Panera Bread Company Reports Q3 2013 Diluted EPS of $1.48, up 19% Versus Q3 2012

		Company-owned			Franchise-operated			Total System
Bakery-cafes as of June 25, 2013		835			873			1,708
Bakery-cafes opened		17			15			32
Bakery-cafes closed		(2	)		(2	)		(4	)
Bakery-cafes as of September 24, 2013		850			886			1,736

Excluding urban bakery-cafes, average weekly sales ("AWS") for Company-owned new bakery-cafes through the third quarter fiscal 2013 were $44,779 compared to $42,642 in the same period of fiscal 2012. Including urban bakery-cafes, AWS through the third quarter fiscal 2013 was $45,205 compared to $47,438 in the same period of fiscal 2012. AWS for franchise-operated new bakery-cafes through the third quarter fiscal 2013 was $48,432 compared to $47,680 in the same period of fiscal 2012. 

A schedule of the third quarter fiscal 2013 AWS is attached to this release as Schedule II.

Use of Capital

During the third quarter fiscal 2013, the Company repurchased 1,022,186 shares at an average price of $169.76 per share for an aggregate purchase price of approximately $174 million. The share repurchases had an approximate $0.02 per diluted share favorable impact on the Company's third quarter fiscal 2013 earnings per diluted share. The Company also repurchased 432,300 additional shares at an average price of $160.55 per share for an aggregate purchase price of approximately $69 million during the first 27 days of the fourth quarter fiscal 2013. The Company had approximately $317 million remaining under its existing $600 million repurchase authorization after these subsequent repurchases.

Fourth Quarter Fiscal 2013 Outlook

Diluted EPS Target

The Company is revising its target range for fourth quarter fiscal 2013 diluted earnings per share to $1.91 to $1.97 from its previous target of $2.05 to $2.11, which would represent an increase of 9% to 13% in the fourth quarter fiscal 2013 versus the comparable period in fiscal 2012. This diluted earnings per share target includes approximately 700 basis points of favorable impact for the 53rd week in fiscal 2013, but does not assume any additional share repurchases beyond those disclosed in this release under the Company's repurchase authorization.

The fourth quarter fiscal 2013 diluted earnings per share target includes the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth

The Company is revising its target for Company-owned comparable net bakery-cafe sales for the fourth quarter fiscal 2013 to be flat to growth of 2.0% from its previous growth target of 3.0% to 5.0%. The Company announced today Company-owned comparable net bakery-cafe sales in the first 27 days of the fourth quarter fiscal 2013 were up approximately 1.6%.

Operating Margin Target

In the fourth quarter fiscal 2013, the Company anticipates its operating margin will be down 100 to 150 basis points on a year-over-year basis. This target reflects both previously disclosed incremental investments to provide greater access for customers and to improve the Company's core enterprise systems, as well as incremental investments to enhance our operational capabilities in our bakery-cafes.

Full Year Fiscal 2013 Outlook

Diluted EPS Target

The Company is narrowing its target range for fiscal 2013 earnings per diluted share to $6.77 to $6.83, which would represent an increase of 15% to 16% versus fiscal 2012. This diluted earnings per share target includes approximately 200 basis points of favorable impact for the 53rd week in fiscal 2013, but does not assume any additional share repurchases under the Company's repurchase authorization beyond those disclosed in this release.

This full year fiscal 2013 diluted earnings per share target is based on the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth

The Company is revising its target for Company-owned comparable net bakery-cafe sales growth for fiscal 2013 to 2.0% to 2.75% from its previous target of 3.0% to 5.0%.

Operating Margin Target

For fiscal 2013, the Company expects operating margin will be flat to down 50 basis points when compared to fiscal 2012. This target reflects the anticipated initiatives discussed in the fourth quarter fiscal 2013 operating margin outlook.

New Bakery-Cafe Development and AWS

The Company now expects to be slightly above the high-end of its previous range of 115 to 125 system-wide new bakery-cafe openings in fiscal 2013. The average weekly net sales performance for new Company-owned bakery-cafes is now expected to be at or above the high-end of the previously provided targeted range of $40,000 to $42,000 for fiscal 2013.

Initial Full Year Fiscal 2014 Outlook

The Company intends to provide more detailed guidance for fiscal 2014 in February 2014 when it reports fiscal 2013 results. The Company is initially targeting fiscal 2014 earnings per diluted share below the low-end of the long-term growth target of 15% to 20%. The Company will provide further detail on its third quarter fiscal 2013 earnings conference call scheduled for October 23, 2013.

Concluding Comment

Ron Shaich, CEO, commented, "Panera generated the highest system wide year-to-date average weekly sales in its history. Indeed, average weekly sales at Panera through this quarter are up over 20% over the last 5 years. As well, new cafes in the class of 2013 generated sales volumes that are among the highest in our history. This speaks to the extraordinary affection customers have for Panera. However, it is also true that in the third quarter comparable store sales rose just 1.7%. While these comparable store sales continue to be above average for the industry, they are below our 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."
Shaich continued, "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."

Notes:

The Company will host a conference call that will be broadcast on the Internet at 8:30 A.M. Eastern Time on Wednesday, October 23, 2013 to discuss the third quarter fiscal 2013 results, preliminary comparable net bakery-cafe sales results for the first 27 days of the fourth quarter fiscal 2013, earnings targets and business outlook for the fourth quarter and full year fiscal 2013, and full year targets for fiscal 2014. To access the call or view a copy of this release, go to http://www.panerabread.com/investor. Access to the call will be made available for 14 days, and the release will be archived for one year.

The Company includes in this release information on Company-owned, franchise-operated, and system-wide comparable net bakery-cafe sales percentages. Company-owned comparable net bakery-cafe sales percentages are based on net sales from Company-owned bakery-cafes included in base store bakery-cafes. Franchise-operated comparable net bakery-cafe sales percentages are based on net sales from franchised bakery-cafes, as reported by franchisees, that are included in base store bakery-cafes. Acquired Company-owned and franchise-operated bakery-cafes and other restaurant or bakery-cafe concepts are included in the Company's comparable net bakery-cafe sales percentages after it has acquired a 100 percent ownership interest and if such acquisition occurred prior to the first day of the Company's prior fiscal year. Comparable net bakery-cafe sales exclude closed locations.

The Company does not record franchise-operated net bakery-cafe sales as revenues. However, royalty revenues are calculated based on a percentage of franchise-operated net bakery-cafe sales, as reported by franchisees. The Company uses franchise-operated and net system-wide sales information internally in connection with store development decisions, planning, and budgeting analyses. The Company believes franchise-operated and net system-wide sales information is useful in assessing consumer acceptance of its brand; facilitates an understanding of its financial performance and the overall direction and trends of sales and operating income; helps the Company appreciate the effectiveness of its advertising and marketing initiatives which its franchisees also contribute based on a percentage of their net sales; and provides information that is relevant for comparison within the industry.

About Panera Bread Company

Panera Bread Company owns and franchises 1,736 bakery-cafes as of September 24, 2013 under the Panera Bread®, Saint Louis Bread Co.®, and Paradise Bakery & Café® names. Our bakery-cafes are principally located in suburban, strip mall and regional mall locations. We feature high quality, reasonably priced food in a warm, inviting, and comfortable environment. With our identity rooted in handcrafted, fresh-baked, artisan bread, we are committed to providing great tasting, quality food that people can trust. Nearly all of our bakery-cafes have a menu highlighted by antibiotic-free chicken, whole grain bread, and select organic and all-natural ingredients, with zero grams of artificial trans fat per serving, which provide flavorful, wholesome offerings. Our menu includes a wide variety of year-round favorites complemented by new items introduced seasonally with the goal of creating new standards in everyday food choices. In neighborhoods across the United States and in Ontario, Canada, our customers enjoy our warm and welcoming environment featuring comfortable gathering areas, relaxing decor, and free internet access. Our bakery-cafes routinely donate bread and baked goods to community organizations in need. Additional information is available on our website, http://www.panerabread.com.

Matters discussed in this news release and in our public disclosures, whether written or oral, relating to future events or our future performance, including any discussion, express or implied, on our anticipated growth, operating results, plans, objectives, future earnings per share, and the impact of our investments in sales-building initiatives and operational capabilities on future sales and earnings, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are often identified by the words "believe," "positioned," "estimate," "project," "target," "plan," "goal," "assumption," "continue," "intend," "expect," "future," "anticipate," and other similar expressions, whether in the negative or the affirmative, that are not statements of historical fact. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict, and you should not place undue reliance on our forward-looking statements. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those discussed from time to time in our reports filed with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended December 25, 2012 and our quarterly reports on Form 10-Q. All forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this release are made only as of the date of this release and may change. While we may elect to update forward-looking statements at some point in the future, we expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Michele Harrison
Vice President, Investor Relations
(314-984-4966)