Why Are Analysts Optimistic about Panera’s 2017 Revenue?

Analysts expect Panera Bread (PNRA) to post revenue of $3 billion in 2017, which represents a growth of 7% from the $2.8 billion reported in 2016.

The company expects to add 70 to 80 new restaurants in 2017, and same-store sales growth (or SSSG) of 3.5%–4.5%. These factors are expected to drive Panera’s revenue in 2017.

Also, the company expects more than 35% of company-owned restaurants and 75% of franchised groups to launch delivery service by the end of 2017. A total of 80% of franchised restaurants are expected to have Panera 2.0 by the end of 2017. These developments, along with menu innovations, marketing, and promotional offers, are expected to drive the company’s SSSG in 2017.

Panera had removed all artificial ingredients from its menu items and packaged products by the end of 2016, and has been conveying this to its customers through its “100% of our food is 100% clean” campaign since January 9, 2017. The marketing campaign includes TV commercials, billboards, and staff t-shirts highlighting the message. Along with Panera’s loyalty program, MyPanera, these changes are expected to contribute to Panera’s 2017 revenue growth.

Analysts expect Chipotle Mexican Grill (CMG) and Shake Shack (SHAK) to post revenue growth of 17.4% and 33.3%, respectively. Next, we’ll look at Panera’s 4Q16 EBIT (earnings before interest and tax) margins.