May 2015 Matters discussed in this presentation and during our 2015 - - PowerPoint PPT Presentation

May 2015

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Matters discussed in this presentation and during our 2015 Annual Meeting of Stockholders, whether written or oral, relating to future events or our future performance, including any discussion, express or implied, on our anticipated growth, operating results, plans,

• bjectives, future earnings per share, investments, and the impact of our investments in

sales-building initiatives and operational capabilities on future sales and earnings, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These statements are

• ften identified by the words “believe,” “positioned,” "estimate,” “project,” “target,”

“plan,” “goal,” “assumption,” “continue,” “intend,” “expect,” “future,” “anticipate,” and

• ther similar expressions, whether in the negative or the affirmative, that are not

statements of historical fact. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict, and you should not place undue reliance on our forward-looking statements. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those discussed from time to time in our reports filed with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended December 30, 2014 and our quarterly reports on Form 10-Q. All forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this presentation or during our 2015 Annual Meeting of Shareholders are made only as of the date

• f this presentation and may change. While we may elect to update forward-looking

statements at some point in the future, we expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events or

• therwise.

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Panera Today

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

1,880 Bakery-cafes



80,000 Employees



45 States & Canada



$2.5 million AUVs



$4.5B System Sales



Multiple Consumer Solutions

As of FY2014 end

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 We offer multiple consumer solutions for diverse needs,

spanning day-parts, under one roof

 We own the “better” soup, salad and sandwich category,

serving food people trust and crave

 We are an authority in fresh-baked bread, allowing us to

serve an elevated dining experience

 Our bakery-cafe environment is a key part of the guest

experience

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Panera…A Track Record of Success

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38,318 39,150 38,668 39,239 39,926 42,852 44,313 46,676 47,403 47,655

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 System-Wide Average Weekly Sales

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Note: 2000 – 2007 system-wide comps based on sales from bakery-cafes that had been in operation or owned for 18 months, 2008 – Present system-wide comps based on sales from bakery-cafes that had an open date or had been owned 12 months prior to the start of the fiscal year

9.1% 5.8% 5.5% 0.2% 2.7% 7.8% 4.1% 1.6% 3.6% 2.2% 7.9% 4.0% 5.7% 2.3% 1.1% System-Wide Comps (1 year)

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(a) FY14 results for 758 company-owned Panera bakery-cafes opened before fiscal year end 2012 (excluding closed cafes) (b) Avg investment cost for 599 company-owned Panera cafes opened before fiscal year end 2012 (excluding closed cafes and acquisitions) (c) Cash-on-cash ROI for New Store Approval Framework is net of any cannibalization impact

(In Millions) Mature Store Base Average Returns (a) (b) New Store Approval Framework - 2nd Year Return Avg Net Sales/Unit $2.6 $2.4 Unit EBITDA $0.5 $0.4 Unit Margin 17.4% 15.9% Invested Capital Investment before OH $0.9 $1.4 Capitalized OH $0.1 $0.1 Investment including OH $1.0 $1.5 Cash-on-cash ROI (c) Mid-point Corporate ROI (before OH) 52.8% 19.5% Mid-point IRR 23.0%

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763 795 791 801 843 910 955 562 585 662 740 809 867 925

2008 2009 2010 2011 2012 2013 2014

Franchise Company

Total Number of Bakery Cafes

2014 AUV of $2.5M

1,325 1,380 1,453 1,541 1,652 1,880

Note: System % unit growth is net of café closings and franchise acquisitions.

1,777

2008 AUV of $2M

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Track Record of EPS Growth 24% 25% 30% 28% 27% 16%

• 2%

2008 2009 2010 2011 2012 2013 2014

Note: Fiscal 2013 included 53 weeks, while 2014 contained just 52 weeks

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PNRA BWLD CMG SBUX DRI EAT S&P

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Panera has delivered over the last fifteen years a total return of more than 4,000% to shareholders, compared to about 40% for the S&P 500. Over the past five years, the company has delivered a total return to shareholders of more than 100%, as compared to about 75% for the S&P 500.

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 38 franchise groups partner in our growth

– Over the past decade, they have built over 1,000 cafes with their capital

 Positive cash balances

– $110 million of free cash flow net of CAPEX in 2014

 Since 2010, we’ve deployed nearly $1B for share

buyback – ~10% of shares outstanding

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Setting Panera Up for an Even Stronger Future

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Revised “Concept Essence” to activate innovation in food, operations, marketing and store design Develop, prototype and iterate Panera 2.0 (for eat in and to go)

• Digital access
• Operational Integrity
• Deliver to table

Increase desirability

• f café

2 1 Improve guest experience in café (less friction) 3 Build capabilities that allow Panera to utilize its soup, salad, sandwich credibility and integrated digital access to expand into very large adjacent markets

• Unit growth: Traditional & infill growth (Delco)
• Catering ( through dedicated Hubs)
• Delivery
• CPG

Expand growth into adjacent $1B+ markets

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END

Café that is a better competitive alternative (Less friction / Greater desire)

MEANS (INITIATIVES)



2.0 (Digital access + Ops Integrity + Deliver to Table)



Concept Essence 2015 – “Craveable wellness”



Activating Innovation in:

• Food and bakery (brand reputation,

category credibility, excitement)

• Operations
• Marketing (new campaign + voice)
• Store design



Unit growth (traditional and in-fill with Delco)



Delivery



CPG



Catering (Hubs, benefiting catering and retail) Capabilities for expanded growth: “Hoovering” (Take share in adjacent $1B+ markets)

Byproduct: Sustained double-digit earnings growth

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Source: Goldman Sachs Global Investment Research

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THE NEW EAT-IN EXPERIENCE THE NEW TO-GO EXPERIENCE

Pic to Come Pic to Come

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GOOD BREAD

Bread is core to our heritage and must be an important symbol of our commitment to the intersection

• f Craveable Food and Wellness Ally. We will lead the Good Bread movement.

Craveable Food

(Through Soups, Salads, Sandwiches, Snacks, Beverages )

We offer craveable foods…the familiar made fabulous and engaging, adventuresome foods

• “Food worth going out
• f your way for”

Wellness Ally

We are a wellness ally that empowers and enables our guests to choose a path of (food) wellness

• “I trust that I am being

good to myself”

Everyday Oasis

We are an everyday

• asis for our guests
• “Panera is a place I

want to be”

Relationships and Warmth

We build relationships with our guests through warmth

• “Panera is of me”

“Wellness That’s Craveable” “Experience That’s Uplifting”

“Good eating brings out the best in all of us”

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 Half portions  Flatbreads  Broth Bowls  Clean foods – No artificial additives  Super Celebration 2: Clean salad dressings, Power

Kale Caesar, Mediterranean Chicken & Quinoa, Strawberry Poppyseed

 Super Celebration 3: Upgrade any sandwich to clean,

carved, slow-roasted turkey

 Whole grains

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Operations Delivering Extraordinary Customer Satisfaction

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 Kitchen display systems  Speed of service/throughput  Capacity  Staffing  Cafe Health  iBOH

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 New agency – Anomaly  New campaign  Voice – consistent across all channels  My Panera – ~ 19 million members

We are also innovating in store design Remodels & Relocations

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DESIGN as a differentiator and point of competitive advantage, solving for customer use, operator use, appropriate economics and consistency with Concept Essence 2015

OUR MISSION

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Store Design

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Store Design

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Store Design

Store Design

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Let’s take a deeper look at our initiatives to expand growth…

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Expanded Growth: New Bakery-Cafe Development

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Bakery-Café Development: Utilizing smaller, in-fill locations (Delco)

Expanded Growth: Delivery

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Delivery is an estimated $44B market…and one that represents a huge

• pportunity for Panera.

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Expanded Growth: Consumer Products

There are several large, relevant CPG categories in which our credibility is significant and in which our market share can grow significantly. Current Categories

• Refrigerated soup ($243M sub-category of the $4.1B total

soup category)

• Refrigerated salad dressing ($300M sub-category of the

$1.7B total dressing category)

• Refrigerated mac & cheese ($48M sub-category of the

$1.6B total mac & cheese category)

• Coffee ($4.5B category)

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Despite limited distribution, marketing & advertising, we have achieved sizeable shares in our initial categories.

We expect to grow distribution, increase velocity & enter new categories. 35% 20% 4% 0% 5% 10% 15% 20% 25% 30% 35% 40% Refrigerated soup Refrigerated Mac & Cheese Refrigerated salad dressing Panera CPG Market Share By Category - YE2014

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We also believe we are uniquely positioned to meet a critical customer need.

Consumer Need Simple, quick-to-assemble meals, using a handful of ingredients Panera’s Brand Equity Consumer loves and trusts the quickly assembled, high- quality meals they find at Panera bakery-cafes

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Panera at Home

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Expanded Growth: Catering Out of Cafes

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Our catering sales are constrained in retail stores.

• We have the largest catering sales in the restaurant

industry

• But we still have a less than 1% share of the total

catering market

• Catering is ~8% of Panera’s total sales
• Service suffers when associates have to leave the

counter to help catering customers or vice versa

• We can’t continue to grow catering out of the back of a

$50,000/week cafe

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Catering hubs can fuel retail and catering sales growth.

• Hubs relieve pressure on cafes during peak crunch

times

• When Hubs combine the volume of multiple cafes,

they reduce the sales volatility that makes catering difficult to execute

• Hubs provide capabilities to offer responsive service

and benefit from professional sales efforts

• Panera is following the Staples model with hubs

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END

Café that is a better competitive alternative (Less friction / Greater desire)

MEANS (INITIATIVES)



2.0 (Digital access + Ops Integrity + Deliver to Table)



Concept Essence 2015 – “Craveable wellness”



Activating Innovation in:

• Food and bakery (brand reputation,

category credibility, excitement)

• Operations
• Marketing (new campaign + voice)
• Store design



Unit growth (traditional and in-fill with Delco)



Delivery



CPG



Catering (Hubs, benefiting catering and retail) Capabilities for expanded growth: “Hoovering” (Take share in adjacent $1B+ markets)

Byproduct: Sustained double-digit earnings growth

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• Physical capabilities

– Panera 2.0, Hubs, Delco

• Technical Capabilities

– IT Investment – shows up as Capital / Depreciation and G&A

• Human Capabilities

– Adding experienced leaders to augment strong existing senior team

We recognize our ambitious plan creates short-term P&L pressure…to mitigate some of that pressure, we are taking a number of actions:

Buyback (up to $500 million of debt) Refranchising (50-150 cafes) Non-Strategic Cost Reduction

• Leverage through sales and digital utilization
• Structural (bakery-café savings)
• Core G&A (5% decrease in 2015)

A B C

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 Our goal is to build capabilities that will allow

us to drive double-digit expanded growth and earnings for many years to come

 Success will not be measured quarter over

quarter, but in multiple years of accelerated earnings growth

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Panera has evolved in the past…the byproduct of which is our 15-year track record of industry-leading performance…and with your support we will do it again.

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