In a sluggish restaurant market, Panera Bread Co (NASDAQ:PNRA) stands out as one of the rapidly growing firms. With more than 1800 outlets across different states in the U.S., and in Canada, the company is a force to consider and a stock to keep a close watch on.
Most firms in the restaurant segment give more importance to the franchise route compared to self-owned restaurants, and they are prepared to trade off lower margins for the ease of licensing their brands. Panera follows slightly different approach in this regard. As of last December, the company owned almost half of their 1880 bakery-cafés and 22 of total 24 facilities that offer fresh dough daily to the outlets. Serving and making dough-based products is the segment where they profit most of their dough from.
The biggest winner in the family of operations is Panera self-owned units, which generate a whopping 88% of the total group’s revenue. Thus, the evident benefit of having franchisees appears to be to boost fast expansion and fortify their branding in North America. Also, a strong supply-chain business adds to the overall margins.
Panera has been beating through its strategic growth course in the last ten years, almost quadrupling their net income and total revenue since 2005. It recorded rapid unit growth as the company added nearly 1000 restaurants during the same period, proving where the franchising contributes in their case. The increase in restaurants count is an average of 100 new units annually, and the company can keep adding new units for the next years.
Panera Bread Co (NASDAQ:PNRA) has performed remarkably well on the sales front, earnings per restaurant increasing to more than $2.4 million from $1.6 million during the same ten-year period. In line with considerable unit growth, it marks an explosive combination.