ST. LOUIS — Citing capacity and throughput limitations, Panera Bread Co. predicts flattened sales in the fourth quarter.
The company reported a 17% increase in net income and an 8% growth in revenues during the third quarter ended Sept. 24, with average weekly sales up more than 20% over the past five years. But comparable store sales rose 1.7%, falling below the company’s expectations.
“As one might expect, our recent comp performance has led to a great deal of self-examination and a thorough review of how we compete and how we operate our business,” said Ron Shaich, chief executive officer. “Based on this review, we have now concluded that operational friction, including capacity and throughput constraints, along with a less differentiated experience not only limits our ability to grow transactions today but could also inhibit our ability to benefit from a number of potentially significant transaction-driving initiatives, including national advertising and enhanced access for customers, that are being readied to begin roll out in 2014. Thus, we are taking a number of deliberate steps to improve our operational capabilities and our competitive position and that we believe will allow us to best meet the demand that exists for the Panera experience today and in the future.”
The company’s net income during the quarter was $42,762,000, equal to $1.49 per share on the common stock, compared with $36,515,000, or $1.25 per share, during the prior-year period. Net revenues climbed to $572,480,000 from $529,338,000 during the same quarter last year.
During the quarter, Panera Bread opened 17 new bakery-cafes and franchisees opened up 15, adding to a system-wide total of 1,736 units as of Sept. 24.Panera revised its target for company-owned comparable net bakery-cafe sales for the fourth quarter to be flat to 2% growth, down from its previous growth target of 3% to 5%.