Panera holds up against higher costs

By Lorraine Heller

- Last updated on GMT

Related tags: Raw material costs, Panera bread

Leading player in the US bakery sector Panera Bread looks to be
holding its own in an industry squeezed by high raw material costs
and a powerful retail sector reluctant to pass on price increases.

The bakery franchise this week reported a 30.6 per cent revenue increase in its third quarter, to $148.6m (€124m), compared to last year's figure of $113.8m (€95m). Panera also revealed an 8.2 per cent increase in system-wide comparable bakery-cafe sales, which exceeded its previously announced target of 6.5 to 8 per cent, but was still down on its 9.3 per cent first half figure. There were a total of 30 new bakery-cafe openings in the quarter, two up on expectations, yet still short of the initial target of 41. However, the company had previously said this will be made up for in the fourth quarter, resulting in increased costs during that period. It also expects to have market research expenses of $2m during the fourth quarter, placing even more pressure on operating margins. The company said it will be reporting its full third quarter earnings on November 1. Other bakery companies in the US have been harder hit by the increase in raw material costs. Interstate Bakeries Corporation (IBC), which recently announced it is to close its seventh bakery since filing for bankruptcy last September, partly blamed its financial troubles on higher ingredients and energy prices. By the time it had filed for bankruptcy, IBC had run up $1.3 billion (more than €1 million) worth of debts. External links to companies or organisations mentioned in thisstory: Panera Bread

Related topics: Markets

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