Panera Bread Reports Third Quarter EPS of $0.37

ST. LOUIS, Oct. 23 /PRNewswire-FirstCall/ -- Panera Bread Company today reported net income of $12 million, or $0.37 per diluted share, for the third quarter ended September 25, 2007, compared to net income of $11 million, or $0.34 per diluted share, for the third quarter ended September 26, 2006. For the thirty-nine weeks ended September 25, 2007, net income was $40 million, or $1.23 per diluted share, compared to $40 million, or $1.25 per diluted share, for the thirty-nine weeks ended September 26, 2006.

The Company's third quarter and year-to-date fiscal 2007 consolidated statements of operations and margin analysis are attached as Schedule I. The following tables set forth, for the periods indicated, certain items included in the Company's consolidated statements of operations (in thousands, except per share data and percentages), and reflects an adjustment to the third quarter revenues released on October 3, 2007:

For the 13 Weeks Ended Percentage September 25, 2007 September 26, 2006 Change Total revenue $273,213 $204,954 33% Net income $11,943 $10,879 10% Diluted earnings per share $0.37 $0.34 9% Shares used in diluted EPS 32,163 31,961 For the 39 Weeks Ended Percentage September 25, 2007 September 26, 2006 Change Total revenue $765,847 $596,059 28% Net income $39,622 $39,943 -1% Diluted earnings per share $1.23 $1.25 -2% Shares used in diluted EPS 32,210 32,012

Third Quarter 2007 Key Metrics & Business Review

During the third quarter of 2007, system-wide comparable bakery-cafe sales increased 2.6% (3.4% Company-owned and 2.1% franchise-operated). System-wide average weekly sales decreased by 0.1% to $38,051 ($37,136 Company-owned and $38,711 franchise-operated), while system-wide operating weeks in the third quarter totaled 14,931 (6,254 Company-owned and 8,677 franchise-operated).

During the third quarter of 2007, the Company opened 35 new bakery-cafes system-wide (19 Company-owned and 16 franchise-operated) and closed two bakery-cafes system-wide (one Company-owned and one franchise-operated).

As of September 25, 2007, there were 1,168 bakery-cafes open system-wide. The breakdown of bakery-cafes between Company-owned and franchise-operated is as follows: Company-owned Franchise-operated Total System Bakery-cafes as of June 26, 2007 475 660 1,135 Bakery-cafes opened 19 16 35 Bakery-cafes closed (1) (1) (2) Bakery-cafes as of September 25, 2007 493 675 1,168

During the third quarter of 2007, earnings per diluted share were $0.37 compared to $0.34 per diluted share in the third quarter of 2006. Panera experienced margin contraction in the third quarter of 2007 resulting from: first, a mix shift both away from soups and sandwiches to higher food cost salads and away from self-manufactured bread and bagels; secondly, product ingredient costs which rose more rapidly than prices; and thirdly, labor costs which rose more rapidly than sales as the Company invested additional labor at lunch to improve the customer experience. Also included in the Company's third quarter 2007 results was a tax benefit of $0.05 per diluted share reflecting the resolution of a certain tax matter.

Fourth Quarter 2007 Business Outlook

The Company is today setting an earnings per diluted share target for the fourth quarter of 2007 of $0.53 to $0.59. The fourth quarter 2007 target assumes system-wide comparable bakery-cafe sales growth of 1.0% to 3.5% (including the price increase of approximately 2.5% which the Company will be taking on November 14, 2007) and system-wide average weekly sales of $39,700 to $40,700. Based upon 27 days of actual sales data for Company-owned bakery-cafes and 21 days of actual sales data for franchise-operated bakery-cafes, the Company is also today projecting that system-wide comparable bakery-cafe sales growth for the four weeks ended October 23, 2007 will be 0.3% to 0.6%. Additionally, bakery-cafe openings are forecasted to be 60 to 65 system-wide in the fourth quarter (39 to 41 Company-owned and 21 to 24 franchise-operated), resulting in expected system-wide operating weeks in the fourth quarter of 2007 of 15,450 to 15,500.

2008 Business Outlook

The Company today is establishing its initial growth target for fiscal 2008 earnings per diluted share at 10% to 20%. The assumptions on key metrics underlying the 2008 target are new bakery-cafe development of 160 to 175, approximately the same as in fiscal 2007, system-wide comparable bakery-cafe sales growth of 1% to 4%, system-wide average weekly sales of $38,400 to $39,600, and system-wide operating weeks of 68,000 to 68,500.

Chairman and Chief Executive Officer Ron Shaich commented: "Despite operating in a very uncertain consumer and cost environment, our concept remains strong as evidenced by our industry leading customer satisfaction ratings, high unit volumes and resulting strong bakery-cafe return on investment. These factors speak to our potential for future growth. Having said that we also recognize the challenges experienced in the past year. As a result, we have charted a clear plan to overcome existing margin compression while maintaining transactions and we've begun to make some encouraging progress. We are looking forward to making further progress and returning to our record of strong earnings growth."

The Company will discuss third quarter 2007 results and preliminary comparable bakery-cafe sales results for the four weeks ended October 23, 2007 in a conference call that will be broadcast on the Internet at 8:30 A.M. Eastern Daylight Time on Wednesday, October 24, 2007. To access the call or view a copy of this release, go to http://www.panerabread.com/investor. Access to the call and the release will be archived for one year.

2008 Financial Reporting

A schedule of preliminary earnings release dates for fiscal year 2008 is attached as Schedule II. Beginning in fiscal year 2008, the Company will no longer issue monthly sales releases but rather will include this information, along with its quarterly sales release, in its quarterly earnings release. This change is being made to conform to reporting frequencies commonly followed by many of its peers.

Included above are franchise-operated and system-wide comparable bakery-cafe sales percentages. System-wide sales is a non-GAAP financial measure which includes sales at all Company-owned bakery-cafes and franchise-operated bakery-cafes, as reported by franchisees. Management uses system-wide sales information internally in connection with store development decisions, planning, and budgeting analyses. Management believes system-wide sales information is useful in assessing consumer acceptance of the Company's brand and facilitates an understanding of financial performance as the Company's franchisees pay royalties and contribute to advertising pools based on a percentage of their sales.

Panera Bread Company owns and franchises 1,115 bakery-cafes under the Panera Bread(R) and Saint Louis Bread Co.(R) names as of September 25, 2007. With its identity rooted in handcrafted, fresh-baked, artisan bread, Panera Bread is committed to providing great tasting, quality food that people can trust. Highlighted by antibiotic free chicken, whole grain bread, select organic and all-natural ingredients and a menu free of man-made trans fat, Panera's bakery-cafe selection offers flavorful, wholesome offerings. The menu includes a wide variety of year-round favorites, complemented by new items introduced seasonally with the goal of creating new standards in everyday food choices. In neighborhoods across the country, guests are enjoying Panera's warm and welcoming environment featuring comfortable gathering areas, relaxing decor, and free internet access provided through a managed WiFi network. At the close of each day, Panera Bread bakery-cafes donate bread and baked goods to community organizations in need. Additional information is available on the Company's website, http://www.panerabread.com. Panera also holds a 51% interest in Paradise Bakery & Cafe, Inc., owner and franchisor of 53 bakery-cafes as of September 25, 2007.

Matters discussed in this news release, including any discussion or impact, express or implied, on the Company's anticipated growth, operating results, and future earnings per share, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are often identified by the words "believe", "positioned", "estimate", "project", "target", "continue", "intend", "expect", "future", "anticipates", and similar expressions. All forward-looking statements included in this release are made only as of the date of this release, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that occur or which we hereafter become aware, after that date. Forward-looking information expresses management's present belief, expectations, or intentions regarding the Company's future performance. The Company's actual results could differ materially from those set forth in the forward-looking statements due to known and unknown risks and uncertainties and could be negatively impacted by a number of factors. These factors include, but are not limited to, the following: inability to execute our growth strategy, including, among other things, variations in the number, timing, and successful nature of Company-owned and franchise-operated bakery-cafe openings and continued successful operation of bakery-cafes; failure to comply with government regulations; loss of a member of senior management; inability to recruit qualified personnel; failure or inability to protect our brand, trademarks, or other proprietary rights; competition; rising insurance costs; disruption in our supply chain or increases in ingredient, product, or other supply costs; disruptions or supply issues in our fresh dough facilities; health concerns about the consumption of certain products; complaints and litigation; risks associated with the acquisition of franchise-operated bakery-cafes; other factors, some of which may be beyond our control, effecting our operating results; and other factors that may affect restaurant owners or retailers in general. These and other risks are discussed from time to time in the Company's SEC reports, including its Form 10-K for the year ended December 26, 2006 and its quarterly reports on Form 10-Q.

Schedule I PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share amounts) For the 13 Weeks Ended September 25, September 26, 2007 2006 Revenues: Bakery-cafe sales $232,244 $165,098 Franchise royalties and fees 16,286 15,134 Fresh dough sales to franchisees 24,683 24,722 Total revenue 273,213 204,954 Costs and expenses: Bakery-cafe expenses: Cost of food and paper products 75,037 49,987 Labor 75,545 52,122 Occupancy 18,580 12,278 Other operating expenses 32,487 24,619 Total bakery-cafe expenses 201,649 139,006 Fresh dough cost of sales to franchisees 20,137 20,333 Depreciation and amortization 14,990 11,325 General and administrative expenses 18,412 16,593 Pre-opening expenses 1,908 1,457 Total costs and expenses 257,096 188,714 Operating profit 16,117 16,240 Interest expense 28 4 Other (income) expense, net (145) (896) Income before minority interest and income taxes 16,234 17,132 Minority interest (income) expense (312) - Income before income taxes 16,546 17,132 Income taxes 4,603 6,253 Net income $11,943 $10,879 Basic net income per share $0.38 $0.35 Diluted net income per share $0.37 $0.34 Shares used in calculation of basic EPS 31,812 31,338 Shares used in calculation of diluted EPS 32,163 31,961 Schedule I (continued) PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share amounts) For the 39 Weeks Ended September 25, September 26, 2007 2006 Revenues: Bakery-cafe sales $638,988 $477,329 Franchise royalties and fees 49,555 44,948 Fresh dough sales to franchisees 77,304 73,782 Total revenue 765,847 596,059 Costs and expenses: Bakery-cafe expenses: Cost of food and paper products 200,157 141,944 Labor 205,405 147,577 Occupancy 50,473 34,797 Other operating expenses 87,807 67,138 Total bakery-cafe expenses 543,842 391,456 Fresh dough cost of sales to franchisees 63,574 62,849 Depreciation and amortization 42,387 32,050 General and administrative expenses 52,928 45,441 Pre-opening expenses 4,687 3,941 Total costs and expenses 707,418 535,737 Operating profit 58,429 60,322 Interest expense 199 10 Other (income) expense, net (731) (2,591) Income before minority interest and income taxes 58,961 62,903 Minority interest (income) expense (120) - Income before income taxes 59,081 62,903 Income taxes 19,459 22,960 Net income $39,622 $39,943 Basic net income per share $1.25 $1.28 Diluted net income per share $1.23 $1.25 Shares used in calculation of basic EPS 31,684 31,275 Shares used in calculation of diluted EPS 32,210 32,012 Schedule I (continued) PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS MARGIN ANALYSIS (unaudited)

The following table sets forth the percentage relationship to total revenues, except where otherwise indicated, of certain items included in the Company's consolidated statements of operations for the period indicated. Percentages may not add due to rounding:

For the 13 Weeks Ended September 25, September 26, 2007 2006 Revenues: Bakery-cafe sales 85.0 % 80.5 % Franchise royalties and fees 6.0 7.4 Fresh dough sales to franchisees 9.0 12.1 Total revenue 100.0 % 100.0 % Costs and expenses: Bakery-cafe expenses (1): Cost of food and paper products 32.3 % 30.3 % Labor 32.5 31.6 Occupancy 8.0 7.4 Other operating expenses 14.0 14.9 Total bakery-cafe expenses 86.8 84.2 Fresh dough cost of sales to franchisees (2) 81.6 82.2 Depreciation and amortization 5.5 5.5 General and administrative expenses 6.7 8.1 Pre-opening expenses 0.7 0.7 Total costs and expenses 94.1 92.1 Operating profit 5.9 7.9 Interest expense - - Other (income) expense, net (0.1) (0.4) Income before minority interest and income taxes 6.0 8.4 Minority interest (income) expense (0.1) - Income before income taxes 6.1 8.4 Income taxes 1.7 3.1 Net income 4.4 % 5.3 % (1) As a percentage of Company bakery-cafe sales. (2) As a percentage of fresh dough sales to franchisees. Schedule I (continued) PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS MARGIN ANALYSIS (unaudited)

The following table sets forth the percentage relationship to total revenues, except where otherwise indicated, of certain items included in the Company's consolidated statements of operations for the period indicated. Percentages may not add due to rounding:

For the 39 Weeks Ended September 25, September 26, 2007 2006 Revenues: Bakery-cafe sales 83.4 % 80.1 % Franchise royalties and fees 6.5 7.5 Fresh dough sales to franchisees 10.1 12.4 Total revenue 100.0 % 100.0 % Costs and expenses: Bakery-cafe expenses (1): Cost of food and paper products 31.3 % 29.7 % Labor 32.1 30.9 Occupancy 7.9 7.3 Other operating expenses 13.7 14.1 Total bakery-cafe expenses 85.1 82.0 Fresh dough cost of sales to franchisees (2) 82.2 85.2 Depreciation and amortization 5.5 5.4 General and administrative expenses 6.9 7.6 Pre-opening expenses 0.6 0.7 Total costs and expenses 92.4 89.9 Operating profit 7.6 10.1 Interest expense - - Other (income) expense, net (0.1) (0.4) Income before minority interest and income taxes 7.7 10.6 Minority interest (income) expense - - Income before income taxes 7.7 10.6 Income taxes 2.5 3.9 Net income 5.2 % 6.7 % (1) As a percentage of Company bakery-cafe sales. (2) As a percentage of fresh dough sales to franchisees. Schedule II PANERA BREAD COMPANY EARNINGS PRESS RELEASE DATES For the Quarter Ended Press Release Date (After Market Closes) March 25, 2008 April 22, 2008 June 24, 2008 July 22, 2008 September 23, 2008 October 21, 2008

Panera Bread Company

CONTACT: Jeff Kip, Senior Vice President, Chief Financial Officer of
Panera Bread Company, +1-314-633-7289

Web site: http://www.panerabread.com/