Panera Bread Company

7 Pages Posted: 14 Jun 2009 Last revised: 9 Oct 2018

See all articles by Marc L. Lipson

Marc L. Lipson

University of Virginia - Darden School of Business


As 2007 drew to a close, Panera Bread Company faced a new challenge. To date, it had relied on retained earnings and minor equity infusions to finance operations. But a decline in margins would limit future financing from internally generated funds. Complicating matters was the fact that its stock price was at a historic low and management was contemplating a large equity repurchase. This case can be used to discuss multiperiod financial forecasts and the relative desirability of various financing sources. A teaching note and instructor and student spreadsheets are available.



Rev. Sept. 24, 2018

Panera Bread Company

As the end of 2007 drew near, Panera Bread Company was facing a brand-new challenge. Until recently, strong margins had allowed Panera to finance its rapid growth largely through retained earnings and very minor equity infusions resulting from compensation programs. The company used no permanent debt financing and, in fact, had allowed a $ 10million credit facility to expire. But now Panera was facing a decline in margins that would limit its ability to rely on internal funds. With growth expected to continue and a $ 75million stock repurchase under consideration, the company realized it would almost surely need capital from external markets—in both the short run and the long run.

History and Business Model

Panera had its origins in another successful bread venture, Au Bon Pain Co., which was founded in 1981. The success of Au Bon Pain in the 1980s gave rise to the 1993 purchase of Saint Louis Bread Company, a small bakery-café company located in St. Louis, Missouri. By the end of 1999, the Saint Louis Bread Company concept was being expanded under the Panera Bread name, Au Bon Pain had sold off all its units except Panera Bread, and Au Bon Pain itself had adopted the Panera name.

. . .

Keywords: balance sheet, forecast, external markets, equity, permanent debt financing

Suggested Citation

Lipson, Marc Lars, Panera Bread Company. Darden Case No. UVA-F-1575. Available at SSRN:

Marc Lars Lipson (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4837 (Phone)
434-243-5021 (Fax)


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