Panera Bread Company And Cosi

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For this project we choose to focus on two restaurants: Panera Bread Company and Cosi Incorporated. These two restaurants operate in the casual restaurant segment of the eating and drinking places (SIC 5812) industry. This industry is comprised of over 670,000 businesses with most, 98%, having less than $5M in annual revenue. Our choices are part of a much smaller subgroup within this industry of companies with over $50M in annual sales for FY13, Panera with $2,385M and Cosi with $86.33M. While both compete with each other for customers, other players in their industry include YUM Brands, Taco Bell, Red Lobster, and Chipotle. Both of our selected businesses operate in similar environments with Panera’s annual report specifying a…show more content…
Profitability Panera’s return on equity ratio (ROE) for 2013 measured 25.7%, up from 2012’s 23.4%, and 2011’s 21.7%. Reviewing Panera’s ROE over the past 3 years, reveals that Panera’s performance signals steady growth, measuring nearly two points increased each year. Another indicator of profitability is the return on assets (ROA) ratio, which for Panera, shows 16.1% in 2013, 15.2% in 2012, and 14.0% in 2011. This represents evidence that Panera is utilizing its assets more efficiently to generate profits each year. Panera’s financial leverage percentage trends up 9.6%, 8.2%, and 7.7%, during the past 3 years; again confirming “the rate of return on [Panera’s] assets exceeds the average after-tax interest rate on its borrowed funds” (pg. 656). Panera chooses to offer two measurements of earnings per share (EPS) on their balance sheet, basic and diluted. The basic EPS over the course of the last 3 years are $6.85, $5.94, and $4.59. The diluted are $6.81, $5.89, and $4.55. The diluted EPS represents a more conservative, or worst case scenario stance. The Quality of Income for Panera from 2013 to 2011 has been 1.78, 1.67, and 1.74. Although the ratio has remained above 1, meaning it is “considered to have high-quality earnings, because each dollar of income is supported by one dollar or more of cash flow,” (pg. 657)
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