Panera Hopes McDonald's Smoothie Splash Can Boost Drink Sales

Date : 07/28/2010 @ 11:04AM
Source : Dow Jones News
Stock : Jamba, Inc. (JMBA)
Quote : 9.095  -0.065 (-0.71%) @ 4:00PM

Panera Hopes McDonald's Smoothie Splash Can Boost Drink Sales

Panera Bread Company (NASDAQ:PNRA)
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Panera Bread Co. (PNRA) hopes McDonald's Corp.'s (MCD) foray into fruit smoothies can help boost its own sales of frozen drinks, which rose 21% in Panera's latest quarter.

McDonald's recently launched smoothies have thrown unprecedented marketing weight behind the blended fruit beverage. Chains such as Panera and Jamba Juice Inc. (JMBA) are expecting to ride the coattails from the burger giant's media spending to higher drink sales.

"We believe [McDonald's smoothie marketing] offers us the opportunity to cement our position as a high-quality leader in the category," Panera Chief Executive Bill Moreton said Wednesday on the company's quarterly earnings call.

McDonald's earlier move into and marketing behind premium coffee drinks like lattes prompted similar sentiment from Starbucks Corp. (SBUX) that the burger giant's advertising helped boost other companies' sales.

Sales of smoothies and other icy drinks like frozen strawberry lemonade were a boon to Panera's profit in its second quarter. The drinks deliver a higher gross profit than other drinks on the menu, Moreton said, and have helped boost sales during the late-afternoon period. The drinks are also being bought as a add-on to lunch meals.

Panera shares were recently up 66 cents, or 0.8%, in recent trading to $79.26. Late Tuesday, Panera reported a 33% increase in second-quarter profit, as same-store sales rose 9.9%.

The chain expects same-store sales growth to slow down a bit during the remainder of the year, but it raised its full-year earnings view slightly due to share repurchases.

Panera said it plans to add chili to its menu in the third quarter and plans to begin to roll out paninis in the fourth quarter as the bakery-cafe chain plans to make hot sandwiches more of a focal point next year. It's also implementing a loyalty card program in the fourth quarter, which is expected to boost same-store sale up to 2%.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;


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