Panera Bread Comprehensive Final

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Prepared and Presented by:
Xiaojia Liu
Megan McCullough
Rachel Murphy
Kaitlyn Stankiewicz
Jing Zhu

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Table of Contents
EXECUTIVE SUMMARY................................................................................................................................................. 3
GENERAL INFORMATION............................................................................................................................................. 5
MANAGEMENT................................................................................................................................................................ 5
ISS CORPORATE GOVERNANCE QUICKSCORE AND FOUR PILARS................................................................... 7
MARKETING..................................................................................................................................................................... 8
BUSINESS MODEL........................................................................................................................................................... 8
COMPANY HISTORY...................................................................................................................................................... 9
RECENT EVENTS........................................................................................................................................................... 10
COMPETITORS............................................................................................................................................................... 11
PERFORMANCE............................................................................................................................................................. 13
EXTERNAL FACTORS EVALUATION........................................................................................................................ 14
OPPORTUNITIES .............................................................................................................................................................. 14
THREATS ........................................................................................................................................................................ 16
COMPETITOR PROFILEMATRIX............................................................................................................................... 19
INTERNAL FACTORS EVALUATION......................................................................................................................... 20
STRENGTHS .................................................................................................................................................................... 20
WEAKNESSES.................................................................................................................................................................. 20
FINANCIAL RATIOS...................................................................................................................................................... 23
MATRICES...................................................................................................................................................................... 25
SWOT MATRIX ............................................................................................................................................................. 25
GRAND STRA TEGY MATRIX ........................................................................................................................................... 25
SPACEMATRIX ............................................................................................................................................................ 26
QSPM MATRIX.............................................................................................................................................................. 26
STRATEGIC PROPOSAL............................................................................................................................................... 27
STRATEGIC IMPLEMENTATION STATEMENT..................................................................................................................... 28
Policy ....................................................................................................................................................................... 28
PROFORMA FINANCIAL STATEMENTS................................................................................................................... 29
APPENDIX A................................................................................................................................................................... 31
APPENDIX B................................................................................................................................................................... 34
APPENDIX C................................................................................................................................................................... 37
APPENDIX D................................................................................................................................................................... 40
APPENDIX E ................................................................................................................................................................... 43
APPENDIX F.................................................................................................................................................................... 47
APPENDIX G................................................................................................................................................................... 52
ASSUMPTIONS................................................................................................................................................................ 53
INCOME STA TEMENT ...................................................................................................................................................... 53
BALANCE SHEET............................................................................................................................................................ 54
ESP/EBIT PROJECTION ..................................................................................................................................................... 55

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Executive Summary
Panera Bread is a North American fast-casual chain restaurant serving bakery-goods,
salads, sandwiches, and more. The company is owned by Au Bon Pain Co. Inc. and started as the
Saint Louis Bread Company. Each store was later renamed Panera Bread, with the exception of
the original flagship store located in Saint Louis, MO. Panera Bread’s current CEO is Ronald
Shaich who is also a founder of the company.
Recently, Panera Bread has made changes in its upper-level management. In 2015,
Panera Bread named Drew Madsen its President and Ken Koziol Vice President. Both have
previous experience in the restaurant industry.
Panera Bread’s major competitors are Starbucks and Chipotle. Both companies have
performed very well financially in the fast-casual market and continue to grow at a quicker rate
than Panera Bread. Panera Bread ranks third within this market.
Panera Bread strongly believes in serving food as it should be. The mission is to serve
customers quality food they can feel good about eating at a price they can feel good about as
well. In the beginning, Panera Bread set out with one goal: to bake fresh bread for its customers
everyday in each of its bakery-cafes. Today Panera still carries out this mission while constantly
searching for new innovative ways to satisfy customers.
Simply stated, Panera Bread is dedicated to serving its customers food they would want
to serve to their own families. This means no artificial preservatives or shortcuts, just
wholesome, great-tasting food fresh from our kitchens. To this end, Panera is now serving
customers poultry and pork raised without antibiotics.
With the implementation of the “No-no” list of artificial preservatives, sweeteners, colors
and flavors being removed from the menu, Panera Bread feels that it is preparing the best food
possible. To go along with this newer, cleaner menu Panera now aims to provide customers with
an improved, cleaner Panera Bread. In the coming years Panera is changing the layout, look and
feel of Panera Breads across the country in order to improve customer experience and
satisfaction.
With more than 1,900 locations in the United States and Canada Panera’s focus is on
providing customers with consistently superior service and food in a warm and welcoming
environment. At Panera Bread, everyday is an opportunity to improve the company and better
serve customers the fresh food they have come to love.
Through research and customer feedback Panera Bread has found that the layout and
aesthetic of its bakery-cafes is one of the biggest opportunities for improvement. With one of the

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largest issues being customer wait times, Panera has devised a plan to address this issue
and provide customers with a more pleasant dining environment.
Panera Bread will implement a new layout and design in all of its bakery-cafes within the
next five years. It will begin with company-owned locations in major cities within the United
States and expand from there.
This strategic remodeling plan calls for a total capital expenditure of $744,345,000
million to remodel all Panera Bread locations. In the first year 785 Panera Bread stores will be
remodeled, all of which are corporate owned locations. In the following two years the remaining
stores will be remodeled, including franchised locations.

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General Information
Panera Bread (NASDAQ ticker: PNRA) is headquartered at 3630 South Geyer Road,
Suite 100, Saint Louis, MO 63127. The company is a leader in the special eateries industry of the
services sector. The company employs 19,9001 full-time employees as well as many other part
time workers. The official vision and mission statement of the company is “A loaf of bread in
every arm.”2
Management
Chief Executive Officer
Panera Bread is led by Chief Executive Officer Ronald M. Shaich. Mr. Shaich obtained a
Bachelor of Arts degree from Clark University and a Master of Business Administration degree
from Harvard Business School. At age 61, he has previously held positions as the Chairman of
the Board at Clark University and the Director of Lown Cardiovascular Research Foundation.
During the 2014 Fiscal year, Shaich earned a salary of $823,077 with a bonus of $618,000
totaling to an annual compensation of $1,441,077. Along with annual cash compensations and
other long and short-term compensations, Mr. Shaich’s total compensation for 2014 was
$3,412,069.3
Chief Financial Officer
The company’s CFO is Mike Bufano, newly appointed April 15 of this year. Mr. Bufano
obtained a Bachelor of Arts in Political Science from the University of Chicago and a Master of
business Administration from The Wharton School of Business.4 At the age of 40, Bufano has
previously held many positions within PepsiCo Americas Beverages such as the Head of
Financial Planning & Analysis.5 As the newly appointed CFO, Bufano will receive a base salary
of $392,304 and a possible bonus of up to 40% of his base pay.6
1
"PNRA Profile | Panera Bread Company Stock - Yahoo! Finance." PNRA Profile | Panera Bread Company Stock - Yahoo!
Finance. Web. 29 Sept. 2015.
2
Panera Bread Company. Panera Bread Press Kit: Fourth Quarter 2006. N.p., n.d. Web. 29 Sept. 2015.
<http://www.firstpicksmgmt.com/files/en/user/news/news/file/6/Media_Kit_03-07.pdf>.
3
"List of Public Companies Worldwide, Letter." Bloomberg.com. Bloomberg. Web. 29 Sept. 2015.
4
"Management Bios." Management Bios. Web. 29 Sept. 2015.
5
"List of Public Companies Worldwide, Letter." Bloomberg.com. Bloomberg. Web. 29 Sept. 2015.
6
"CFO Moves:EasyJet, Panera Bread, ICAP." The CFO Report RSS. Web. 29 Sept. 2015.

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Chief Operating Officer
Panera Bread’s CEO is assisted by Charles J. Chapman III, the COO of Panera Bread.
Mr. Chapman obtained a Bachelor’s degree from Dartmouth College and an MBA from
Dartmouth College’s Tuck School of Business. At the age of 52, Mr. Chapman previously held
the position of Chief Operating Officer at American Dairy Queen Corporations and at
Bruegger’s Bagels, Inc. During the 2014 fiscal year, Mr. Chapman earned $742,925, the result of
a base salary of $540,144 with a bonus of $202. In addition to his base salary and bonus, Mr.
Chapman received long and short-term compensation, bringing his total compensation to
$1,282,934.7
7
"List of Public Companies Worldwide, Letter." Bloomberg.com. Bloomberg, 2 Oct. 2015. Web. 3 Oct. 2015.

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ISS Corporate Governance Quickscore and Four Pillars
Corporate governance refers to how a business operates and is managed to “improve
long-term shareholder value by enhancing corporate performance and accountability, while
taking into account the interest of other stakeholders.” In other words, it is “doing the right things
and doing things right” free of personal interest.8 Panera Bread’s overall score for corporate
governance is 7 and its scores across the four pillars can be seen in the table below.
Table 1: Panera Bread’s Assessment Across the Four Pillars
Board Structure: 6 Compensation: 6
Shareholder Rights: 9 Audit & Risk Oversight: 2
With a score of 1 indicating low risk and a score of 10 indicating high risk, Panera
Bread's score of 7 is rather high.9 This indicates that Panera Bread’s shareholders may not have
much power in regards to influencing the management of the company. Also, a Shareholder
score of 9 could be related to the fact that Panera Bread does not pay out dividends for its
common stock. In addition, Panera Bread does not offer preferred stock.10 The high shareholder
rights score may also contribute to the higher scores in the categories of Board Structure and
Compensation.
8
GARP. Corporate Governance and Risk Management: July 2012. Garp.org. N.p., July 2012. Web. 29 Sept. 2015.
9
"QuickScore - ISS." ISS RSS. Web. 29 Sept. 2015.
10
"LinkedIn Analysis of Panera Bread." LinkedIn Analysis of Panera Bread. Web. 29 Sept. 2015.

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Marketing
Product
Panera Bread owns and franchises restaurants within the fast-casual industry. Its
restaurants offer, “fresh baked goods, made-to-order sandwiches, soups, salads, pasta dishes,
custom roasted coffees, and other complementary products through on premise sales, as well as
providing catering services.”11
Target Market
The customers that Panera Bread aims to capture are families and individuals that pursue
healthy lifestyles. In addition, these customers are technologically inclined12, and earn a salary of
approximately $75,000 a year.13 The company’s latest marketing development focuses on
families and healthy living.14
Product Positioning
Panera Bread’s product position has not been clear until recently. The company’s CEO
came out with a letter describing where he saw the future of the company. His main goal is to
make food “as it should be” and promote a family environment.15
Business Model
Panera Bread’s customer profile was briefly discussed in the product section of the
company profile. Panera customers are health conscious families searching for good quality
meals that are convenient and competitively priced with market substitutes.16
Panera Bread’s customers value quality food at market comparable prices, given to them
in a speedy manor. Customers are entering Panera Bread chains across the U.S. and Canada to
find fresh goods made specifically for them without artificial flavors, colors, preservatives or
sweeteners.17 Upbeat employees ensure customers receive the best service. In the food market,
good service is imperative to retaining customers.
The Bakery-Cafe segment accounts for the most profit. Bakery-Cafe means any sales
made inside Panera Bread stores. Next, is the Fresh Dough segment. Fresh Dough encompasses
revenue received for goods shipped, mainly bread dough, to each franchisor. Lastly, Panera
11
"PNRA Profile | Panera Bread Company Stock - Yahoo! Finance." PNRA Profile | Panera Bread Company Stock - Yahoo!
Finance. Web. 29 Sept. 2015.
12
"The Pleasures and Pain-Points of Panera 2.0." The Pleasures and Pain-Points of Panera 2.0. Web. 29 Sept. 2015.
13
"Welcome to Market Realist." Panera Bread's Silver Lining: Measures to Remedy Growth Issues. Web. 29 Sept. 2015.
14
"Ad of theDay: Panera Gets Into LifestyleBranding With Manifesto About Healthy Living." AdWeek. Web. 4 Oct. 2015.
15
16
"We Are Panera Bread." Who We Are. Web. 29 Sept. 2015.
17
"Panera Bread Business Modeland Growth Strategy - BrandonGaille.com." BrandonGaillecom. Web. 29 Sept. 2015.

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Bread receives revenue from Franchisor Royalties. These are fees each franchisor pays in
order to own and operate a Panera Bread store.
Panera Bread chooses lower retail upcharges, but still upcharges enough to gain a profit
as a company.18 This creates brand equity, by serving high quality goods at a reasonable price.
Panera Bread is a hybrid of a fast food chain and a sit down restaurant. This reaches a niche
market most companies have not thought to address.
Company History
In 1981 Au Bon Pain Co., Inc., was founded by Louis Kane and Ron Shaich. The
company operated along the east coast and internationally from the 1980’s to the 1990’s. In 1993
the company bought the Saint Louis Bread Company, which operated 20 chains in the Saint
Louis area.
Around 1997 these chains, with the exception of the flagship Saint Louis Bread Co. store,
were renamed Panera Bread Co. Two years later in 1999, Au Bon Pain Co., Inc. sold all of its
business units with the exception of Panera Bread stores. With this sale, Au Bon Pain Co., Inc.
transitioned to Panera Bread Company.
Since 1997, Panera Bread’s stock has continued to grow and they have purchased
Paradise Bakery & Café, a chain of 70 stores located in the west and southwest United States.
Currently, Panera Bread has “1,946 bakery-cafes in 46 states, the District of Columbia, and in
Ontario Canada operating under the Panera Bread, Saint Louis Bread Co. and Paradise Bakery &
Café name.” 19
18
"Panera Bread Business Modeland Growth Strategy - BrandonGaille.com." BrandonGaillecom. Web. 29 Sept. 2015.
19
"We Are Panera." Our History. 2015. Web. 1 Oct. 2015.

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Recent Events
In 2014 Panera Bread, led by head chef Dan Kish, announced plans to remove artificial
colors, flavors, sweeteners and preservatives from their menu by the year 2016. This year, they
produced a “No-No List” of 150 artificial ingredients they either do not currently serve or plan to
phase out in the next year. 20
During 2015, the company made additional management changes. For example, on April
27, 2015, Panera Bread named Ken Koziol Executive Vice President. Before being appointed
Executive Vice President at Panera Bread, Koziol was the Worldwide Chief Restaurant Officer
at McDonald’s. 21
Also, on May 11th, the company named Drew Madsen its President. Prior to joining
Panera Bread, Madsen was the president and Chief Operating Officer of Norwegian Cruise Line
from October 2014 to March 2015. Previously, he was president and COO of Darden Restaurants
Inc. from 2005 to 2013.
According to Shaich, Panera Bread’s CEO, 2015 is a critical period for further
developing Panera Bread to make it a better option as the company grows.22 In hiring these two
new executives with previous experience in the industry, Panera will enhance its capabilities,
capitalize on opportunities and increase profitability. It is also important to note that the hiring of
new top management will likely cause Panera Bread’s stock price to fluctuate.
20
Gelles, David. "Panera's Mission to Be Anythingbut Artificial." The New York Times. The New York Times, 4 July 2015.
Web. 29 Sept. 2015.
21
"Panera Bread Taps Former Darden Restaurants Exec as President: Business." Stltoday.com. 11 May 2015. Web. 29 Sept.
2015.
22
"Panera Bread Taps Former Darden Restaurants Exec as President: Business." Stltoday.com. 11 May 2015. Web. 29 Sept.
2015.

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Competitors
As mentioned previously, Starbucks Corporation is a major competitor of Panera Bread.
Starbucks has begun to expand its offerings beyond coffee and the move has enhanced this
competition drastically. Starbucks’ menu will start including “more food options such as
sandwiches and salads. Starbucks has also added drive-thrus to many locations.”23 Starbucks,
like Panera Bread, has customers who are technologically inclined and want a place where they
can spend time and enjoy quality food and beverages. The competition is keener between the
companies because Panera Bread and Starbucks have overlapping target age groups.24
Another major competitor of Panera Bread is Chipotle Mexican Grill. Both companies
are companies that operate food chain restaurants considered “fast casual.” The “fast casual”
segment of the market tends to share similarities such as high quality ingredients, more upscale
decor, and more customizable food options.25
Three-Year Sales
The sales figures in the table below illustrate that both Starbucks Corporation and
Chipotle Mexican Grill are have experienced greater success in sales than Panera Bread over the
past three years.
Chart 1: Total Sales Comparison of Panera Bread Company’s Competitors
23
Lutz, Ashley. "Starbucks Is Determined to Become a Threat to Chipotle, Five Guys, and Panera Bread." Business Insider.
Business Insider, Inc., 11 Aug. 2015. Web. 1 Oct. 2015.
24
"Who Is Starbucks' Target Audience?" Small Business. Web. 29 Sept. 2015.
25
Piazzola, Marissa. "Fast Casual Restaurants Are Eating up theCompetition." Web. 29 Sept. 2015.

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Stock Performance
See Appendix A, Charts 2, 3 and 5.
The three-year stock performance of Panera Bread, Chipotle Mexican Grill, and
Starbucks Corporation shows that Panera Bread’s stock prices are fluctuating more than those of
Starbucks Corporation and Chipotle Mexican Grill. Starbucks Corporation and Chipotle Mexican
Grill’s stocks have steadily increased over the past three years while Panera Bread’s stock seems
to fluctuate from year to year. This stock performance is illustrated in the three charts can be
included in Appendix A.

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Performance
See Appendix B, Chart 5
The performance graph, Chart 5 in Appendix B, indicates the revenue trend in both level
and growth rate for the past nine years. Although the revenue has been continuously growing, the
growth rate year-over year, or YOY, for Panera Bread plummeted from 10% in 2012 to 5% in
September 2014. The unit growth declined around 2007 due to the recession, indicating the units
sold decreased. This continued until 2009 when Panera Bread was still recovering from the
recession.26
In addition to the steady decline in revenue growth from 2012 to 2014, the revenue of
Panera Bread grew at a 17% compound annual growth rate (CAGR)27, while its competitor
Chipotle Mexican Grill had a CAGR of 20% over the past nine years. More details regarding the
segments are presented under the Business Model.
In the company’s annual report for 2013, the management of Panera Bread attributed the
decline in sales growth rate to negative publicity on food products. Customers’ preference and
traffic are adversely affected by the concerns over food-borne illnesses and food safety. For
example, past outbreaks of E. coli in certain beef products and outbreaks of salmonella in
cantaloupes, jalapeños and spinach caused consumers to avoid these products. Specifically,
management states “These problems, other food-borne illnesses (such as hepatitis A or
trichinosis), and injuries caused by food tampering have in the past, and could in the future,
require us to temporarily close bakery-cafes.” Additionally, the occurrence of problems
mentioned above could influence the availability and price of certain ingredients, resulting in
higher costs and lower revenues28.
Overall, same-store sales growth slowed in 2014, which can be seen in Chart 6 of
Appendix B. Compared to 8.1% increase over the same period in the year of 2013, system-wide
same-store sales, a combination of performance of both franchise-operated and company-owned
stores, grew only 2.7% in 2014.
26
“Welcome to Market Realist.” Unit Growth Is More Important For Panera Bread. Web 2 Nov. 2015.
27
CAGR is a measurement that describes the rate at which the revenue would have grown if it had grown at a steady rate. The
number smooths out the volatilities in thechanges of the figure over thegiven time period.
28
Panera Bread. 2013 Annual Report. Saint Louis

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Panera Bread’s External Factors Evaluation
A total weighted score of 1.62 in this category indicates that Panera Bread has a below average
ability to respond to external factors.
See Appendix C for External Factors Evaluation.
Opportunities
Panera Bread currently only operates in the United States, Canada, and the District of
Columbia, with no international presence overseas. Panera bread operates in 46 states and has
1,946 total stores including those in Canada.29 There is still room for significant growth in the
United States since Panera Bread is not operating in all 50 states and only 5 states have 100 or
more stores.30 The states Panera Bread does not operate within are Utah, Montana, North Dakota,
and Idaho.31 This lack of presence may be because these states have rather small population sizes
compared to most other states, but the opportunity for growth in each state remains. 32 Of the
states without Panera Bread, Utah has the largest population of 2.943 million.33
In recent years the fast-casual trend has also been on the rise outside of the United States,
especially in Western Europe. Some countries have seen growth rates within this industry of as
much as 30%. Markets such as Germany offer a large fast-casual market along with target
customers possessing high disposable income. Chart 8 below shows the growing market trends
internationally. Although the countries in this table are seeing growth within the fast casual
market, not all countries are suitable for U.S. companies. Venezuela’s government has
continually introduced weaker currency exchange rates, which has caused many U.S. companies
within Venezuela to lose money.34 Ukraine, Russia, and Saudi Arabia are politically unstable
countries with respect to their relationship with the U.S. government and this fact interferes with
the establishment of business relationships in these countries. For example, the Russian
government may seize foreign assets at any time without warning and currently is in conflict
with Ukraine.35
Since 1999, the fast-casual market has been on the rise. This increase is due to the fact
that the fast-casual concept has grown in popularity among consumers. With the majority of fast-
29
30
"Panera Bread: Fast Growth Still Viable In U.S. Market." Seeking Alpha. Web. 28 Oct. 2015.
31
"5 Things You Didn't Know About thePanera Bread Chain." The Huffington Post. TheHuffington Post, 29 Apr. 2014. Web.
11 Nov. 2015.
32
Austin, Kristin. "Panera Bread Opens in Wyoming." M Live. 29 Sept. 2015. Web. 11 Nov. 2015.
33
"Utah QuickFacts from the US Census Bureau." Utah QuickFacts from the US Census Bureau. Web. 11 Nov. 2015.
34
Aubin, Tim. "Venezuela's Currency Woes Are Costing American Companies a Ton of Money." Business Insider. Business
Insider, Inc, 30 July 2015. Web. 11 Nov. 2015.
35
"Russia Prepares to Seize Western Assets." EurActiv. 27 July 2015. Web. 12 Nov. 2015.

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casual consumers being from the Millennial Generation, the biggest generation, fast-
casual restaurants are able to take advantage of this large target market. The build your own
segment of this market has experienced a 22% increase in sales as compared to an 11% increase
for those with the traditional made to order format. This increase in sales is because the
Millennial Generation favors customization.36 As more Millennials enter the workforce, their
buying power will increase as will their ability to influence the market. This buying power has
the possibility to increase the sales for build your own concept stores even more so than previous
years.
Chart 8: Fast Casual Market Growth37
Compared to previous generations, the Millennial Generation is more socially aware.
They are willing to pay more for products from companies who invest in communities and take
the concept of corporate social responsibility (CSR) seriously.38 Panera Bread can develop an
improved public relations campaign to inform the public that they are investing in communities
through their Panera Bread Cares community cafes, which is aimed at bringing awareness to the
issue of hunger in the United States. “These cafes operate on a pay-what-you-can sliding scale—
meals for guests who can’t afford to pay are covered by guests before them who can afford to
pay a little extra. Guests may also earn meal vouchers by contributing volunteer hours.” 39
36
Newman, Andrew. "How the Build-Your-Own MealCraze Is Reshaping Restaurants." AdWeek. 7 June 2015. Web. 2 Oct.
2015.
37
Ferdman, Roberto. "The ChipotleEffect: Why America Is Obsessed with Fast Casual Food."Washington Post. The
Washington Post, 2 Feb. 2015. Web. 1 Oct. 2015.
38
Hogan, Scott. "Millennials: The'800 Pound Gorillas' of Social Responsibility." Linkedin. 7 July 2015. Web. 2 Oct. 2015.
39
Orman, Sasha. "Top 10 Most CharitableChains and Franchises." Top 10 Most Charitable Chains and Franchises. 10 Dec.
2014. Web. 2 Oct. 2015.

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Panera Management is paying attention to other important developments as well.
For example, in recent years there has been an increase in the number of individuals who identify
themselves as vegetarian or vegan. There has also been an increase in the number of individuals
who are simply interested in the vegetarian and vegan diet.40 With consumer tastes changing, this
may be an opportunity for Panera Bread to diversify their menu and include more vegetarian and
vegan items. The Millennial Generation and Generation Z are also trending towards healthier
food options with 32% and 41% willing to pay more to have healthy food.41 Additionally, the
Millennial Generation has recently become the largest generation within the labor force at 53.5
million. This indicates that they not only have a willingness to pay more for healthy food, but
they are becoming more financially capable to do so.42
Starbucks, Panera Bread’s major competitor, has seen an increase in lobby sales, which
now accounts for 5% of their revenue. Items sold include prepackaged coffee, teas, and other
merchandise.43 With Panera Bread not having any lobby sales this may be an opportunity to
increase their revenue. Starbucks has also begun to serve alcohol at some of their locations in
recent years resulting in 3% to 7% of their sales. Studies show that this addition to menus may
cause customers, especially Millennials, to become more loyal customers. This addition also
gives these customers more of an incentive to pick fast casual over traditional fast food.44
This year, the United States has become the nation with the second largest population of
Spanish speakers with 41 million native speakers and 11 million bilingual speakers.45 Hiring
bilingual employees will help Panera pursue this Spanish-speaking market. In addition, hiring
bilingual staff can help with international expansion.46
Threats
Competitors, Starbucks and Chipotle, have both seen higher revenue growth rates than
Panera Bread thus far in 2015. While Panera Bread’s growth has steadily increased from 7.13%
to 8.28%, it still has yet to reach the level of growth seen by its competitors. Chipotle’s revenue
growth started around 20.45% and has increased to 31.12%, while Starbucks revenue growth rate
started at 17.8% and decreased to 10.16%.47 A challenge for each company will be the cost of
40
Sareen, Anjali. "Interest In Vegan Diets On The Rise: Google Trends Notes Public's Increased Curiosity In Veganism." The
Huffington Post. TheHuffingtonPost.com, 3 Apr. 2013. Web. 2 Oct. 2015.
41
Watson, Elwood. "Younger Consumers Are Trending Toward MoreHealth-Conscious Eating." The Huffington Post.
TheHuffingtonPost.com, 9 Feb. 2015. Web. 1 Oct. 2015.
42
Fry, Richard. "Millennials Surpass Gen Xers as the Largest Generation in U.S. Labor Force." Pew Research Center RSS. 11
May 2015. Web. 2 Oct. 2015.
43
Jones, Adam. "Starbucks' Lobby Sales Contribute5% To Revenues." Yahoo Finance. 30 Dec. 2014. Web. 2 Oct. 2015.
44
"Why "Fast Casual" Brands Are Making Alcohol Their CompetitiveEdge." Franchise Business Opportunities. 15 Dec. 2014.
Web. 1 Oct. 2015.
45
Burgen, Stephen. "US Now Has MoreSpanish Speakers than Spain – Only Mexico Has More." The Guardian. 29 June 2015.
Web. 1 Oct. 2015.
46
"5 Benefits of Hiring a Bilingual Employee." VerbalizeIt. 24 Feb. 2015. Web. 28 Oct. 2015.
47
"Panera Bread Company (PNRA) Revenue Growth." Wikinvest. 2015. Web. 1 Oct. 2015.

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certain food products, such as meat and dairy, which are predicted to increase by 4-5% in
2015, meaning an even higher cost of production for Panera Bread.48
In addition, Starbucks has a stronger brand image partially because they do a better job of
emphasizing corporate social responsibility (CSR). Starbucks capitalizes on this through
exercising the following practices:
● Investing in their employees and putting them first
● Ethical coffee sourcing
● Positively impacting communities through the creation of opportunities
● Being a leader as a sustainable “green” retail store49
Entry into the fast casual industry is relatively easy with few barriers. The capital
necessary for entry typically ranges from $100,000 to $300,000.50 This amount can be higher but
is not likely to exceed 1 million; therefore barriers to entry are considered to be low.51
Competitors, Starbucks and Chipotle, have seen a greater increase in their same-store
sales growth in the past year with growth rates of 7%52 and 16.1%.53 This growth in same-store
sales is one of the drivers of revenue and explains why Starbucks and Chipotle have also seen
higher growth rates in terms of revenue.54
Panera Bread’s competitor, Chipotle, was founded 12 years after Panera Bread and still
has nearly as many units as Panera Bread with Chipotle having 1,831 and Panera Bread having
1,946. Chipotle also has more of an international presence than Panera Bread with stores in
Canada, France, Germany, and the United Kingdom.55 Panera Bread’s presence is limited to the
United States and Canadian Markets.
Starbucks invests in their employees and offers great benefits such as college tuition
reimbursement and recognition programs. They make a point to ensure that employees feel they
are a partner of the company rather than just an employee. In addition, Starbucks creates a
diverse and inclusive workforce that makes employees happy to come to work.56 By comparison,
Panera Bread offers traditional benefits to its employees and does not make a point to create an
environment where employees feel they are more than just employees.57
48
Chang, Ellen. "Why Your Steak and Other Food Prices Are Still Rising This Year." MainStreet. 6 Jan. 2015. Web. 1 Oct.
2015.
49
"How To Create a Strong Brand Image & Effective Marketing Campaigns: Lessons From the Best."Mega. 23 Apr. 2015. Web.
2 Oct. 2015.
50
Farrell, Maureen. "How To Run A Restaurant: Start-Up Costs." Forbes. Forbes Magazine, 2 Feb. 2007. Web. 3 Oct. 2015.
51
Jones, Adam. "Overview: Assessing theRestaurant Industry Business Model." MarketRealist. 10 July 2014. Web. 3 Oct.
2015.
52
Jones, Adam. "Starbucks' Worldwide Same-Store Sales Growth Remains Strong." Yahoo Finance. 27 Apr. 2015. Web. 2 Oct.
2015.
53
Jones, Adam. "ChipotleMexican Grill Sees MassiveSame-Store Sales Growth." Yahoo Finance. 10 Feb. 2015. Web. 3 Oct.
2015.
54
Jones, Adam. "Welcome to Market Realist." Panera Bread's Same-Store Sales Growth Declined In 4Q14. 19 Feb. 2015. Web.
2 Oct. 2015.
55
"Our Company." Chipotle. Web. 28 Oct. 2015.
56
"Working at Starbucks." Starbucks Coffee Company. Web. 2 Oct. 2015
57
"Benefits." Panera People. Web. 4 Oct. 2015.

18
If the United States increases the minimum wage above the current rate,
restaurants would have to increase the pay of its workers, a significant increase to labor costs. In
addition, this change would also be impacted by the increase in pay required for veteran workers
who already make more than minimum wage.58
In a significant number of countries, tea and/or coffee are regularly consumed
beverages.59 With tea and coffee being Starbucks’ main selling point, this makes the competitor
more attractive to many consumers across many different cultures and makes it easier for
Starbucks to enter these different markets.
58
Shah, Khushbu. "How a Higher Minimum Wage Could Negatively Affect Restaurants." Eater. 11 June 2015. Web. 4 Oct.
2015.
59
Desilver, Drew. "Chart of the Week: Coffee and Tea Around theWorld." Pew Research Center RSS. 20 Dec. 2013. Web. 2
Oct. 2015.

19
Panera Bread’s Competitive Profile Matrix
A total weighted score of 2.41 indicates that Panera Bread does not have a strong position
within the fast-casual market. Starbucks and Chipotle both score above the average of 2.50,
which means that they have a strong position within the market.
Panera Bread and Starbucks were both analyzed through the use of these factors because
they are critical to the success of companies within the foodservice industry.60 While Starbucks
excels overall, Panera Bread is about average. This is based on a scale of 1 through 4, “where 4
means a major strength, 3 – minor strength, 2 – minor weakness and 1 – major weakness.”61
Panera Bread’s CPM of 2.41 scores the lowest out of its competitors. This means Panera Bread
needs to work on strengthening areas such as location, expansion, and customer loyalty.
Starbucks and Chipotle both have strong CPM scores, which places them above Panera Bread
competitively.
60
Wilson, Geoff. "Top 20 Factors for Success in theRestaurant Business." Restaurant Central. Web. 4 Oct. 2015.
61
"CompetitiveProfile Matrix (CPM)." Competitive Profile Matrix (CPM). Web. 5 Oct. 2015.
Panera Bread Starbucks Chipotle
Critical Success Factors Weight Rating Score Rating Score Rating Score
Brand Reputation 0.13 3 0.39 4 0.52 4 0.53
Location of Facilities 0.12 2 0.24 4 0.48 3 0.36
Advertising 0.11 1 0.11 3 0.33 1 0.11
Product Quality 0.11 3 0.33 4 0.44 4 0.44
Financial Position 0.11 4 0.44 3 0.33 4 0.44
Global Expansion 0.11 1 0.11 3 0.33 2 0.22
Customer Service 0.10 1 0.10 4 0.4 4 0.40
Customer Loyalty 0.08 3 0.24 2 0.16 4 0.32
Product Variety 0.07 3 0.21 3 0.21 3 0.21
Price Competitiveness 0.06 4 0.24 2 0.12 2 0.12
Total 1.00 - 2.41 - 3.32 - 3.15

20
Panera Bread’s Internal Factors Evaluation
A total weighted score of 2.34 indicates that Panera Bread is internally weak. This is
because 2.50 is the average and is the lowest score that is considered acceptable.
See Appendix D for Internal Factors Evaluation.
Strengths
Panera Bread is working to overcome obstacles as a fast-casual restaurant. In 2016,
Panera Bread will have 150 locations enabling customers to order through digital kiosks at
tables. Panera Bread has also increased their accessibility by creating a phone application. This
phone application currently allows users to view the menu and order online food to go. Soon, the
application will permit customers to order while they are sitting inside a Panera Bread restaurant.
In summer 2015, Panera Bread created a new marketing plan to reach a different target
market. The marketing focuses on family friendly environments and healthy living styles,
promoted through billboards and commercial ads. This new campaign stems from Panera’s
recent efforts to be transparent with its menu items. The company came out with a “No-No List”
of additives and other unhealthy ingredients they are removing from their products within the
next year. In order to maintain this standard of health, Panera Bread picks suppliers that uphold
their same standard of food quality. Each day, Panera Bread makes their items fresh by
supplying new product every night. It also maintains certain product staples and seasonal items,
options that are very important to consumers.
Panera Bread has come up with a new growth plan called the Panera Bread Growth
Strategy 2.0. In this strategy, Panera Bread’s goal is to eliminate wait times and provide high
quality service. The plan will be fully implemented by 2016 and will consist of technology
advancements and better food options.
Panera Bread has been known to have economies of scale. The company has such a large
output of production it is decreasing its cost in products, as well as having central fresh dough
locations for producing goods. Panera Bread’s stock price has also consistently grown since 2013
showing it is a good investment.
Weaknesses
In pioneering and navigating the fast-casual restaurant business, Panera Bread has
encountered challenges along the way. Wait times in Panera Bread locations have become a
deterring factor for potential Panera Bread customers and negatively impacts customer
satisfaction. Inefficient layouts are the main factor contributing to these long lines, as they were
originally designed for smaller customer bases. Panera Bread’s customer service tends to lack in
comparison with its main competitor, Starbucks. Long lines and incorrect orders have been cited

21
as issues facing Panera Bread, while Starbucks is known for their friendly and speedy
service. Poor customer service and long wait times could contribute to the steady fluctuation of
same-store sales growth over the years.
Panera Bread’s mission statement, “A loaf of bread in every arm,” is not strong enough to
clearly convey the company’s mission to the customer. The statement may have been more
applicable when Panera’s sole focus was bread, however considering the company’s expansion
over the years, its mission statement should acknowledge this growth. A stronger mission
statement should emphasize their dedication to a broad spectrum of high-quality food at
affordable prices. Due to growth, Panera Bread’s main selling point is no longer their bread, and
in comparison with competitors it lacks a main product.
Panera Bread employs a great deal of part-time employees often within the 18-22 year
age range. These employees seek part-time work as opposed to careers, therefore these
employees tend to be less invested in the company long-term as opposed to competing
companies.
One of the biggest limiting factors as related to the growth of Panera Bread is the set of
high standards one must meet in order to become a franchisor. Some of these parameters include
recognition as a top restaurant operator, a net worth of $7.5 million and liquid assets of $3
million. Such barriers limit the opportunity for substantial growth.
Average ticket price, or the amount each customer spends in a transaction, has decreased
since 2013. Although it has seen slight increases recently, the actual price is significantly lower
than it has been in the past. This is due to the growth of breakfast traffic, which carries a
significantly lower ticket price that lunch or dinner items.62
62
"Welcome to Market Realist." Panera Bread Mix on a Downward Trend. N.p., n.d. Web. 23 Nov. 2015.

22
Chart 9: Panera Bread’s Ticket Growth
Another weakness, Panera Bread’s lack of presence overseas, reduces their customer base
and potential for growth. The majority of the world’s consumers are not being served and
therefore potential profit is lost.

23
Financial Ratios
See Appendix E for all Financial Ratios
Liquidity
Current Ratio: 1.152
Current Ratio indicates the company’s ability to use its current assets to cover its
Short-term liabilities. From 2012 to 2013, the current ratio declined by almost 50 percent and
recovered in 2014 for a short time. This is due to Panera Bread using a large amount of cash to
buy the Class A common stock in 2013. There are two types of stock, Class A and Class B. Class
A is open to the public, whereas Class B is mainly held by the management of Panera Bread. In
2013, both the current ratio and quick ratio are below the industry average, yet current ratio
diverges from the industry average more than quick ratio does. Quick ratio offers a more
conservative view to measure the ability to pay off short-term liabilities since it excludes
inventory which is hard to liquidate. According to Panera Bread financial statement, inventories
consist of food products, paper goods and supplies, and promotional items. The ratios indicate
that Panera Bread inventories account for a smaller portion in the current assets than that in the
industry do. Compared to its competitors, Panera Bread's current ratio shows an acceptable
ability to cover its current liabilities.
Leverage
The debt-to-total-asset ratio of almost 0.5 indicates that half of the assets are financed
through debt, leading a healthy financial trend. The increasing debt-to-equity ratio over the past
three years reveals that Panera Bread has been taking more liability as a means of financing.
The abrupt decrease in times-interest-earned ratio is due to the increase in interest
expense in 2014. In 2014, interest, related to construction of new locations, is capitalized as part
of the assets to which it is amortized over the asset’s useful life.
Profitability
Price-Earnings Ratio: 26.04
Price-Earnings ratio measures the company’s current share price relative to its per-share
earnings. This ratio is important to investors because they want to verify that the price they pay
for a stock is fair in relation to the earnings they can expect from it. Panera Bread’s Price-
Earning Ratio is close to the industry ratio. A higher P/E indicates that investors are expecting
higher earnings growth in the future. Panera’s P/E ratio sits between competitors’ Starbucks and
Chipotle, indicating potential for higher earnings growth in the future.
Price-Sales ratio measures the company’s total market capitalization relative to its
revenue of the current year. It is similar to Price-Earning Ratio but Price-Sales Ratio is more
resilient to variations in the market. A low P/S Sales indicates the market price is
undervalued. Price-Sales Ratio is also a useful measurement of valuing stock price. In 2014,
Panera Bread has a 2.13 P/S ratio, whereas the industry has a 3.77. This shows a slightly low P/S

24
ratio of Panera compared to the industry. Based on the Current and Quick Ratio, Panera
Bread is at the industry average level. Therefore, the stock price for Panera Bread is slightly
undervalued.
Growth
Growth in sales reflects the company’s current status of performance. Although the sales
have been constantly growing, the rate of growth has decreased. This trend is consistent with the
fixed-assets-turnover ratio, which has decreased during the same time. Panera Bread is not using
its fixed assets efficiently enough to boost a strong sales growth. Since the price-earning ratio
and earnings per share have been rather stagnant in contrast to the underperformance in sale
growth, the market is valuing the brand name as well as the new technology implementation in
the order process.
Panera Bread does not distribute dividends, nor does Chipotle.

25
Matrices
SWOT Matrix
See Appendix F, Matrix 1 for SWOT Matrix.
The SWOT Matrix is the first of four matrices explaining what steps Panera Bread
should take in the future. As seen in the matrix, the most prevalent strategy is to expand Panera
Bread internationally. The next most prevalent strategy defines strengthening the existing
customer service within Panera Bread stores. From understanding the SWOT Matrix, the two
strategies listed above should be further researched as options for enhancing Panera Bread as a
company.
Grand Strategy Matrix
Based on research, Panera Bread is positioned in Quadrant 2 of the Grand Strategy
Matrix. Within this quadrant, as seen in the above graph, there are five key strategies Panera
Bread can pursue. These strategies are: product development, market development, market
penetration, horizontal/vertical integration, and liquidation/divestiture. Panera Bread should
work on aspects from product development, market development, and market penetration to
improve business performance. The company has a strong product, but their service is weak and
needs improvement. From the IFE and EFE, it was determined Panera Bread could expand
further in North America and globally. While creating better services and increasing market
penetration, the company also needs to address market development. Panera Bread’s marketing

26
and advertising has been insufficient to compete within the industry. The growing
industry demands a stronger competitive advantage from Panera Bread.
SPACE Matrix
See Appendix F, Matrix 2 for SPACE Matrix.
For each of the four quadrants of the Space Matrix, four variables measure how well
Panera Bread and the fast-casual industry performs. The ratings for these variables have
determined that Panera Bread falls within the competitive quadrant of the Space Matrix.
Companies that fall within this quadrant are recommended to pursue the following types of
strategies: backward integration, forward integration, horizontal integration, market penetration,
market development, and product development.
QSPM Matrix
See Appendix F, Matrix 3 for QSPM Matrix.
Of the strategies determined by the SPACE Matrix, Grand Strategy Matrix, and SWOT
Matrix we found the following two strategies to be the ones that Panera Bread should consider
pursuing:
1. International Development
2. Service Quality Improvement
These two strategies have been analyzed in the QSPM Matrix through the application of
Panera Bread’s opportunities, threats, strengths, and weaknesses. While international
development has a score of 3.73 and service quality improvement has a score of 2.55, it has been
determined that Panera Bread will pursue a strategy of improving service quality through
changing the layout of all of its stores. Improving service quality, while it has a lower score, is a
better strategy for Panera Bread to pursue because it enables Panera Bread to fix problems that
are present in existing stores.

28
Strategic Implementation Statement
Policy
Panera Bread’s best option to obtain a competitive advantage is to remodel all of its
existing stores, including those that are franchised. The implementation of this plan will allow
Panera Bread’s stores to be more attractive and welcoming to current customers as well as attract
new customers. The strategy should be implemented over the next few years, and be completed
by 2020. This strategy does not include any new locations Panera Bread opens after this time
period.
Interim Strategies
Panera Bread will begin remodeling 785 of its 1,946 stores in 2016. Once phase I is
complete, Panera Bread will remodel the remaining 1,141 stores following an observation period
of half a year to a year. All of Panera Bread’s current stores will be completed remodeled by as
early as 2018. Any new stores will be built using the new layout. The guidelines will include but
not be limited to: location of the fireplace, layout of coffee station versus food ordering platform,
and the kiosk ordering placement will all be uniform throughout each store.
For the first year of renovations, Panera Bread will require $372,172,500 for the remodel
of 785 of its stores. Panera Bread will finance the layout strategy by incurring debt. In updating
the layout, Panera Bread will establish a more modern, cleaner look and better reach the
company’s target market. Panera Bread should expect a revenue increase from this strategy.
The overall goal of changing and updating Panera Bread’s layout is to exceed customer
expectations and meet the target market’s needs. This will be accomplished by creating a more
welcoming and up to date atmosphere for customers to enjoy. Each Panera Bread employee will
be involved in this change. It is imperative those who directly serve customers understand why
the layout is changing and promote the updated version of Panera Bread. To ensure Panera Bread
employees are best serving customers, each employee will go through another level of training
on customer service. With more knowledgeable employees, customers will be happier with the
services provided. The new layout and up to date training will help reach our goal of exceeding
expectations and meeting our customers’ needs.
Once the first set of updated stores are completed, Panera Bread will have District
Managers monitor sales trends and record any positive or negative results. These results will then
be sent to Panera Bread headquarters to analyze and evaluate how well the new layout is
working.

29
ProForma Financial Statements
See Appendix G for ProForma Financial Statements.
Assumptions and explanation
See Appendix G for Assumptions.
The problem Panera Bread now faces is creating an environment conducive to customer
retention and acquisition. The current layout creates problems aesthetically as well as in the
creation of long lines. To solve this issue, Panera Bread will implement a renovation strategy to
go along with Panera 2.0. In 2016 Panera will renovate half its stores and observe consumer
response to these changes. This observation period will be between a half a year to one year.
Based on the results, Panera Bread will either choose to implement the renovation in remaining
locations or to reevaluate at that time.
It is reasonable for Panera Bread to implement this strategy to half of its locations in the
first year, costing $372,172,500. Through research, it was found that Starbucks recent
renovations cost $85 per square foot. This number was multiplied by 4,500, the average square
footage of a Panera Bread location. The resulting number was then multiplied by 1,946, the total
number of Panera Bread locations. Panera Bread will finance this investment through the
borrowing of debt. This was chosen instead of issuing additional common stock, which would
eventually dilute shareholders’ stock rights and thus reduce shareholders’ power in the long run.
Therefore, financing through debt is a sound method to raise the amount needed. This debt
would have an interest rate of 1.19%, which is projected from previous Long-term debt incurred.
Income Statement and Income Statement Explanation
See Appendix G for Income Statement.
The revenue projected for 2016 has a decreased the revenue growth-rate. This is mainly
because the past three years’ growths have declined year over year, and the remodeling would
require stores to shut down for a period of up to three months. The Costs of Goods Sold
decreased accordingly, resulting in an equal gross profit margin. The projected operating expense
for 2016 is the operating expense for the last period, plus the total amount needed for the first
year to implement the strategy, divided by 15, which is the useful life for restaurant renovations
to become outdated. The interest expense for 2016, as stated previously, is the amount borrowed
times the annual interest rate. According to Panera Bread’s annual report of 2014, the tax rate for
recent years is decreasing. Based on this trend, Panera Bread’s estimated tax rate for 2016 is
33%.

30
Balance Sheet and Balance sheet Explanation
See Appendix G for Balance Sheet.
On the Balance Sheet, the Long Term Debt would increase by $372,172,500, as this is
the way to finance the cost for renovation. After implementing the strategy, there is a
$192,889,476 difference between Assets and Liabilities & Stockholder’s equity. As a result,
Panera Bread would use this amount as a plug in number to make Assets and Liabilities &
Stockholder's equity balance.
EBIT analysis
See Appendix G for EPS/EBIT Analysis.
After implementing the new strategy, the EPS, in a normal year, would increase from
$6.67 in 2015 to $6.78 in 2016.

32
Chart 2: Chipotle Mexican Grill three-year stock performance63
Chart 3: Starbucks Corporation three-year stock performance64
63
"ChipotleMexican Grill, Inc. (CMG) Stock Chart." NASDAQ.com. Web. 29 Sept. 2015.
64
"Starbucks Corporation (SBUX) Stock Chart." NASDAQ.com. Web. 29 Sept. 2015.

33
Chart 4: Panera Bread Company’s three-year stock performance65
The three-year stock performance of Panera Bread, Chipotle Mexican Grill, and
Starbucks Corporation shows that Panera Bread’s stock prices are fluctuating more than those of
Starbucks Corporation and Chipotle Mexican Grill.
65
NASDAQ. Web. 29 Sept. 2015.

35
Chart 5: Panera Bread Annual Growth66
This chart indicates the revenue has been continuously growing, though the growth year-
over year, or YOY, plummeted from 10% in 2012 to 5% in September 2014.
66
"Welcome to Market Realist." Panera Bread's Revenue Growth Is Declining. Web. 29 Sept. 2015.

36
Chart 6: Panera Bread Same Store Growth67
Overall, same-store sales growth slowed in 2014. Compared to 8.1% increase over the
same period in the year of 2013, system-wide same-store sales, a combination of performance of
both franchise-operated and company-owned stores, grew only 2.7% in 2014.
67
4 Oct. 2015.

37
Appendix C
External Factors Evaluation

38
Opportunities Weight Rating Weighted Score
1 Fast-Casual markets are growing internationally, such
places as New Zealand have fast-casual markets that have
grown as much as 30% in the past few years.68
0.12 1 0.12
2 Nationally, Panera bread is operating in 46 states 69 with
“100+ bakery-cafés in only 5 of these states.” 70
0.11 2 0.22
3 Millennials and Generation Z are trending towards
healthier food options,32% of Millennials and 41% of
Generation Z are willing to pay more for healthier food.71
0.08 3 0.24
4 Millennials are more socially aware and responsible than
previous generations.72
0.06 1 0.06
5 About 16 million people in the United States are
vegetarian.73
0.04 2 0.08
6 Competitors such as Starbucks obtain 5% of their sales
through merchandise.74
0.03 1 0.03
7 The United States has the second largest Spanish
speaking population with 41 million native Spanish
speakers.75
0.03 1 0.03
8 The fast-casualmarket has grown 550% since 1999 and
currently accounts for 5% of all restaurant traffic.76
0.02 4 0.08
9 The build-your-own subcategory ofthe fast-casual
market has grown by 22% in the past year.77
0.02 2 0.04
10 Some fast-casualrestaurants,such as Starbucks have
begun to serve alcohol, which makes up 3-7% of sales.78
0.01 1 0.01
68
Friend, Elizabeth. "Fast Casual in International Markets:Where's the Opportunity?" AnalystInsight from Euromonitor
International. 22 May 2015. Web. 1 Oct. 2015.
69
70
"Panera Bread: Fast Growth Still Viable In U.S. Market." Seeking Alpha. Web. 28 Oct. 2015.
71
Watson, Elwood. "Younger Consumers Are Trending Toward MoreHealth-Conscious Eating." The Huffington Post.
TheHuffingtonPost.com, 9 Feb. 2015. Web. 1 Oct. 2015.
72
Hogan, Scott. "Millennials: The'800 Pound Gorillas' of Social Responsibility." Linkedin. 7 July 2015. Web. 2 Oct. 2015.
73
McClees, Heather. "16 Million Peoplein theUS Are Now Vegan or Vegetarian!" ISKCON News. 9 Oct. 2014. Web. 2 Oct.
2015.
74
Jones, Adam. "Starbucks' Lobby Sales Contribute5% To Revenues." Yahoo Finance. 30 Dec. 2014. Web. 2 Oct. 2015.
75
Burgen, Stephen. "US Now Has MoreSpanish Speakers than Spain – Only Mexico Has More." The Guardian. 29 June 2015.
Web. 1 Oct. 2015.
76
Ferdman, Roberto. "The ChipotleEffect: Why America Is Obsessed with Fast Casual Food."Washington Post. The
Washington Post, 2 Feb. 2015. Web. 1 Oct. 2015.
77
"Technomic: Build-your-own Concepts Fueling Fast Casual Growth." Pizza Market Place. 25 June 2015. Web. 1 Oct. 2015.
78
"Why "Fast Casual" Brands Are Making Alcohol Their CompetitiveEdge." Franchise Business Opportunities. 15 Dec. 2014.
Web. 1 Oct. 2015.

39
Threats Weight Rating Weighted Score
1 As of April 2015, Competitor Chipotle has 1,831 units79
while Panera has 1,946.80
0.12 1 0.12
2 Competitor Chipotle has more of an international
presence with stores in Canada, France, Germany, and
the United Kingdom.81
0.10 2 0.20
3 Competitors Starbucks and Chipotle saw an increase in
same store sales by 7%82 and 16.1%83 compared to
Panera's 3.3%84
0.06 1 0.06
4 Competitor Starbucks has a higher revenue growth rate of
10.16% and Chipotle has a revenue growth rate of
31.12% compared to Panera’s growth rate of 8.28%85
0.05 2 0.10
5 Starbucks invests in their employees a great deal and
offers opportunities to pay for their college education.86
0.05 1 0.05
6 Starbucks has a strongerbrand image due to their
emphasis on Corporate Responsibility87
0.03 1 0.03
7 There are not many barriers to entering the fast-casual
industry,making it easy for new competitors to enter the
market.88
0.03 2 0.06
8 Starbucks’ selling points, coffee and tea are “universal”
beverages.89
0.02 2 0.04
9 Food costs such as meat and dairy products are expected
to rise 4%90
0.01 2 0.02
10 An increase to minimum wage could eat into profits or
cause an increase in product prices.91
0.01 3 0.03
Total 1.00 1.62
79
Jones, Adam. "Chipotle’s Unit Growth:49 Additional Units in 1Q15." MarketRealist. 23 Apr. 2015. Web. 28 Oct. 2015.
80
"Our History." Panera Bread. Web. 28 Oct. 2015.
81
"Our Company." Chipotle. Web. 28 Oct. 2015.
82
Jones, Adam. "Starbucks' Worldwide Same-Store Sales Growth Remains Strong." Yahoo Finance. 27 Apr. 2015. Web. 2 Oct.
2015.
83
Jones, Adam. "ChipotleMexican Grill Sees MassiveSame-Store Sales Growth." Yahoo Finance. 10 Feb. 2015. Web. 3 Oct.
2015.
84
2 Oct. 2015.
85
"Panera Bread Company (PNRA) Revenue Growth." Wikinvest. 2015. Web. 1 Oct. 2015.
86
"Working at Starbucks." Starbucks Coffee Company. Web. 2 Oct. 2015.
87
"How To Create a Strong Brand Image & Effective Marketing Campaigns: Lessons From the Best."Mega. 23 Apr. 2015. Web.
2 Oct. 2015.
88
Shakoor, Hamzah. "The Growth of Fast Casual Dining." The Market Mogul. 25 June 2015. Web. 2 Oct. 2015.
89
Desilver, Drew. "Chart of the Week: Coffee and Tea Around theWorld." Pew Research Center RSS. 20 Dec. 2013. Web. 2
Oct. 2015.
90
Chang, Ellen. "Why Your Steak and Other Food Prices Are Still Rising This Year." MainStreet. 6 Jan. 2015. Web. 1 Oct.
2015.
91
Wolf, Connor. "Restaurants Will Suffer From An Increased Minimum Wage." The Daily Caller. 11 June 2015. Web. 2 Oct.
2015.

40
Appendix D
Internal Factors Evaluation

41
Strengths Weight Rating
Weighted
Score
1
Panera Bread has an annual income of
$161.5 million92
0.10 4 0.40
2
In 2016, 150 stores will have digital
ordering systems 93 and was recognized as
tech accelerator of the year 94 0.08 4 0.32
3
Panera Bread uses specific suppliers for
product 95
0.07 3 0.21
4
Summer 2015 premiered a new marketing
plan to reach a family target market96
0.06 3 0.18
5
Panera produced a “no, no” list of
ingredients removed from all food items in
all locations (summer 2015)97
0.06 4 0.24
6
Panera’s phone app currently offer mobile
ordering, and by 2016 will be able to order
in stores at tables.98
0.05 3 0.15
7
Growth Strategy Panera 2.0 has
implemented technology in select stores for
trial run.99
0.04 3 0.12
8
Panera uses cost and returns of scale
(increase production but not cost)100
0.02 4 0.08
9
Stock Price has consistently grown since
2013 101
0.02 3 0.06
10
Each season Panera has specific menu items
and options for its customer base.102
0.01 3 0.03
92
"Panera Bread Co Inc Class A." Growth, Profitability, and Financial Ratios for (PNRA) from Morningstar.com. Web. 4 Oct.
2015.
93
Horovitz, Bruce. "Panera Goes to High-tech Ordering." USA Today. Gannett, 13 May 2014. Web. 4 Oct. 2015.
94
Feldt, Brian. "Panera Wins Restaurant Industry’s Top Tech Award." St. Louis Business Journal. 30 Sept. 2015. Web. 29 Oct.
2015.
95
"Panera Bread. Food as It Should Be." Panera Bread Food As It Should Be. Web. 4 Oct. 2015.
96
97
"Our Food Policy: Transparent Menu." TransparentMenu. Web. 4 Oct. 2015.
98
Horovitz, Bruce. "Panera Goes to High-tech Ordering." USA Today. Gannett, 13 May 2014. Web. 4 Oct. 2015.
99
"Investor Relations." 2.0 Video. Web. 4 Oct. 2015.
100
Wilson, Jack. 2012. Web. 4 Oct. 2015.
101
"Starbucks Corporation (SBUX) Stock Chart." NASDAQ.com. Web. 29 Sept. 2015.
102
"Panera Bread Ordering Application." Panera Bread Ordering Application. Web. 4 Oct. 2015.

42
Weaknesses Weight Rating
Weighted
Score
1
Panera Bread does not have a presence
outside of North America103
0.10 1 0.10
2
Panera Bread has inferior customer service
in comparison to its competitor Starbucks104
0.09 1 0.09
3
Panera Bread’s Same-Store Sales growth
has been declining from 8.1% to 2.7%105
0.09 1 0.09
4
Panera Bread has not had a steady selling
point106
0.06 1 0.06
5
Customers are turning away from long
waiting times 107
0.04 1 0.04
6
Panera Bread mainly hires part-time
employees who are college-aged or
younger108
0.04 1 0.04
7
Panera Bread’s layout is not functional for
lines109
0.03 2 0.06
8
Panera Bread’s ticket, average check, per
customer grew 2% in the past year, but is
down overall from previous years where
growth was almost 6%.110
0.02 2 0.04
9
Must have a net worth of $7.5 million to
become franchisor111
0.01 2 0.02
10
Panera Bread’s mission statement is
vague112
0.01 1 0.01
Total 1.00 - 2.34
103
Lutz, Ashley. "McDonald's FutureIsn't about America Anymore." Business Insider. Business Insider, Inc, 18 June 2015.
Web. 5 Oct. 2015.
104
"Panera Bread’s Problem: Customers Are Walking Away from Long Lines." Corporate Intelligence RSS. Web. 5 Oct. 2015.
105
"Panera Bread: Sell This Jim Cramer Favorite At $192." Seeking Alpha. Web. 5 Oct. 2015.
106
"Panera Bread: Sell This Jim Cramer Favorite At $192." Seeking Alpha. Web. 5 Oct. 2015.
107
"Panera Bread’s Problem: Customers Are Walking Away from Long Lines." Corporate Intelligence RSS. Web. 4 Oct. 2015.
108
"Panera Bread Employee Earns Manager of the Quarter Award - Providence Business News." Providence Business News.
Web. 5 Oct. 2015.
109
"Panera Is Already Operating Beyond Capacity." Seeking Alpha. Web. 4 Oct. 2015.
110
"Welcome to Market Realist." Panera Bread's Traffic And Ticket Impact Same-Store Sales Growth. Web. 4 Oct. 2015.
111
"Franchise Information." Franchise Overview. Web. 4 Oct. 2015.
112
Panera Bread Company. Panera Bread Press Kit: Fourth Quarter 2006. N.p., n.d. Web. 29 Sept. 2015.
<http://www.firstpicksmgmt.com/files/en/user/news/news/file/6/Media_Kit_03-07.pdf>.

43
Appendix E
Financial Ratios

44
Liquidity Ratios 2012 2013 2014 Starbucks
in 2014
Chipotle
in 2014
Industry
in 2013
Current Ratio Current assets/Current
liabilities
1.725 0.998 1.152 1.37 3.58 1.57
Quick Ratio (Acid
Test Ratio)
Current assets-
inventory/ Current
liabilities
1.654 0.926 1.087 0.81 3.58 1.13
LeverageRatios 2012 2013 2014 Starbucks
in 2014
Chipotle
in 2014
Industry in
2013
Debt-to-Total-Asset
Ratio
Total debt/Total
asset
0.352 0.407 0.471 0.51 0.21 -
Debt-to-Equity Ratio Total debt/ Total
stockholders'
equity
0.543 0.687 0.889 1.04 0.27 -
Long-Term Debt-to-
Equity
Long-term debt/
Total
stockholders'
equity*
- - 0.136 0.39 0.14 -
Times-Interest-
Earned Ratio (Interest
Coverage Ratio)
Profits before
interest and taxes/
Total interest
charges
261.433 294.165 151.285 50.29 202.91 3.05
Activity Ratios 2012 2013 2014 Starbucks
in 2014
Chipotle
in 2014
Industry
in 2013
Fixed Assets
Turnover
Sales/Fixed Assets 3.287 3.150 2.833 4.9 3.97 -
Total Assets
Turnover
Sales/Total Assets 1.482 1.786 1.604 1.48 1.8 -
Accounts Receivable
Turnover Ratio
Net Annual Credit
Sales/
[(Beginning Accounts
Receivable + Ending
Accounts Receivable) /
2]
57.15 62.10 72.73 27.59 139.61 -
Average Collection
Period
(Days*Accounts
Receivable)/Credit Sales
7.51
days
5.04
days
5.27
days
14 days 3.09 days -
Operating Cash-flow
Ratio
Cash flow from
operations/ Current
1.043 1.149 0.950 0.2 2.47 -

45
Growth Ratios 2012 2013 2014 Starbucks
in 2014
Chipotle
in 2014
Industry in
2013
Sales Annual percentage
growth in total
sales
16.91% 11.97% 6.05% 10.45% 28% -
Net Income Annual percentage
growth in profits
27.58% 13.10% 8.60% 24800% 36.02% -
Earnings Per
Share
Annual percentage
growth in EPS
$5.94 $6.85 $6.67 27400% 34.96% -
Dividends Per
Share*
Annual percentage
growth in
dividends per share
- - - 23% - -
*Note 1 COGS= cost of foods and paper products+ fresh dough and other franchise cost
*Note 2 Panera bread does not indicate any long-term debt in 2013 and 2012
*Note 3 No dividend for this comp
Profitability Ratios 2012 2013 2014 Starbucks
in 2014
Chipotle
in 2014
Industry
in 2013
Gross Profit Margin Sales- cost of goods
sold*/ Sales
36.37% 36.41% 36.86% 58.30% 65.41% 52.20%
Operating Profit Margin Earnings before
interest and taxes
(EBIT) /Sales
15.06% 14.83% 12.43% 18.73% 17.30% 8.40%
Net Profit Margin Net income/Sales 9.23% 9.30% 8.04% 12.57% 10.84% -
Return on Assets Ratio Net income/ Total
assets
13.68% 16.61% 12.89% 18.57% 17.50% 4.50%
Return of Stockholders'
Equity
Net
Income/Shareholder's
Equity
21.10% 28.03% 24.35% 42.41% 25.09% -
Price-Earnings Ratio Market price per share/
Earnings per share
28.66 26.64 26.04 14.88 47.7 -
Earnings Per Share Net income/ Numbers
of shares of common
stock outstanding
$5.94 $6.85 $6.67 $2.75 14.13 -
Price-Sales Ratio Total Market
Capitalization/Revenue
of Current Year
2.42 2.24 2.13 3.55 5.46 3.77

46
Liquidity: Current Ratio indicates the company’s ability to use its current assets to cover its
short-term liabilities. Quick ratio offers a more conservative view to measure the ability to pay
off short-term liabilities since it excludes inventory, which is hard to liquidate.
Leverage: The debt-to-total-asset ratio of almost 0.5 indicates that half of the assets are financed
through debt, leading a healthy financial trend. The increasing debt-to-equity ratio over the past
three years reveals that Panera Bread has been taking more liability as a means of financing.
The abrupt decrease in times-interest-earned ratio is due to the increase in interest expense in
2014.
Profitability-Price: Earnings ratio measures the company’s current share price relative to its per-
share earnings. Price-Sales ratio measures the company’s total market capitalization relative to
its revenue of the current year.
Growth: Growth in sales reflects the company’s current status of performance. Although the
sales have been constantly growing, the rate of growth has decreased.

47
Appendix F
Matrices
Matrix 1: SWOT Matrix

48
The SWOT Matrix is the first of four matrices explaining what steps Panera Bread should take in
the future.
Strengths Weaknesses
1. Financially healthy with an annual
income of $161.5 million
2. Tech accelerator of theyear in the
food industry because of digital
upgrades including a digital ordering
system
3. High quality food from handpicked
suppliers
4. The Panera Bread “no-no” list for
ingredients not to include in food
products
5. Summer 2015 premiered a new
marketing plan to reach a family
target market
1. Panera Bread lacks a presence outside
of North America
2. Panera Bread has inferior customer
service in comparison to its
competitors.
3. Panera Bread’s Same-Store Sales
growth has been declining from 8.1%
to 2.7%
4. Panera Bread’s storelayout is not
functional for lines
5. Panera Bread does not have a steady
selling point
1. Fast-Casual markets are growing
internationally by as much as 30
percent
2. Room for National growth as Panera
operates only in 46 states
3. 32 percent of Millennials and 41
percent of Generation Z are willing to
pay more for healthy food
4. Millennials are more socially aware
and responsible than previous
generations
5. The fast-casual market has grown
550% since 1999 and currently
accounts for 5% of all restaurant
traffic.
SO Strategies
1. Expand presence to international
countries with growth in their fast-
casual markets (S1, O1)
2. Continue improving the menu
through offering healthy options and
removing food additives (S3, S4,
O3)
WO Strategies
1. Expand presence outsideof North
America
(W1, O1)
1. Competitor Chipotlehas more of an
international presence and operates in
Canada, France, Germany, and the
United Kingdom
2. 2. As of April 2015, Competitor
Chipotlehas 1,831 stores while Panera
has 1,946.
3. Competitors Starbucks and Chipotle
saw an increase in same store sales by
7%
and 16.1% compared to Panera's 3.3%
4. Competitor Starbucks has a higher
revenue growth rate of 10.16% and
Chipotlehas a revenue growth rate of
31.12% compared to Panera’s growth
rate of 8.28%
5. Starbucks invests in their employees a
great deal and offers opportunities to
pay for their college education.
ST Strategies
1. Expand Internationally (S1,T1)
2. Expand Nationally within the United
States (S1,T2)
WT Strategies
1. International expansion (W1,T1)
2. Improved customer service (W2,T3)
OpportunitiesThreats

49
Matrix 2: Space Matrix
For each of the four quadrants of the Space Matrix, four variables measure how well Panera
Bread and the fast-casual industry performs.

50
Matrix 3: QSPM Matrix
Strategy 1: International
Development
Strategy 2: Improve Service
Quality
Key Factors Weight Attractiveness Total
Attractiveness
Attractiveness Total
Attractiveness
Opportunities
Fast-Casualmarkets are growing
internationally by as much as 30
percent
0.19 4 0.76 -
Room for National growth as Panera
operates only in 46 states
0.15 - -
32 percent of Millennials and 41
percent of Generation Z are willing to
pay more for healthy food
0.10 - 2 0.20
Millennials are more socially aware
and responsible than previous
generations
0.07 - 2 0.14
The fast-casualmarket has grown
550% since 1999 and currently
accounts for 5% of all restaurant
traffic.
0.05 3 0.15 -
Threats
Competitor Chipotle has more of an
international presence and operates in
Canada,France, Germany, and the
United Kingdom
0.18 4 0.72 -
As of April 2015, Competitor Chipotle
has 1,831 stores while Panera has
1,946.
0.12 3 0.36 -
Competitors Starbucks and Chipotle
saw an increase in same store sales by
7% and 16.1% compared to Panera's
3.3%
0.07 2 0.14 -
Competitor Starbucks has a higher
revenue growth rate of 10.16% and
Chipotle has a revenue growth rate of
31.12% compared to Panera’s growth
rate of 8.28%
0.05 2 0.10 -
Starbucks invests in their employees a
great deal and offers opportunities to
pay for their college education.
0.02 - 2 0.04

51
Strengths Weight Attractiveness Total
Attractiveness
Attractiveness Total
Attractiveness
Financially healthy with an annual
income of $161.5 million
0.17 3 0.51 3 0.51
Tech accelerator of the year in the
food industry because of digital
upgrades including a digital
ordering system
0.14 - 3 0.42
High quality food from
handpicked suppliers
0.11 1 0.11 4 0.44
The Panera Bread “No-No” list
for ingredients not to include in
food products
0.08 - 4 0.32
Summer 2015 premiered a new
marketing plan to reach a family
target market
0.04 1 0.04 -
Weaknesses
Panera Bread lacks a presence
outside of North America
0.19 4 0.76 -
Panera Bread has inferior
customer service in comparison to
its competitors.
0.12 - 4 0.48
Panera Bread’s Same-Store Sales
growth has been declining from
8.1% to 2.7%
0.08 1 0.08 -
Panera Bread’s store layout is not
functional for lines
0.04 - -
Panera Bread does not have a
steady selling point
0.03 - -
Total 1.00 3.73 2.55

52
Appendix G
ProForma Statements

53
Assumptions
Renovation costs $85/sq. ft.
Average Panera Square
Footage
4,500 sq. ft.
Cost Per Store $382,500
Cost for All Panera Stores $744,345,000
Amount Needed Through
First Year
$372,172,500
Income Statement
2015 2016
Revenue $2,529,195,000 $1,953,803,138
COGS $1,982,376,000 $1,531,385,460
Gross Profit $546,819,000 $422,417,678
Gross Profit Margin
(GP/Rev)
21.62% 21.62%
Operating Expenses $270,876,000 $227,968,500
Operating Income $275,943,000 $194,449,178
Operating Margin 10.91% 9.95%
Total Other Income/Expenses $3,175,000 $1,500,000
Earnings Before Interest &
Tax
$279,118,000 $195,949,178
Interest Expense $1,824,000 $4,428,852.75
Income Before Taxes $277,294,000 $191,520,325
Taxes $98,001,000 $70,096,439
Net Income after Tax $179,293,000 $121,423,886
Dividends - -

54
Balance Sheet
Assets 2015 2016
Current Assets:
Cash and Cash Equivalents $196,493,000 $196,493,000
Short Term Investments -
Net Receivables $106,653,000 $106,653,000
Inventory $22,811,000 $22,811,000
Other Current Assets $80,209,000 $80,209,000
Total Current Assets $406,166,000 $406,166,000
Long Term Investments -
Property Plant and
Equipment
$787,294,000 $1,134,655,000
Goodwill $120,778,000 $120,778,000
Intangible Assets $70,940,000 $70,940,000
Accumulated Amortization - -
Other Assets $5,724,000 $5,724,000
Deferred Long Term Asset
Charges
- -
Total Assets $1,390,902,000 $1,738,263,000
Funds Required (Plug
number)
$146,235,386
Total Assets After Funds
Required
$1,884,498,386
(Liabilities Section Continued on Next Page)

55
Balance Sheet (continued)
Liabilities
Current Liabilities
Accounts Payable $19,511,000 $19,511,000
Short Term Debt - -
Other Current Liabilities $333,201,000 $333,201,000
Total Current Liabilities $352,712,000 $352,712,000
Long Term Debt $100,000,000 $472,172,500
Deferred Rent $67,390,000 $67,390,000
Deferred Income Tax $76,589,000 $76,589,000
Other Long Term Liabilities $58,027,000 $58,027,000
Total Liabilities $654,718,000 $1,026,890,500
Stockholder's Equity
Misc. Stocks Options
Warrants
- -
Redeemable Preferred Stock - -
Preferred Stock - -
Common Stock $3,000 $3,000
Retained Earnings $1,229,177,000 $1,350,600,886
Treasury Stock -$706,073,000 -$706,073,000
Additional Paid in Capital $214,437,000 $214,437,000
Other Stockholder Equity -$1,360,000 -$1,360,000
Total Stockholder's Equity $736,184,000 $857,607,886
Total Liabilities & SE $1,390,902,000 $1,884,498,386
EPS/EBIT Projection 2016
Recession Normal Boom
EBIT $162,637,818 $195,949,178 $264,531,390
Interest $0 $0 $0
EBT $162,637,818 $195,949,178 $264,531,390
Taxes $53,345,204 $62,703,737 $86,766,296
EAT $109,292,614 $133,245,441 $177,765,094
Numbers of Shares
Outstanding
26,825,121 26,825,121 26,825,121
EPS $4.07 $4.97 $6.63

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