St. Louis Bread Co. - Parent company invests $40 million in new cafe venture

Panera Bread Co., the parent company for St. Louis Bread Co., is rising in the ranks of publicly traded companies.

The company recently announced a joint venture agreement with its former president and chief operating officer, Rick Postle, that will create 50 new stores throughout Pennsylvania, Virginia and Washington, D.C., in the next five years.

The deal, a first for the company, is a $40 million total investment for the stores.

This action does not directly affect Springfield franchise owner Jim Magers, but it does indicate the company's push for progress, he said.

"It's a new thing that they're doing in certain markets," Magers said. "They're taking on operating partners who will be the on-site management of the area that they're developing."

Traditionally, Panera Bread has expanded through franchise agreements. Postle said the new arrangement is a blend between franchising and company stores.

"If this model proves to be as successful as we think it will, the company would like to make this a third option in developing," Postle said from Norfolk, Va., where he is holding a store grand opening. It costs $800,000 to open a store, Postle said.

Panera stock prices are reflecting its growth as well. According to Yahoo! Finance, individual shares of Panera Bread stock, traded on the NASDAQ under PNRA, have increased from about $35 in September to an all-time high of more than $70 last month. It closed May 29 at $65.56 a share.

First franchisee

Panera's bakery-cafes originally began opening in 1987 as St. Louis Bread Co. and didn't begin selling rights until 1992.

Magers became the company's first franchise owner in 1992, when he purchased the Springfield rights from founder Ken Rosenthal.

"We were the first franchisees for the concept," said Magers, who opened the first store on Battlefield Road in June 1993. "It is neat when you look and see how many people are on board now. We had no idea it would be this big."

Springfield attorney Sam Hamra purchased his franchise rights in 1997, when Postle was president and chief operating officer for the company. Hamra owns 12 stores in Chicago and seven in Boston.

"It's positive for the company," Hamra said of the joint venture. "It gives (Postle) a way that he can be financially compensated for the good work he did, and at the same time it allows the company to expand their development."

Since Hamra's investment, the total number of bakery-cafes has jumped from 79 to 369 locations at the end of last year. And 259 of that total are franchise stores.

"They're growing at a rapid rate," Hamra added. Hamra plans to open six more in Chicago and two more in Boston by the end of the year, to give him 27 in all.

Magers, too, is growing his share in other markets. He opened a location in Benton-ville, Ark., May 13 and opened another June 1 in Norman, Okla. Magers owns 28 stores in Springfield, Tulsa, Oklahoma City, Dallas and northwest Arkansas.

Locally, Magers plans to remodel the bakery-cafe at 500 S. National Ave. this summer to the "new look" of the other Springfield locations, he said. However, the National Avenue store will include a fireplace, he said.