honor them by how we treat them.