Will Panera Bread Keep Rising after Its 1Q16 Earnings?
Panera Bread (PNRA) earns its revenue from three sources—revenue from company-operated restaurants, royalty and franchise fees collected from franchisees, and fresh dough operations. The revenue generated from company-operated restaurants forms more than 85% of the company’s overall revenue.
Wall Street analysts expect Panera Bread to post 1Q16 revenue of $674.1 million—growth of 3.9% from $648.5 million in 1Q15. It forms 0.08% of the holdings of the iShares Russell Mid-Cap ETF (IWR). The revenue growth in 1Q16 is expected to be driven by same-store sales growth and unit growth. More restaurants being converted to Panera 2.0, the enhanced usage of technology, and expansion of its business to various delivery services compelled analysts to forecast positive same-store sales growth in 1Q16.
An increase in the number of franchised restaurants is expected to increase the revenue generated through the franchise fee, royalty, and revenue from fresh dough operations. However, a reduction in the number of company-operated restaurants due to refranchising is expected to offset some of the revenue growth. In the next few parts, we’ll discuss the revenue drivers.
During 1Q16, Panera’s peers such as Chipotle Mexican Grill (CMG), Shake Shack (SHAK), and Brinker International (EAT) are expected to report revenue growth of -20.2%, 37.8%, and 7.9%, respectively.
Panera Bread’s management set guidance for revenue growth of 4.5%–6.5% for fiscal 2016. In 2016, analysts are expecting the revenue to be $2.8 billion. This would represent growth of 4.6% from $2.7 billion in 2015.
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