This summary is based on the second quarter fiscal 2008 earnings call conducted by Panera Bread Co. (PNRA: chart) on July 23, 2008.

Management:

- Chief Executive Officer: Ronald M. Shaich
- Chief Financial Officer: Jeffrey W. Kip

Key Investors Issues

- Net income was $15.7 million or 52 cents a share, up 24% from $12.6 million or 39 cents a share in 2007
- Revenues rose 27% to $320.9 million versus $253 million in the prior year.
- Net bakery cafe sales increased 31% to $274.4 million.

Half Year Highlights:

- Revenue rose 27% to $625.8 million from $492.6 million in 2007.
- Net income was $28 million or 93 cents a share, up 2%.

Second Quarter Highlights

Comparable bakery cafe sales increased 6.5% in company-owned locations, benefitting 30 to 40 basis points from the shift of Easter from the second quarter last year to the first quarter year.

- Retail price was 5.5% year over year and net of the Easter shift, transaction and mix growth amounted to a +0.6 to +0.7% year over year, with mix impact modest.
- Comps increase 4.8% at franchise operated locations.
- Average weekly sales for company-owned units opened were $35,776 and the firm opened 19 bakery cafes, 6 of which were company owned and 13 of which were franchise operated.
- Net income was $15.7 million or 52 cents a share, up 24% from $12.6 million or 39 cents a share in 2007 against a 2 cents per share charge resulting from unfavorable tax adjustment.
- Income was also impacted by a cent a share from further writedown of the company’s investment in the Columbia’s Strategic Cash Portfolio.

Revenues rose 27% to $320.9 million versus $253 million in the prior year as net bakery cafe sales increased 31% to $274.4 million driven primarily by sales from new units, acquisitions and increases in comparable bakery cafe sales.

- Franchise royalties and fees increased 6% to $18.1 million from $17 million in the same quarter in the prior year, driven by new franchise-operated bakery cafes, partially tempered by the impact of the acquisition of franchise-operated bakery cafes.
- Fresh dough sales to franchisees grew 8% to $28.4 million from $26.3 million in 2007.
- As a result of these differential growth rates, the firm continues to experience a ship in total revenue mix as bakery cafe sales as a percent of total revenues increased to 85.5% compared to 82.9% in 2007.

Fresh dough sales to franchisees declined as a percent of total sales to 8.8% from 10.4%.

- Restaurant margins overall were higher by about 170 basis points as cost of food and paper products improved by 30 basis points year over year to 30.3% of restaurant sales.
- Category management initiatives and operational focus drove 190 basis points of favorability year over year, while the impact of wheat and other cost inflation drove an offsetting 160 basis points of unfavorability.
- Labor as a percentage of restaurant sales improved 100 basis points year over year to 31.1% of restaurant sales.
- Occupancy costs increased 30 basis points versus the prior year to 8.1% of restaurant sales, based upon somewhat higher average per square foot costs in immature stores outpacing the growth in sales.

Other operating expenses as a percent of restaurant sales improved 70 basis points to 13.4% from 14.1% in the prior year, as the firm benefited from higher than expected sales.

- Bakery cafe margins are up 170 basis as the result of the ability to take price to offset inflation, category management initiatives driving a more profitable mix of business, and favorable labor costs given the removal Crispani which have more than offset the rise of wheat and fuel costs.
- Fresh dough cost of sales to franchisees as a percent of fresh dough sales to franchisees left 720 basis points over the year unfavorable, with 780 basis points of this unfavorability driven by the $2.2 million impact of wheat cost increases.
- Increases in diesel costs per gallon year over year drove another additional 40 basis points of unfavorability in this margin line.
- Operating leverage in the manufacturing facilities yielded 100 basis points offsetting favorability, netting the total 720 basis points of unfavorability.

Depreciation costs improved 50 basis points to 5.1% of total revenues versus the prior year at 5.6%, with the positive leverage driven by sales leverage and investments.

- General and administrative expense improved 20 basis points year over year to 6.7% from 6.9% in the prior year.
- This improvement, driven by strong G&A disciple, came even though the firm accrued 80 basis points more of incentive compensation program expense versus the prior year.
- Pre-opening expenses improved 30 basis points to 0.3% of total revenues versus 0.6% in 2007 as the firm opened 11 fewer company-owned units.

The company generated $62.7 million of cash from operations and employee stock option exercises and had capital expenditures of $15.9 million.