We believe Panera Bread Co. (PNRA) remains well positioned to reinvigorate brands, revitalize comparable store sales and accelerate unit growth in the long run. The introduction of a new menu, increased positive impact from media support, traction to off-premises catering program and faster recovery of higher-end consumers promises further growth.
Most importantly, Panera expects commodity inflation to cool down as the year progresses. We find Panera's second-quarter earnings and revenue beat, raise in full-year guidance for two consecutive quarters, the expectation of continued margin improvement and pricing power quite encouraging.
A more stable traffic growth compared to its restaurant peers also raises optimism. Hence, we upgrade our recommendation from Neutral to Outperform.
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