Michell Li
Varun Srinivasan
Nancy Liu
Srikar Dandamuraju
Miguel Perez
It All Begins With Fresh Baked
Bread…
Investment Thesis
 Undervalued relative to competitors
 Favorable consumer trends
 New Initiatives
Company Overview
Company Segments
1%
48%
51%
Company
Bakery-Café
Operations
Franchise
Operations
Fresh Dough and
Other Products
Operations
Panera Bread currently operates 1,800 bakery-cafes in
45 states as well as Ontario, Canada.
Company Overview
 Hand-crafted, fresh baked, artisan bread
 Serves 7.5 million customers per week
 Awards and Recognition
 2013; COEX Innovation Award, National Chain Winner
 2012; Ranked #1 in Attractive/Inviting Restaurants
 2012; Ranked #2 among large chain restaraunts
Competitive Advantage
 Switching night shifts to daytime hours
 Fresher food, less waste
 Panera 2.0
 Integrated technologies to enhance customer experience
 MyPanera Loyalty Program
 Reduce wait times and crowding
 Improve order accuracy
 Growth
 115-125 new locations this year
 Expanding beyond the suburban area
Management
William W. Moreton
-Vice Chairman, Interim CFO
-DePaul University- Certified Public
Accountant
-Qualified to take over Interim CFO
duties as previous positions include
CEO or co-CEO (2010-2013), co-COO
(2008-2010), and CFO (1998-2003)
Ronald M. Shaich
-Founder, Executive Chairman, CEO
-Clark University, BA, 1976,
-Harvard Business School, MBA, 1978
Charles J. Chapman III
-Executive Vice President, COO
-Served on Board of Directors (2008-2011)
-Amos Tuck Business School of Administration at
Dartmouth College, MBA, Economics and
Psychology from Dartmouth College, BA
Industry Overview
• Fast casual dining
• Annualized growth rate 11%
• A costumer base of high
income millennia and
families
• Sunshine industry
• Tech savvy costumers
Risks and Mitigations
• Marketing : not positioned towards
millennia
• Aggressive marketing strategy : 2%
of sales
• A slow growth of same store sales
• Marketing , weather
• Decline catering business
• Only 8 % of revenue
• Management change
• Ex CEO is the new CFO
Comps Analysis
Fast Casual
Valuation Statistics
Capitalization
EV /
EV /
Share
Equity
Enterprise
Revenue
EBITDA
P/E
ROIC
Company Name
Price
Value
Value
2015
2015
2015
MR Quarter
Starbucks Corp
$ 74.80
$
57,008.60
$
57,862.40
3.1x
13.4x
24.0x
-10.6%
Chipotle Mexican Grill Inc
$ 666.39
$
20,920.00
$
20,115.40
4.2x
20.0x
38.7x
19.8%
Dunkin' Brands Group Inc
$ 44.16
$
4,590.10
$
6,236.00
7.7x
14.8x
21.7x
9.2%
Noodles & Co
$ 19.12
$
567.10
$
576.00
1.2x
10.4x
38.4x
8.8%
Potbelly Corp
$ 11.60
$
349.60
$
280.30
0.8x
8.5x
46.7x
0.2%
Panera Bread Co
$ 166.87
$
4,544.00
$
4,458.90
1.6x
10.1x
23.2x
23.8%
Maximum
$ 666.39
$
57,008.60
$
57,862.40
7.7x
20.0x
46.7x
23.8%
75th Percentile
$ 143.85
$
16,837.53
$
16,645.55
3.9x
14.5x
38.6x
17.2%
Median
$ 59.48
$
4,567.05
$
5,347.45
2.4x
11.9x
31.2x
9.0%
25th Percentile
$ 25.38
$
1,561.33
$
1,546.73
1.3x
10.2x
23.4x
2.4%
Minimum
$ 11.60
$
349.60
$
280.30
0.8x
8.5x
21.7x
-10.6%
3.1x
12.9x
32.1x
8.5%
Summary Statistics
Average
DCF Analysis
Discounted Cash Flow Analysis
($ in Millions)
Sun Bioscience - Panera Bread
Historical
2011
Sales
2012
Projected
2013
2014
2015
2016
2017
2018
1,822
2,130
2,385
2,616
2,886
3,221
3,530
3,798
18.1%
16.9%
12.0%
9.7%
10.3%
11.6%
9.6%
7.6%
587
684
625
695
755
823
915
1018
1,235
1,446
1,760
1,921
2,131
2,398
2,615
2,780
67.8%
67.9%
73.8%
73.4%
73.8%
74.4%
74.1%
73.2%
Operating & Other Expenses
822
955
1,221
1,412
1,582
1,761
1,872
1,929
Selling General & Administrative Costs
113
117
123
142
151
163
179
197
EBIT
300
374
416
368
397
474
564
654
16.5%
17.6%
17.4%
14.1%
13.8%
14.7%
16.0%
17.2%
111
138
154
136
147
175
209
242
189
236
262
232
250
299
355
412
80
91
107
123
143
166
192
222
(68)
(87)
(202)
(52)
(77)
(35)
(32)
(30)
(108)
(152)
(192)
(233)
(232)
(251)
(271)
(292)
Unlevered Free Cash Flow
70
84
179
245
312
Present Value of Free Cash Flow
64
72
141
178
210
1
2
3
4
5
Sales Growth
COGS
Gross Profit
Gross Margin
EBIT Margin
Tax Expense @
37%
NOPAT
D&A
Change in Working Capital
Capital Expenditures
Discount Period:
Assumptions & Sensitivity
DCF Assumptions & Output
z
Discount Rate:
8.3%
Exit Multiple:
Terminal Value:
$
PV of Terminal Value:
Sum of PV of Cash Flows:
Enterprise Value:
$4,172
$665
$4,836
Enterprise Value:
Net Debt:
Implied Equity Value:
Shares Outstanding
$4,836
($85)
$4,921
27
Implied Price Per Share:
Current Price Per Share:
Implied Discount:
WACC
$182.28
6.3%
7.3%
8.3%
9.3%
10.3%
11.3%
12.3%
7.5x
$163.38
$156.38
$149.75
$143.47
$137.52
$131.88
$126.53
9.5x
6,215
8.5x
$181.23
$173.41
$166.01
$159.00
$152.36
$146.07
$140.10
$ 182.28
$ 164.38
10.89%
Terminal EV/EBITDA
9.5x
10.5x
$199.08
$216.94
$190.45
$207.49
$182.28
$198.54
$174.54
$190.07
$167.21
$182.05
$160.26
$174.44
$153.66
$167.23
11.5x
$234.79
$224.52
$214.81
$205.61
$196.89
$188.63
$180.80
12.5x
$252.64
$241.56
$231.07
$221.14
$211.73
$202.82
$194.37
13.5x
$270.50
$258.60
$247.34
$236.67
$226.58
$217.01
$207.93
Questions?