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04_Panera - Panera Bread Company Mr Dave Sluga Mr Dan...

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Panera Bread Company Mr. Dave Sluga Mr. Dan Oleyourryk SIMM Company: Panera Bread Company (PNRA) Recommendation: Buy Purchase Price: $33.50 Current Price: $39.99 Number of Shares: 5% Target Price: $41.93 Bailout Price: $30.00 Reevaluate at: $41.93
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Company Analysis Panera Bread Company is a small cap stock that sells on the NASDAQ with the ticker symbol of PNRA. Panera Bread Company operates in the retail bakery-café segment of the restaurant industry in the services sector. Under the control of CEO Ronald Shaich, Panera Bread Company functions under the names of Panera Bread Company and St. Louis Bread Company. Originally, Panera operated primarily only on the east coast but has now opened up operations in 35 states. Panera’s stores are located mostly in suburban areas near malls and other shopping centers. Panera Bread offers an assortment of breads, deli sandwiches, salads, and pastries among other products. Panera competes in the restaurant industry against such restaurants as McDonald’s and Wendy’s, but Panera’s differentiation from its competitors comes from its café environment including a more up-scale and healthy menu (see menu). Panera Bread Company began as Au Bon Pain Company in 1981 operating on the east coast. In 1993 Au Bon Pain Company purchased St. Louis Bread Company, which was comprised of 20 bakery-cafes in the St. Louis area. From the years 1993 to 1997, the bakery-cafe names changed to Panera Bread. In 1999, Au Bon Pain Company sold all business units except for Panera and the company was renamed Panera Bread Company. Since the companies restructuring Panera Bread Company has become one of Business Week’s “100 Hot Growth Companies.” Panera Bread Company has recognized large scale growth in recent quarters and is now on pace for large growth rates in the future. Panera currently has 429 franchise operated stores and 173 company-owned bakery-cafes. Panera’s ability to increase sales of franchises has enabled Panera to grow rapidly. Panera does not sell single-unit franchises but rather sells franchise agreements of generally 15 stores in 6 years. Panera has strict criteria that must be met to buy a franchise including a certain amount of capital that is required. Panera depends on increased sales of franchises and increased revenues in same store sales to continue at its large growth rate. Panera Bread Company is a small cap company with great growth potential as their name becomes more widely known. News and Current Events The fast food restaurants have been hit hard by the recent health craze that has struck the United States. This consumer trend has benefited Panera significantly because Panera offers what most consumers believe to be a higher quality product at a slightly higher cost. McDonald’s and Burger King are attempting to cater to the health conscious consumer by creating more health efficient products. However, companies such as Panera Bread and Wendy’s Baja Fresh have a leg up on the competition. On the negative side, now that most fast food restaurants have seen the consumer trend for healthier food, competition has grown.
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