Panera Bread: Falling Comps Hurt Revenues
Panera Bread: Waiting for the Dough to Rise
How comps can hurt revenues at Panera Bread
Previously in this series, we discovered that Panera Bread’s (PNRA) earnings growth rate has declined over the past three years. In this section, we’ll look at one of the most critical factors driving the company’s revenues—comps or same-store sales.
In the chart above, you can see that the firm’s revenue growth rate has trended closely with its comps. Panera Bread’s comps don’t paint a good picture for investors. In previous parts of this series, we learned that the firm’s revenue growth rate started declining beginning in 2012. This is when comps also started declining. The chart above should make it clear why comps are so important.
Investors might consider investing in the broader Consumer Discretionary Select Sector SPDR Fund (XLY), which has returned 22.7% annually. XLY invests 4% of its portfolio in McDonald’s (MCD), 1.5% in Yum! Brands (YUM), and ~1% in Chipotle Mexican Grill (CMG).
Comps decline
In 1Q12, comps were 6.3%, but have declined in every quarter since, finishing the latest quarter at a mere 0.7%. Comps are made up of two components—traffic and ticket. Management has more control over ticket, which is the price and mix. We’ll talk about price and mix later in this series. In contrast, management has little control over traffic. Traffic refers to the number of customers visiting Panera Bread.
In the chart above, you can see the firm’s company-owned comps trend by traffic and ticket. Panera Bread has struggled with traffic since 2012. In every quarter since then, the number of people visiting Panera has fallen. In most quarters, ticket has been the driver for Panera’s comps, but, in more recent quarters, ticket growth has also decelerated.
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