PANERA BREAD 2012
Introduction and Recommendation
Panera Bread operated 1,541 company owned and franchised bakery-café in 42 states, the district of Colombia, and Ontario, Canada, under the Panera bread Co. and Paradise Bakery and Café. By the end of 2015, Panera had 1,972 company-owned or franchised bakery-cafes.
Based on acceptance of the brand and real estate availability, we believe Panera can add 1,200 new locations the next 10 years, implying 3,200 locations by the end of 2025. (Morning star)
Panera Bread baked more specialty bread everyday than any other restaurant, bakery-café in North America, and it was viewed as the fastest growing “fast-casual” restaurant in the industry.
Problem Formulation
Panera’s goal is to make its bakery-cafe …show more content…
Panera Bread Company has aggressive grow strategy, they are expected to grow at15-20%. They have target market of affluent Suburbanites, particularly the baby boomers who are willing to spend on healthy and quality food with relaxed dining experience. There is a big demand from the customers for healthier and more nutritious menu offering, whole grain bread was introduced in 2004, and using organic all natural ingredients.
Panera has succeeded in creating value for its customers by providing comfortable, relaxed environment with perceived high quality made to order food. They have provided dining experience one step ahead, where people come every day to relax. …show more content…
EV/EBITDA – I would use Buffalo Wild Wings multiple of 9 multiplied by the most current EBITDA of 376 = $3,384,000 as a starting offer. There are too many internal red flags, poor recent quarter earnings, and analysis consensus estimating underperformance compared to competitors and the market.
2. P/E – I’d use the average P/E for PNRA of 28.68 and multiply that by the most current earnings per share of 5.79 to get a share price of $166.06. Using total weighted outstanding shares of 25,788, one can find the market capitalization of 4,280,808.
Given these two valuation metrics, a fair starting offer would exist in between the two. Given this is below the market capitalization and enterprise value, it is unlikely the offer would be seriously considered or accepted. Again, far too many red flags, fierce competition, and poor performance risk a loss of investment in this company.
Recommendation
No, we will not buy Panera Bread:
Insiders selling, analysts are not expecting growth and profitability is lower than competitors, yet multiples are higher than competitors indicating overvaluation.
Alternative Perspective
Expand and open Panera Bread internationally to increase growth and profit.
Manage costs accordingly.
Margins are not as attractive as competitors and continue to decrease year over
Introduction and Recommendation
Panera Bread operated 1,541 company owned and franchised bakery-café in 42 states, the district of Colombia, and Ontario, Canada, under the Panera bread Co. and Paradise Bakery and Café. By the end of 2015, Panera had 1,972 company-owned or franchised bakery-cafes.
Based on acceptance of the brand and real estate availability, we believe Panera can add 1,200 new locations the next 10 years, implying 3,200 locations by the end of 2025. (Morning star)
Panera Bread baked more specialty bread everyday than any other restaurant, bakery-café in North America, and it was viewed as the fastest growing “fast-casual” restaurant in the industry.
Problem Formulation
Panera’s goal is to make its bakery-cafe …show more content…
Panera Bread Company has aggressive grow strategy, they are expected to grow at15-20%. They have target market of affluent Suburbanites, particularly the baby boomers who are willing to spend on healthy and quality food with relaxed dining experience. There is a big demand from the customers for healthier and more nutritious menu offering, whole grain bread was introduced in 2004, and using organic all natural ingredients.
Panera has succeeded in creating value for its customers by providing comfortable, relaxed environment with perceived high quality made to order food. They have provided dining experience one step ahead, where people come every day to relax. …show more content…
EV/EBITDA – I would use Buffalo Wild Wings multiple of 9 multiplied by the most current EBITDA of 376 = $3,384,000 as a starting offer. There are too many internal red flags, poor recent quarter earnings, and analysis consensus estimating underperformance compared to competitors and the market.
2. P/E – I’d use the average P/E for PNRA of 28.68 and multiply that by the most current earnings per share of 5.79 to get a share price of $166.06. Using total weighted outstanding shares of 25,788, one can find the market capitalization of 4,280,808.
Given these two valuation metrics, a fair starting offer would exist in between the two. Given this is below the market capitalization and enterprise value, it is unlikely the offer would be seriously considered or accepted. Again, far too many red flags, fierce competition, and poor performance risk a loss of investment in this company.
Recommendation
No, we will not buy Panera Bread:
Insiders selling, analysts are not expecting growth and profitability is lower than competitors, yet multiples are higher than competitors indicating overvaluation.
Alternative Perspective
Expand and open Panera Bread internationally to increase growth and profit.
Manage costs accordingly.
Margins are not as attractive as competitors and continue to decrease year over