For a long time, I've found Panera (NASDAQ:PNRA) unpalatable. I even nominated it as the Worst Stock for 2009. However, recent news suggests that my attitude toward shares of the bakery cafe chain was in poor taste.

Panera's third-quarter net income increased 38%, to $19 million, or $0.61 per share. Revenue increased 6%, to $335 million, and company-owned same-restaurant sales increased by 3.3%.

Some of Panera's sales success was due to price hikes on its menu; although the average check increased by 1.5%, Panera boosted menu prices by 2.2%. I've often complained that Panera has used higher prices to pump up its fortunes, instead of generating real traffic growth. But this quarter, the chain was able to achieve 1.8% more transactions year over year.

I'm also impressed that Panera was able to increase same-store sales growth and customer traffic in the third quarter; last quarter, those figures still left something to be desired. Panera also released guidance for next year, projecting a 14%-18% increase in earnings per share.

Perhaps the bakery cafe can do just fine in the current environment. I wouldn't be surprised if reasonably priced, high-quality restaurants such as Panera and Chipotle (NYSE:CMG) (NYSE:CMG-B) continue to tempt budget-conscious customers away from more expensive restaurants such as Cheesecake Factory (NASDAQ:CAKE) and Ruth's Hospitality (NASDAQ:RUTH). Frugality's pretty hip these days, after all.

I'm still a bit leery of the stock, and consumers remain skittish in general. Personally, a stock like McDonald's (NYSE:MCD) strikes me as less risky right now, given its operational success, dividend yield, and lower multiple than many restaurant peers. However, Panera is displaying admirable evidence that it can get customers in the doors despite the economic crunch. In my opinion, that's some admirably fresh news for Panera's investment thesis.

Chipotle Mexican Grill is a Motley Fool Rule Breakers selection and a Motley Fool Hidden Gems recommendation. The Fool owns shares of Chipotle. Try any of our Foolish newsletters free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a freshly baked disclosure policy.