On March 30th, Charlotte Clegg pitched Panera Bread to the SMIF class. She believed that the job of a portfolio manager is to outperform the market and sectors, not to be satisfied with indexing or achieving average returns. Therefore, even though Panera Bread is not in the S&P500, she explained that it is not only the best restaurant stock to own, but also has outstanding long term growth potential. Panera’s performance (now and in the future) is the best in the fast casual industry and NPD group estimates that fast casual will grow in the double digits through 2022, while the rest of the restaurant industry will seek out growth rates around half a percentage point. Additionally, Panera has just started to take advantage of new market opportunities in the fast growing delivery and catering sectors, which will provide a significant boost to both future revenues and profitability. Therefore, Charlotte emphasized that three key catalysts for Panera in the future: growth in new sales channels, Panera 2.0 (their technological initiative) and the increased trend in healthy eating.
Accordingly, Charlotte recommended to sell 310 shares of XLY (the consumer discretionary ETF) and buy 100 shares of Panera. However, after discussion, the class decided that buying 50 shares of Panera would be best, so we would not be taking on too much active risk. Thus, Charlotte motioned to buy 50 shares of Panera and sell 155 shares of XLY. The motion passed 22 to 5.