Opening of a new business almost always requires significant financial resources. In order to develop financing strategies and to observe potential profitability of your business, it is useful to take a brief look at the financial statements estimations of your business. Panera Bread is a public company, and we can find the financial statements of the company in the web. A new location of Panera in London, England, will become a part of the whole corporation, because it will be operating on franchise basis. It is obvious, that this new entity will have its own finances and will be striving to generate enough revenues in order to cover the costs and to gain sufficient profits. However, it is important to remember that the start of this business will involve significant costs, because it is necessary to choose the location, to rent the building, to hire the employees and to set all the process so that the business will be operating efficiently throughout time. Thus, taking into consideration all the costs, we should say that new Panera in London will be covering all the initial costs with its revenues throughout the first months of operation, and it is hard to estimate at what moment it will meet its breakeven point.
At this point, it will be useful to take a look at the major financial indicators of Panera Bread, ‘mother’ company of new London entity, in order to see how the company is doing overall and whether its financial results are satisfactory for the stakeholders.
Income statement of Panera Bread reveals a steady growth of total revenues for the period from the year 2011, as well as a steady growth in net income of the company. In such a way, its revenues have increased from $1 822 032 thousands in the year 2011 to $2 529 195 thousands in 2014, and net income, in turn, from $135 192 thousands in 2011 to $179 193 thousands in 2014 (Nasdaq.com). Those numbers shows that the company manages to cover its costs successfully and generates significant profits. Nevertheless, it does not mean that all of the locations of Panera are operating successfully, because it represents general picture, and every of its items is a separate entity with its financials.
A new location of Panera Bread will try to attract as many customers as possible and to build a base of loyal customers in order to increase sales and to have a consistent flow of customers. In such a way, it will set a goal of meeting breakeven point after 4 months of operations, and after this period, it will start to generate enough revenues to have sufficient profits. Therefore, we can say that it will be extremely useful to analyze the financial statements of ‘mother’ company, to look at the financial ratios, such as liquidity and profitability, and to observe balance sheets carefully. It is important in order to have a picture of the financial side of the company, and to see, in which environment Panera Bread in London will be performing.
Another crucial point is to find the resources for the opening of a new business entity. There are various options, such as looking for investors, who will be willing to invest in your business or taking loans that will give you enough resources for the opening. It is hard to judge which of the options better, and every particular case has particular circumstances. In case of new location of Panera Bread in London, England, it will be useful to attract investors, because a ‘mother’ company has a positive image in the eyes of stakeholders, shows good financial results and represents a company with a successful history of performance and numerous locations. In such a way, we should say that Panera in London would try to attract investments from outside in order to finance the opening of the entity. Relying on the financial information of the whole corporation, we can make a good proposition for the investors, because they will see that there are positive prospects for the new location.
References
PNRA Income Statement. (n.d.). Retrieved February 14, 2016, from http://www.nasdaq.com/symbol/pnra/financials?query=income-statement
