Much of the talk around Panera Bread Co.’s “2.0” effort has focused on the costs of technology and labor tied to the upgrades. But Keith Siegner, an analyst for UBS, points out that the upgrades will enable the St. Louis-based restaurant chain to collect additional fees with each sale, which will increase earnings potential.
Those fees currently add up to $3 million, Siegner said, but they could increase to roughly $15 million by 2017 and $25 million by 2019, adding $1 to earnings per share. About half of Panera’s more than 1,800 restaurants are franchise-operated, and the company charges those franchises royalty fees for new software and other technology-related services.
Siegner estimates those fees make up 36 percent of all fees paid by franchises to Panera, and he projects that figure to increase over time as Panera 2.0 begins to take root.