Flash Call | PNRA: The Activist Playbook

Takeaway: We’re hosting a flash call tomorrow, April 17 at 11am EST to run through the activist playbook on PNRA. Dial-in details and materials to fol

Last night Panera announced in a press release that its Board of Directors approved an increase to the company’s share repurchase program to $750 million. The company expects to repurchase $500 million over the next twelve months.  The release also highlighted the progress that Panera is making in its previously announced refranchising initiative.  The company has entered letters of intent to sell 73 cafes and is expected to reach its refranchising goal by year end (50-150 cafes).  This initiative, which is expected to be accretive to earnings, was reflected in management’s 2015 EPS guidance.

On March 3, 2015 we penned an open letter to CEO Ron Shaich detailing our activist playbook on the company:

Note: PNRA: RON SHAICH MUST BECOME AN ACTIVIST CEO


In this letter, we recommended five steps he should consider taking in order to unlock significant shareholder value:

  1. Sell-off non-core assets
  2. Slowdown the rollout of Panera 2.0 and begin molding a concept of the future
  3. Slow unit growth and cut capital spending
  4. Cut excessive SG&A spending
  5. Aggressively refranchise stores

We believe these changes to the business model will significantly enhance the margins, returns, and overall earnings power of the company.  We put the baseline earnings power of the company between $8-10 per share and the implied stock price between $240-300.

We look forward to further articulating these recommendations on the call tomorrow.