Panera Bread Co. executives said Wednesday that the bakery-café chain would introduce pasta systemwide by the end of the first quarter, the result of tests over the past two years.
Ronald Shaich, chairman and co-chief executive of St. Louis-based Panera, said the pasta platform was among other culinary initiatives planned at the 1,652-unit chain, which reported Tuesday that fourth-quarter profit increased 34 percent from the prior-year period.
The company's culinary and catering initiatives of the past year contributed to a fourth-quarter systemwide same-store sales increase of 4.9 percent, with company-owned same-store sales rising 5.1 percent and franchised units increasing 4.7 percent. At company locations, transactions declined 0.3 percent year-over-year, but check averages rose 5.4 percent, the company said.
For the new pasta category, which has been in regional tests, Panera will initially roll out three pasta items systemwide, Shaich said. The dishes —tortellini alfredo, pesto saccottini (“purses”), and rustic penne Bolognese — will likely be permanent menu additions, according to the company.
“For more than two years, we have been at work developing several high-quality pasta offerings that fit within our production system and complement our soup and salad platforms," Shaich said.
The pasta dishes will be offered in two sizes and both will include a half salad or cup of soup.
In addition, the company is seeing success in convincing customers to trade up to items with higher prices. During 2012, the higher-priced “Signature” and hot sandwich categories performed well, Shaich said, adding that sales of those items increased 34 percent in the fourth quarter and 18 percent for year.
“The strong result in the quarter was the continued success of our roast and avocado BLT sandwich and the introduction of the Big Kid Grilled Cheese,” Shaich said. The Big Kid features Vermont Cheddar, Gruyere and American cheeses with applewood-smoked bacon.
“We saw an interesting trend with the Big Kid Grilled Cheese, which illustrates the power of the choice we provide our guests,” Shaich said. “Our initial belief was that the Big Kid Grilled Cheese would take share away from the other sandwiches, however we saw a lot of customers trading up out of café sandwiches to the Big Kid Grilled Cheese, which provided check growth.”
“We have a number of initiatives out there to leverage the customer experience and drive competitive advantage,” Shaich said. “It begins with some very exciting food initiatives this year. It follows with a range of marketing initiatives, including loyalty. And it gets intensified around our efforts at catering.”
The Panera loyalty program now has 13 million members and has aspects that “allow us to market to you in a very individual way,” Shaich said, citing the possibility of a sandwich reward for a regular breakfast customer or a sandwich to a regular lunch customer.
Catering efforts will be increased this year as well, the executives said, with more sales managers being hired and a new online ordering website. Panera’s catering grew to about 20 percent in 2012, said William Moreton, the company’s president and co-chief executive, and it made up 7.7 percent of sales for the year. Shaich added that is was “essentially non-cannibalizing of growth.”
Moreton also announced the hiring of Roger C. Matthews Jr., as Panera's chief financial officer, effective March 18. “Ron and I have known Roger for more than 15 years,” Moreton said. The CFO position had been filled by Pat Kelly on an interim basis since April 2012.
Matthews most recently served as managing director and sector head of the U.S. restaurant industry division of the Goldman Sachs Group Inc. investment-banking firm.
For the fourth quarter, which ended Dec. 25, Panera posted profit of $51.6 million, or $1.75 a share, rising from $38.6 million, or $1.31 a share, in the prior year. The year-earlier period included a one-time pre-tax charge of $5 million. Revenue grew 15 percent to $571.5 million.
Panera Bread owns and franchises units in 44 states and Ontario, Canada. It operates under the names Panera Bread, Saint Louis Bread Co., and Paradise Bakery & Café.
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