Panera Bread 2014 Annual Report Download - page 3

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April 16, 2015
Dear Stockholder,
We are in a time of transition at Panera. Our current efforts have one goal: to reignite significant earnings
expansion. We are working to reclaim the growth Panera has experienced throughout much of its history,
recognizing that to do so we must build transactions and same-store sales by offering an ever-more differentiated
experience in a landscape crowded with Panera wannabes. As well, we are focused on continued café expansion,
while building capabilities to leverage our brand credibility in large adjacent markets that we believe can offer
new paths of growth.
WHERE WE HAVE BEEN
Our journey has evolved over time. In 2011, we conceived a vision for an enhanced customer experience enabled
by technology that would position Panera ahead of the competition in an increasingly digital and omnichannel
world. Our primary goal at that time was to reduce guest friction within our cafes. In 2012, we created a
prototype and named that prototype Panera 2.0. Panera 2.0 is inclusive of both digital access and improved
operational processes. In 2013, we began testing Panera 2.0.
In 2013, we also focused on building the e-commerce and technology capabilities necessary to fulfill our vision
and began taking steps to expand our share of the market for large-order delivery (catering), small-order delivery
and consumer products. These are very large markets and a big opportunity for Panera. They take advantage of
our e-commerce capabilities. To that end, we began testing catering hubs that would take pressure off of our
already-constrained cafes and offer the physical capability necessary to benefit from a professional sales force as
we grow our large-order delivery business. We also intensified our efforts to take market share in the consumer
products business, so more consumers could enjoy Panera at home.
By early 2014, we also recognized the need to rethink how we were driving customers into our cafes. With more
competitors vying for the same customers as Panera and carbs under attack, we recognized that we needed to
refocus our positioning in the marketplace. Indeed, after a year of research and reflection by our senior team, we
reconceived our brand mission as one of offering craveable wellness and an elevated experience.
2014 also saw us undertake a thorough review of pricing and value at Panera, as well as the execution of a
number of initiatives to expand our barbell pricing structure, including the introduction of half sandwiches, half
salads and flatbreads.
As 2014 unfolded, it was clear we were making material progress in our journey. Q4 was our best quarter in 18
months in terms of same-store sales growth, as well as the third straight quarter in which Panera experienced
same-store transaction growth, even as many other restaurant companies fought to lure traffic. We were changing
the trajectory of our business.
By the end of 2014, we had made notable headway, but our transition is still a work in progress. Readying to win
in a future that is just unfolding has never been easy.