Last August, I expressed concerns that quite a few companies were scrambling to climb aboard the low-carb bandwagon, just as the wheels appeared to be wobbling off. A year later, the driving force behind the fad, Atkins Nutritionals, has filed for bankruptcy, its followers have abandoned the diet in droves, and most of the staggering 3,800 retail products specifically targeted to the low-carb crowd have either been yanked from store shelves or languish on them at discounted prices.
Now that things have come full circle, it seems fitting that Panera Bread (NASDAQ:PNRA), often cited as the company most affected by the backlash against bread, is back on track again. Yesterday, the bakery-cafe operator reported that second-quarter revenues jumped 33% to $140.2 million. Bakery sales, which represent approximately three-fourths of total revenues, climbed 38% during the quarter, while franchise royalties and fresh-dough sales rose 22% and 18%, respectively. With revenues on the rise, Panera was able to pound out a 61% increase in net income to $10.4 million, or $0.33 per share.
Though not quite as ambitious as the ubiquitous Starbucks (NASDAQ:SBUX), Panera has been expanding at a steady clip. The company has opened 131 new locations since this time last year, bringing the systemwide total to nearly 800. Another 60 outlets are expected to begin baking by the end of the year, though costs to get them up and running will likely put a lid on short-term operating margins.
Like Wendy's (NYSE:WEN) Tim Horton's chain -- which is slated to be spun off in the near future -- aggressive expansion is keeping Panera's top-line growth on an upward trajectory. However, as Alyce Lomax pointed out last month, the company's organic growth is also flourishing once again. After stalling for much of last year, same-store sales were up a robust 9.3% for the quarter. Meanwhile, rival Cosi (NASDAQ:COSI) recently served up a 6.4% gain in second-quarter comps.
Panera has carved out an impressive niche, but it has also rolled out products and services designed to differentiate it from competitors. The company is one of the nation's largest providers of free in-store wireless Internet services. Its new, all-natural chicken has been well received, with chicken menu items as a percentage of total sales quadrupling since this time last year. And for those who can't visit, the Via Panera take-out service is a convenient alternative, offering catering services for everything from early-morning board room meetings to box lunches for family gatherings.
Panera has emerged from the low-carb slowdown relatively unscathed and poised for future growth. Though after running up by more than 60% over the past 12 months, the shares may need some time to cool down.
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Fool contributor Nathan Slaughter owns none of the companies mentioned.
