Consumers want high-quality food offerings, and Panera Bread (NASDAQ:PNRA) has latched on to the trend for healthier food in a big way. At the same time that it has sought to use ingredients in its menu items that consumers can trust, Panera has also worked hard to keep up with changes in the marketplace that have changed the way customers want to place orders and have items ready for them when they arrive.

Coming into Tuesday's fourth-quarter financial report, Panera investors had high hopes that the fast-casual company would be able to keep its sales and income growing at a steady pace. Panera's actual results were better than some had expected, and the company believes that 2017 could bring the fruits of its efforts to drive innovation and efficiency forward. Let's look more closely at Panera Bread and its latest results to see what investors should learn from them.

Panera Bread bakery cafe location.

Image source: Panera Bread.

Panera keeps its growth going

Panera's fourth-quarter results were encouraging in terms of building forward momentum for the fast-casual chain. Revenue was up 5% to $727.1 million, matching what most investors had expected to see on the top line. Net income rose a somewhat slower 2% to $44 million, but a reduction in share count helped to produce a 9% rise in adjusted earnings to $2.05 per share, after taking into account one-time items. That topped the consensus forecast by $0.05.

Taking a closer look at how Panera did, the fast-casual chain continued to see mixed results with its growth efforts. Systemwide comparable restaurant sales were up only 0.7%, decelerating from growth rates in the previous quarter and earlier in 2016. Company-owned locations again produced all of the growth for Panera, with gains of 3% in comps for those restaurants. By contrast, comparable sales fell 1.4% among franchise-owned operations. Even when you extend the view of sales out to two years, franchise-owned operations still had a drop, looking weak compared to a 6.6% rise in two-year company-owned location comps. Panera said that stronger pricing produced the bulk of the comps gains throughout the company, with entree counts and order mix taking on secondary roles.

Panera posted mixed results on the margin front. Bakery-cafe margin improved slightly, with lower food costs more than offsetting the increase in wages and various start-up and transition costs associated with strategic efforts. However, operating margin fell slightly, as overhead expenses rose and spending on technology weighed on Panera's bottom line. In particular, Panera finished the rollout of Panera 2.0 in its company-owned stores, and delivery is now available in 15% of cafes systemwide.

New restaurants also kept playing a role in Panera's growth. The company opened 11 new locations, and franchisees added another 15. Average weekly sales for Panera's newest company-owned cafes came in at almost $50,000, setting a record.

Panera CEO Ron Shaich kept investors' eyes on the long game. "The power of our multi-year strategic plan and the impact of our initiatives to transform Panera into a better competitive alternative with expanded runways for growth becomes ever more clear with each passing quarter," Shaich said. The CEO pointed to rising market share and good early results from Panera 2.0, delivery, and digital ordering as driving forces for the company's success.

Can Panera keep up the pace?

Panera sees plenty of room for further growth ahead. In Shaich's view, "Because of the strength of our initiatives, we are confident our efforts will translate into market share gains and sustainable double-digit earnings growth."

Panera's guidance reflected that expectation. For 2017, Panera expects to post adjusted earnings of $7.45 to $7.70 per share, up 11% to 14% from 2016 figures. That's consistent with investor expectations, albeit toward the lower end of them. Comps should rise 3.5% to 4.5% for company-owned stores, and Panera hopes to open another 70 to 80 cafes across its system.

Panera shareholders were happy with the news, and the stock climbed more than 2% in after-hours trading following the announcement. The restaurant chain's growth rates aren't incredibly impressive, but in an industry environment that has had some headwinds, Panera is moving forward with its strategic vision and expects bigger payoffs in the near future. 

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Panera Bread. The Motley Fool has a disclosure policy.