Panera Bread Company (PNRA) is one of the most promising companies in the world. The company has several competitive advantages, chief of which is its management. The company has gained its popularity in the market due to its remarkable growth over the last decade. The company also has a well maintained balance sheet. Long-term investors are advised to seriously consider adding Panera Bread to their investment portfolio.
Panera bread is a national bakery-cafe, and is currently one of the largest food service companies in the U.S. Panera Catering differentiates itself through its healthier food, better customer service, and a well designed decor. Over the years, Panera Bread has become very popular. According to The Wall Street Journal, Panera scored the highest level of customer loyalty amongst quick casual restaurants. It also ranked 2nd amongst excellent large fast-food chains. In addition, Panera made it to Fortune magazine's 2010 list of 100 Fastest-Growing companies.
The biggest competitive advantage with Panera is its ambiance. The ambiance is rich with comfort and delight. In addition, the interior decor of the cafe is artistic and attractive. The company's goal is to offer an "oasis," away from the rush of daily life. Many of Panera's locations incorporate a fireplace and outdoor seating areas, distinguishing it from other neighborhood cafes. Panera promotes the image of freshness. The first object customers see when they enter the cafe is a massive display of bread. Also, the baguettes are tagged with the time when they came out of the oven.
Another competitive advantage with Panera is its high quality customer service. The associates at the restaurant are trained to greet customers by name, and have the skills to make each visit extraordinary. The company looks for and hires associates with the right personalities for the job. In 2010, Panera Bread was listed in BusinessWeek's list of top 25 'Customer Service Champs.'
Panera lays a lot of emphasis on buying fresh ingredients. It is famous for its antibiotic-free chicken. The antibiotics fed to chicken lets it fend off disease, but also produce downsides. Also, the company serves whole grained bread, select organic food, and all-natural ingredients. The bread at Panera is baked on location and not at a faraway 'Fresh Dough Facility.' This helps the company serve the food fresh.
Perhaps, the biggest reason for Panera's success is the presence of its founder, Ron Shaich. Ron Shaich has always emphasized high-quality product, instead of short-term profits. His main goal as regards business is to understand what makes some businesses tick, and others not. He, then, applies that new understanding at Panera. In Ron's own words, "I never got into business to be in business. I got into business because it was the way in which I made a difference and I could have an impact." Ron continues to visit the Panera's locations to regularly speak with customers and receive valuable feedback. Ron Shaich is the man responsible for the company's success, and with his leadership, the company should continue to innovate and please its customers.
The company has a lot of admirers in the market, due to its strong financial books. The company has maintained its cash reserves at high levels. Panera has a strong and sustainable current ratio of 1.72. The current ratio has remained high despite constantly increasing investment expenditure.
Also, the company had no outstanding borrowings in 2012. Most of the company's capital expenditures have been financed by operating cash flow. The good financial condition of the company allows it margin to expand further, and venture into newer markets.
Although the stock of Panera seems expensive at first sight, the market deems the valuation appropriate in view of its excellent growth opportunities. Panera has grown gangbusters over the last decade. The EPS has grown 480% in the last 10 years. That produces an average annual growth rate of 19.4%. Due to the company's competitive advantages and excellent management, it seems unlikely that the company's earnings growth would slow down a lot.
Panera is a 'BUY' for long-term investors. The company has excellent future prospects, owing to its world class management. The founder, Ron Shaich, has successfully created a brand that faces no formidable competitors in the market. The company has delighted its customers and enjoys exceptional customer loyalty. The company should prove to be a safe bet for long-term investors.