In the last part of this series, we discussed how Panera Bread Company (PNRA) had a disappointing operating income. Let’s see what could have led to this result.
When a restaurant reports weak or flat earnings, the first place to look is same-store sales. See our Chipotle Mexican Grill (CMG) series here to learn more about same-store sales.
Same-store sales for company-operated and franchised restaurants
The company reported same-store sales growth of 0.10% compared to 3.8% in the corresponding quarter in 2013. Franchise same-store sales were -0.2% compared to same-store sales growth of 3.5% in the second quarter of 2013.
Panera’s peer Chipotle Mexican Grill (CMG), another fast-casual restaurant chain, saw same-store sales growth of 17.3% in the second quarter. Fast food chain McDonald’s (MCD) recorded same-store sales growth of 1.5% in the U.S., and Wendy’s (WEN) recorded growth of 3.3%.
If you’re looking to invest in a mix of restaurants but want to avoid company-specific risks, then you may consider an exchange-traded fund (or ETF) like the Consumer Discretionary Select Sector SPDR Fund (XLY).
Same-store sales are further driven by the number of customers (or traffic) and the ticket (or average check). Traffic grew 0.4%, which was offset by a decline in ticket by 0.3% in the quarter. Let’s look at this result in more detail in the next part of this series.