Panera Bread Co. is continuing its refranchising efforts with PR Management Corp.’s recent announcement that it has acquired 29 company-owned units in Massachusetts.
The acquisition brings the total Panera holdings for PR Management Corp., based in Newton Lower Falls, Mass., to 64 units. PR Management already has Panera restaurants in Maine, Massachusetts and New Hampshire. The franchisee agreed to open 14 additional Panera units in those three states.
St. Louis-based Panera Bread has been progressing toward its goal of refranchising as many as 150 units. The company sold one café in the first quarter, and anticipated selling an additional 45 to 55 cafés in the late third quarter or early fourth quarter, said Mike Bufano, Panera chief financial officer.
Bufano told analysts during the company’s second-quarter earnings call that “we continually challenge ourselves to be our own internal activist,” and that the refranchising effort would cut general and administrative expenses by 5 percent.
“We continue to hold our strategic target for company-owned cafés to be between 35 percent and 50 percent of the system,” Bufano said. “We believe a balanced ownership portfolio allows us to weather the ups and downs of a full business cycle more effectively, much like companies with similar company-to-franchise mixes.”
The sale of the 29 Massachusetts units was completed in mid July, and included cafés in the Boston area, which is a mixed company and franchised market. The company sold the cafés for about $19 million, Bufano said during the call.
“The transaction included three Panera 2.0 cafés in the Boston market,” Bufano said. “While those cafés themselves are very profitable, the Boston market as a whole was well below our system average.”
"We are thrilled to begin integrating our new locations into PR Management Corp.," Mitchell Roberts, co-founder and CEO of PR Management, said in a statement.
Roberts and David Peterman co-founded PR Management in 1997.
“Taking ownership of these additional 29 bakery-cafés is certainly a testament to our ongoing growth as a company,” Peterman said.
For its most recent second quarter ended June 30, Panera reported a 14.8-percent decline in net income, which included special charges for refranchising initiatives and an insurance issue.
The company reported income of $41.9 million, or $1.60 a share, compared with $49.2 million, or $1.82 a share, in the same period a year ago. Revenue in the second quarter increased 7.2 percent, to $676.7 million, from $631.1 million a year ago.
Panera systemwide same-store sales rose 1.8 percent in the quarter, compared with the same period last year. Same-store sales increased 2.4 percent at company-owned bakery cafés, the company said, and grew 1.1 percent at franchised restaurants during the quarter.
As of June 30, Panera had 1,926 bakery-cafés in 46 states and Ontario, Canada, operating under the Panera Bread, St. Louis Bread Co. and Paradise Bakery & Café brands.
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