Has Panera Bread Co (PNRA) Become the Perfect Stock?

Panera has had unusual success in bucking the trends that have hurt some of its fellow eateries. Even as other restaurant chains have had to cut prices and focus on promotional deals, Panera has raised prices to support an expanded menu. By moving into pasta, Panera Bread Co (NASDAQ:PNRA) is catering to its high-income customer demographic, which has held up far better during the recession and slow recovery than their lower-income counterparts.

Part of Panera’s strength has come from its attention to high-quality healthy food. But Panera also took a page from Starbucks by making its locations not just a place to eat and run, but a home away from home, with Wi-Fi and permission to stay as long as customers want. Just as Starbucks has reaped the benefits of creating its own culture, so too is Panera building a competitive advantage over less customer-friendly restaurants, where such behavior would be frowned upon as loitering, rather than encouraged.

In its most recent quarter, Panera once again demonstrated its resiliency. Comparable store sales jump 5.1%, while weekly average sales rose 13%. Most importantly, food costs stayed below 30%, even as rival health-conscious chain Chipotle Mexican Grill, Inc. (NYSE:CMG) has fought against margin pressure from high food ingredient prices.

For Panera Bread Co (NASDAQ:PNRA) to improve, it needs to keep its sales growth rising, and its earnings to catch up to its stock price. If the economic recovery starts to accelerate, then Panera looks well-positioned to take full advantage and get closer to perfection in the near future.

The article Has Panera Bread Become the Perfect Stock? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill, Panera Bread, and Starbucks. The Motley Fool owns shares of Chipotle Mexican Grill, Panera Bread, and Starbucks.

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