from a longtime customer and long
You are a B A K E R Y ... C A F E
High margin, premium products with mass appeal. Great coffee, breads, bagels, muffins, sandwiches, cookies, cakes etc. Ditch the cheap flimsy coffee cups and repackage. Bakery products are HIGH MARGIN. PNRA doesn't have what I need so I spend a fortune at my local bakery for biscotti, cakes and cookies for dinner parties, family birthdays etc.... I'm talking like $20 for a box of these (probably 60-70% margin for the bakery). I'd be happy to buy them from PNRA for 11.99 if they improved this area.
Keep prices up ... don't ever get into a discount trap like fast food. Win on superior product and find other creative ways to get butts in the stores.
Forget dinners and pizza in most locations. Close earlier and save money (my local open until 10:00, with 6 people working the front, and 5 customers there past 8 !!!!) I care more about same store INCOME, not revenue. Dinner can not be profitable unless you are in a prime location.
What is next... burgers and fries?
While some of what you wrote is correct, PNRA is suffering from others invading their turf. I don't drink coffee, so I don't know SBUX (sadly) but I have noticed they've added food items to their locations. While this might be a case of "diworsefication" for them, it definitely poses a challenge to PNRA. PNRA also has been around for a while in some markets. While many don't recognize this, once a location has been open for 3 or 4 years it starts to max out, and then the SSS #'s are under pressure. Finally, that afternoon slot is killing them. I've always wondered how the 2-4 PM "chill out" time would work for them, and now it appears it doesn't. I see it here at Covelli locations in Cleveland. They pack 'em in in the AM and for lunch. Then it dies. I'm not sure there's a cure for that.
Back to SBUX for a moment. SBUX are reproducing like bunnies. They're everywhere. That hurts PNRA big-time, because SBUX becomes THE place to stop mid-afternoon for a quick (and way, way, WAY overpriced) latte and a chit-chat. That steals customers from PRNA during those slower time slots, who try as they might will not steal hot/chilled beverage share from SBUX, which has become an institution (just like SBUX will not steal bread business from PNRA).
Another issue, which is the one that is really overlooked, is the consumer is just plain maxed out right now. The fall in home (and now stock) prices is starting to weigh on the consumer. Yes, they still want to consume, but it's paring back where it can. Many have read my observations on buying habits in a restaurant. What I see going on today is a repeat of 6 or so years ago (right after the tech bubble). Olive Garden still fills their restaurants, but the average table check, adjusted for price increases (which are somewhat fooling investors, by the way), are actually down. People are skipping extras, eating more "unlimited" bread and salad, and saving some scratch that way. I plan on visiting other sitdown midrange restaurants during the next few weeks, but I'm willing to bet this is playing out all over the U.S. I was at Maggiano's (wonderful Brinker restaurant) last week and even there I saw more "a la carte" ordering, cutting back on the big "family style" spend of $30 per head. One of the waitstaff admitted they saw this going on (always talk with the waitstaff - the best stock information you will ever get for free).
I don't know. My crystal ball is always fuzzy, but sometimes you see trends like this that just scream out at you.
PS - one thing I have wondered. Why the heck doesn't SBUX just buy PNRA and leverage their bakery network to help fill their SBUX with limited PNRA fare, even if it's rebranded? Talk about a match made in heaven.....
I have non-longed SBUX twice and would do so unflinchingly for the 3rd time should that overVALued POS sniff $40 again. Buy PNRA?!? With what currency? The Board plus the investing communiy would have mgmt's head! SBUX experiencing what it deserves --- fundamental overVALuation and enough time for the makret to understand and correct itself. Same with PNRA (plus others). This is a wonderful event for those with a sense of VALuation, patience, and $$$$. More to come. I continue to be surprised it has taken the market this long to realize the criminal behaviour of Greenspan's actions......Good luck to all.......
BTW I am more shocked at the rumor of IHOP buying Applebees. Now that is a diworseification!!!! GLTA........
Great post. I've always suggested, thought it was a great idea YEARS ago, that PNRA and SBUX should be under the same corporate roof. What a combination that would be. Or at least serve SBUX coffee at PNRA. Wow. Imagine.
Cheers to All,
The product has deteriorated since the early days. I was in a store today in Lake Forest, CA. The food was so-so. Two out of two orders were wrong. I ordered a sandwich with no mayo and the other with mayo and mustard on the side. Both sandwiches came dry. The napkins shred, sprinkling little bits of paper dust all over a dark suit. The mens room had paper overflowing the trash bins. What's going on? One you lose your product, it's all downhill.
Agree. Sandwiches are not made like ordered i:e no onion come with onion, often out of desired breads, not enough service people, flimsy napkins and the worst of all skimpy sandwiches (mostly bread).
Yes, good post. I do think they really need to improve their coffee. And give some more options. This will bring in lots of customers. I just don't understand why they don'6 understand that if they improve their coffee. They will grow like crazy.
I agree they need to focus on fundamentals. But the area that needs improvement the most is the coffee. They beat all the rivals everywhere else, but several of the coffee-centric places, especially Starbucks, just have better coffee. This should not be hard to fix.
You are right. However, reality is hitting Panera in the face, disposable income for "fluff" is going bye-bye. The cost of "needs" is rising and the "yuppie" consumer can no longer afford to buy these luxary items.
Panera's golden days are over, they wont go away, they will just steadily decline.
I agree with you in theory but disagree with regard to PNRA. PNRA will just grow slower that anticipated but it will grow. This is still a small chain. "Casual" food is the last thing to go if you need to cut out "fluff". Switching from PNRA to home bought coffee, bagels won't save you much. If you want to save ... you will cut vacations, gas use, scale back on cable channels, alcohol (or at least expensive alcohol), turn the A/C to 74 vs 70, mow your own lawn ... all more meaningful and would save hundreds. I'll still enjoy my breakfast and good coffee on the way to work, and a decent lunch even if it costs me $20 more per week.
If it is this bad we should be short the entire market. Just yesterday Bernake discussed growth resuming.