Panera Bread 2015 Annual Report Download - page 3

April 15, 2016
Dear Stockholder,
2015 was a transformative year for Panera. The leading indicators of our strategy to generate sustained earnings
expansion by making Panera a better competitive alternative with expanded runways for growth showed real
traction. Our efforts resulted in same-store sales and transaction growth that expanded throughout the year, even
as others in the restaurant industry struggled. In the fourth quarter, our same-store sales growth outperformed the
industry by 345 basis points, when measured against the Black Box all-industry composite. That’s the biggest
spread we’ve seen in three years and a true indication of the impact of our initiatives. As we continue our work to
once again redefine the restaurant industry and set Panera on a path of industry-leading performance, one thing is
becoming clear: Our strategy is working.
WHERE WE’VE BEEN
2012
Five years ago, we conceived a vision for an enhanced customer experience enabled by technology. Our primary
goal at that time was to reduce guest friction within our cafes. In 2012, we created a prototype inclusive of both
digital access and improved operational processes called Panera 2.0. We began testing it a year later.
2013
In 2013, we focused on building the e-commerce and technology capabilities necessary to fulfill our vision and
began taking steps to expand our business into adjacent $1 billion categories, like large-order delivery (catering),
small-order delivery and consumer products. We recognized that many of these businesses could take advantage
of our e-commerce capabilities and all represented large opportunities for Panera.
2014
By early 2014, we recognized the need to rethink how we were driving customers into our cafes. With more
competitors vying for the same customers as Panera, we decided to refine our positioning in the marketplace.
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. We also began rolling out Panera 2.0 to select markets.
2015
In 2015, we converted an additional 300 cafes to Panera 2.0, reaching about half the company system with about
400 total cafes converted by year-end. Our Panera 2.0 cafes continued to outperform our traditional cafes,
confirming our success in improving the customer experience and increasing guest frequency. In addition, Rapid
Pick-Up, an element that debuted as part of Panera 2.0 and was rolled out system-wide in 2014, grew to over 6%
of company sales in 2015.
Our focus on operations also paid off in 2015, with guest satisfaction scores rising materially year over year.
We also worked to bring our refined brand positioning to life with innovative menu items intended to drive brand
reputation, category credibility and product excitement. To that end, we introduced culinary successes, like our
very popular clean Roasted Turkey, Apple and Cheddar Sandwich and our Ancient Grain, Arugula and Chicken
Salad.
With the release of our No No List in May 2015, Panera became a reference brand for clean food and set off a
race among other restaurant companies trying to catch up. Within weeks of our announcement, Noodles &
Company, Papa John’s, Subway, Taco Bell and others also claimed they were embracing clean food on some
scale. To the best of our knowledge, few are moving as aggressively as Panera. By the end of 2015, we had
removed all artificial colors, flavors, sweeteners and preservatives from more than 90% of our food items. We