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How Is Panera Bread Planning to Expand Its Business?

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4Q15 unit growth

After discussing same-store sales growth in the previous article, now we will discuss another revenue driver: unit growth. For expansion, Panera Bread (PNRA) is focused on both franchising and opening new company-owned restaurants.

In 4Q15, the company’s unit count has increased from 1,956 to 1,972, an increase of 26 units, with franchise-operated restaurants increasing by 56 units. The company-operated restaurants decreased their unit count by 30 units due to refranchising.

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Panera 2.0 upgrade

In 2015, PNRA upgraded 304 restaurants to Panera 2.0, with 227 of these being upgraded in the third and fourth quarters of 2015. By the end of 2015, 410 restaurants were upgraded to Panera 2.0.

Outlook for 2016

In fiscal 2016, Panera Bread (PNRA) is set to open 90–100 new restaurants, with the majority of new openings being company-operated restaurants. Also, the company has set to convert 200 of its company-operated restaurants to Panera 2.0. The company management is expecting to spend $200 million–$225 million for these initiatives. Also, Panera Bread’s management expects around 100 of the franchise-operated restaurants to be upgraded to Panera 2.0 in fiscal 2016.

Having discussed Panera Bread’s revenues and revenue sources, we will discuss the company’s EBITDA margins in our next article.

Alternatively, you can gain exposure to Panera Bread (PNRA) by investing in the iShares Russell Mid-Cap Growth ETF (IWP), which has invested 0.19% of its portfolio in PNRA. IWP has also invested 0.235% in Domino’s Pizza (DPZ), 0.16% in Dunkin Brands (DNKN), and 0.11% in Brinker International (EAT).

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