I bought a little Panera Bread PNRA shares today. I have watched the stock for more than 6 months. This noon I went to the store at St. Charles Rock road as usual, and I saw the biggest crowd. After I ordered food, I can see and hear the associate calling the customer name (when food is ready) about every 20 to 30 seconds. It took me about 15 minutes to get my food, probablly a record for me. But I am not complaining here; I always see a large crowd during lunch hour there and today’s wait helped me make the decision to buy some stocks. I noticed this place is more popular than my old favorite lunch place Fazoli’s and there is reasons behind that: better food; people always want to be in the “crowded restaurant”, whether in China or the United States.
Here is a good introduction of Panera Bread.
The stock is trading at $56, about 32 times of earnings. The company is expected to grow EPS from 22% to 26% in next year. Normally we should not pay twice of the growth rate, so the stock is not very expensive. Panera is mainly a breakfast and lunch place, I usually get bagel and coffee in the morning, and have sandwich for the lunch. They tried to increase the dinner sales through the Crispani Pizza but it seems the effort was not successful. I believe that’s OK as long as another growth driver (expand geographically) still holds. Another positive is the lowering gas prices lately, which helps people have more “lunch money” to eat out. Panera does offer espresso and latte, but that part of sales can not be compared to the Starbucks. By the way, Starbucks seems doing very well lately with the new “drive through” stores.