Panera Bread Co. said Wednesday that its strong third-quarter performance, which included double-digit growth in revenue and earnings, as well as a 5.8-percent jump in same-store sales, was driven by a focus on new marketing initiatives, catering and seasonal menu development.
The St. Louis-based company, which operates or franchises 1,625 restaurants, said its multi-year push to create a marketing function that company had never used before is starting to pay dividends, especially in tandem with catering and menu efforts.
For the quarter ended Sept. 25, net income increased 27 percent to $36.5 million, or $1.24 per share, compared with earnings of $28.8 million, or 97 cents per share, in the same quarter a year ago. Latest-quarter revenue totaled $529.3 million, an increase of 17 percent from revenue of $453.1 a year earlier.
Systemwide same-store sales increased 5.8 percent. At corporate-owned restaurants, which posted a third-quarter same-store sales gain of 6.2 percent, transaction growth rose 0.2 percent, while the average check increased 5.6 percent.
“We believe that a combination of our culinary skills, our increased and more powerful marketing activities, our expanded operational capabilities and the smart utilization of our size and scale will allow us to continue to provide a truly differentiated customer experience,” chairman and co-chief executive Ron Shaich said.
Looking ahead, co-chief executive and president Bill Moreton said the company is targeting a same-store sales growth rate of between 5 percent and 6 percent for the fourth quarter.
Panera has continued to increase its direct-marketing efforts, and the My Panera loyalty program currently totals about 12 million members. “The effort to build a real marketing function has been a multi-year effort for us,” Shaich said. “It is really starting to pay off.”
Catering is also becoming a “larger and larger percent of our business,” Shaich said. Catering sales increased 22 percent year to date, he said.
Panera’s menu has driven results as well, the company said, citing Panera’s “Summer Celebration,” during which seasonal items featuring avocado were promoted. The ChoppedCobb with Avocado and the company’s signature Strawberry Poppy Seed Chicken Salad spurred sales of Panera’s Signature, or premium, salads to grow 11.6 percent during the quarter. Panera’s signature sandwich sales grew 28 percent, driven by the Roasted and Avocado BLT offering.
“We strive to bring innovation and craftsmanship to our menu items,” Shaich said, adding that a turkey and cranberry sandwich, emulating a Thanksgiving dinner, would be on the fourth quarter’s seasonal menu. A grilled cheese sandwich, made with various high-end ingredients, including Gruyere and white cheddar and bacon, will also be featured.
“We believe that our multi-year strategy of continuing to invest in the quality of our customer experience will continue to drive earnings growth into the future,” Moreton added.