Panera Bread Vertical Analysis
Panera Bread’s primary competition is comprised of many other fast casual and/or café-style restaurant chains, including Chipotle, Starbucks Coffee, Five Guys Burgers and Fries and P.F. Chang’s China Bistro.
BALANCE SHEET ANALYSIS
One of the significant changes on Panera Bread’s vertical analysis occurs with the Treasury Stock – Common account, which went from accounting for -17% of their Total Liabilities and Shareholder’s Equity to accounting for -51% of them. This change constituted for a decrease of approximately 34% over the course of four years. As a perpetually negative account that represents share reacquisitions, this decrease coincides with the fact that Panera reacquired a significant number of its shares from 2011-2014. In late …show more content…
At first glance, the income statement appears to have remained very stable in terms of % of assets. However, when looking at the years individually, it is clear that many accounts experienced steady growth from 2011 to 2013, yet dropped back down significantly in 2014. Operating income, which had the highest overall change with a 1.67% increase, dropped from 12.99% in 2013 to 10.91% 2014. This is concerning, as operating income measures the amount of profit realized from Panera’s operations after taking out operating expenses such as COGS, wages and depreciation. As total revenue has in fact been steadily increasing over the years, it is clear that the drop in operating income is due to an increased amount of expenses acquired by Panera. In order to accurately see the changes, it is important to take a look at the company’s horizontal analysis, which paints a less stable picture of its revenues and expenses. All of Panera’s expenses increased substantially from their 2011 figure, particularly in 2014. From 2013 to 2014, Cost of Revenue increased by 9%, Selling/General/Administration Expense increased by 13% and Depreciation/Amortization increased by 22%. In contrast, Revenue only increased by 8%. Panera introduced masses of new menu items in 2014, which naturally led to a significant amount of new expenses. Unfortunately, they did not lead to the profit increase that was expected, but rather to longer customer wait times and lower food quality due to the newly overcrowded menu. This made many loyal customers shy away from the company, so the new expenses were not matched by the expected increase in revenue. The largest change on Panera’s horizontal analysis was Interest Expense (Income) – Net Operating, which increased by 122% since 2011 and by 94% just in 2014. This coincides with it relying more heavily on debt financing, which naturally led to more
BALANCE SHEET ANALYSIS
One of the significant changes on Panera Bread’s vertical analysis occurs with the Treasury Stock – Common account, which went from accounting for -17% of their Total Liabilities and Shareholder’s Equity to accounting for -51% of them. This change constituted for a decrease of approximately 34% over the course of four years. As a perpetually negative account that represents share reacquisitions, this decrease coincides with the fact that Panera reacquired a significant number of its shares from 2011-2014. In late …show more content…
At first glance, the income statement appears to have remained very stable in terms of % of assets. However, when looking at the years individually, it is clear that many accounts experienced steady growth from 2011 to 2013, yet dropped back down significantly in 2014. Operating income, which had the highest overall change with a 1.67% increase, dropped from 12.99% in 2013 to 10.91% 2014. This is concerning, as operating income measures the amount of profit realized from Panera’s operations after taking out operating expenses such as COGS, wages and depreciation. As total revenue has in fact been steadily increasing over the years, it is clear that the drop in operating income is due to an increased amount of expenses acquired by Panera. In order to accurately see the changes, it is important to take a look at the company’s horizontal analysis, which paints a less stable picture of its revenues and expenses. All of Panera’s expenses increased substantially from their 2011 figure, particularly in 2014. From 2013 to 2014, Cost of Revenue increased by 9%, Selling/General/Administration Expense increased by 13% and Depreciation/Amortization increased by 22%. In contrast, Revenue only increased by 8%. Panera introduced masses of new menu items in 2014, which naturally led to a significant amount of new expenses. Unfortunately, they did not lead to the profit increase that was expected, but rather to longer customer wait times and lower food quality due to the newly overcrowded menu. This made many loyal customers shy away from the company, so the new expenses were not matched by the expected increase in revenue. The largest change on Panera’s horizontal analysis was Interest Expense (Income) – Net Operating, which increased by 122% since 2011 and by 94% just in 2014. This coincides with it relying more heavily on debt financing, which naturally led to more