Partial Example #2 for Panera Case part 1 analyis
Excludes answers to #3 and 4, which were covered in the earlier example Item 1
The company’s mission statement, although I think of it more as a slogan, is “A loaf of bread in every arm.” The company is on a mission to extend the consumption of their baked products broadly in the areas where they operate. Their strength in this mission comes with their strategic locations in high traffic urban areas. These locations enable them to service both the shopping customer base, but also the business base co-located in these high traffic areas. Their vision is one that their customers will love freshness of their products and the tastiness of their offerings to the degree that they will be driven to visit their stores repeatedly and often. Panera believes that the values they provide their customers are: creating wholesome healthy foods, maintaining affordable prices, to always innovate, and respect for both customers and employees. Bread is a staple of life and Panera believes that by them enhancing the flavorful menu offerings around bread, then they will increase their base market for baked goods served by Panera outlets and franchises. As a customer of Panera, I can tell you that their product offerings are so flavorful that they are a strength to their business. There are two areas where the slogan or vision appear to deviate from the text; 1) overly broad language; and 2) rather generic. That said, we are talking about bread; and bread is the single most important staple for human life, next to rice. It works. One of Panera’s strategic objectives is to expand their product line, creating further distance between them and their rivals, and to increase their sales in foreign markets. They will achieve that strategic objective as a result of continued investment and focus in five key business areas: 1) the quality of their food, 2) their increased marketing expenditures, 3) the rollout of their MyPanera loyalty program, 4) the growth of their catering business, and 5) the quality of their operations and their people. We believe that success in these five areas will place Panera at the top of the list of the very best companies in our industry; and are a direct result of continued investment in the quality of our customers’ experience to help drive product differentiation and thus provide Panera a competitive advantage among its peers. The investments that were made over the last three years have driven Panera’s results in 2011 and they believe the investments that were made in 2011 position them well for the future. Item 2:
The company’s financial objective is to have long-term operating earnings growth target of 12-17% per year. In 2011, Panera had a very good year. Their Earnings per Share (EPS) grew 28%. This was their fourth consecutive year that their EPS has grown 24% or greater; which is above the upper end of their long-term earnings growth target. Their performance in 2011 was driven both by their strong operating performance as well as their ability to generate EPS growth through deployment of their excess capital. Earnings growth of approximately 20% was driven by core operations, which was above their long-term operating earnings growth target of 12-17%. Additionally, an incremental 8% earnings growth was driven by the more than $400 million of capital they deployed to make acquisitions (25 new stores) and to repurchase shares. The key to their achieving core operating earnings growth is their ability to grow their bakery-cafe sales. In 2011, their Company-owned bakery-cafe sales increased 4.9% vs. 2010, and rose to 12.4% on a two-year basis. They also celebrated the opening of their 1,500th store, nationwide. This, coupled with their debt free position, they believe these results will put them among the very best in their industry and are a direct result of continued investment in the quality of their customers’ experience to drive...
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