HIGHLIGHTS

--  Company-owned comparable sales (calendar basis) up 6.9% in the first 27
    days of Q4 09
--  Franchise comparable sales (calendar basis) up 6.3% in the first 27 days
    of Q4 09
--  Q3 2009 Company-owned comparable bakery-cafe sales up 3.3% over Q3 2008
--  Q3 2009 operating margin up 230 bps over Q3 2008
--  Q3 2009 net income up 38% over Q3 2008
--  Q4 2009 EPS target $0.85 to $0.87 (net of $0.05 of expected asset
    retirement expenses)
--  FY 2010 EPS target set at $3.05 to $3.15 (up 14% to 18% versus target for
    FY 2009)
    

Panera Bread Company (NASDAQ: PNRA) today reported net income of $19 million, or $0.61 per diluted share, for the third quarter ended September 29, 2009, which included the net impact of $0.04 per diluted share of nonrecurring charges resulting from (i) unexpected expenses associated primarily with a state sales tax audit and (ii) an unexpected gain from the Company's partial redemption of its investment in the Columbia Strategic Cash Portfolio. These results compare to net income of $14 million, or $0.45 per diluted share, for the third quarter ended September 23, 2008 and represent a 38% year-over-year increase in net income.

For the thirty-nine weeks ended September 29, 2009, net income was $56 million, or $1.82 per diluted share. These results compare to net income of $42 million, or $1.38 per diluted share, for the thirty-nine weeks ended September 23, 2008 and represent a 35% year-over-year increase in net income.

The Company's third quarter and year-to-date fiscal 2009 consolidated statements of operations and margin analysis are attached as Schedule I. The following tables set forth, for the periods indicated, certain items included in the Company's consolidated statements of operations (in thousands, except per share data and percentages):

                                    For the 13 Weeks Ended
                                 -----------------------------
                                 September 29,  September 23,   Percentage
                                     2009           2008          Change
                                 -------------- -------------- -----------
Total revenue                    $      335,018 $      315,195           6%
Net income                       $       18,894 $       13,740          38%
Diluted earnings per share       $         0.61 $         0.45          35%
Shares used in diluted EPS               31,065         30,557
                                    For the 39 Weeks Ended
                                 -----------------------------
                                 September 29,  September 23,   Percentage
                                     2009           2008          Change
                                 -------------- -------------- -----------
Total revenue                    $      986,521 $      941,041           5%
Net income                       $       56,356 $       41,887          35%
Diluted earnings per share       $         1.82 $         1.38          32%
Shares used in diluted EPS               30,925         30,383

Third Quarter Fiscal 2009 Business Review

Comparable Bakery-Cafe Sales Growth

In the third quarter of fiscal 2009, Company-owned comparable bakery-cafe sales increased 3.3% versus the comparable period in fiscal 2008, increasing sequentially over the prior year in each fiscal monthly period in the third quarter of fiscal 2009 (2.6%, 3.0%, and 4.4%, respectively). Franchise-operated comparable bakery-cafe sales increased 2.5% and system-wide comparable bakery-cafe sales increased 2.8% versus the comparable period in fiscal 2008.

The Company-owned comparable bakery-cafe sales increase of 3.3% in the third quarter of fiscal 2009 included the following year-over-year components: transaction growth of 1.8% and average check growth of 1.5%. Average check growth in turn was comprised of retail price increases of approximately 2.25% and negative mix impact of approximately (0.75)%.

In the third quarter of fiscal 2009, transaction growth and average check growth were fueled by new product introductions, investments in marketing and the improved strength of the catering business.

Operating Margin Improvement

In the third quarter of fiscal 2009, the Company generated operating margin improvement of approximately 230 basis points compared to the third quarter of fiscal 2008. This was primarily a result of sales leverage, year-over-year benefits from purchasing efficiencies and wheat and diesel fuel cost decreases.

New Unit AWS and Development

In the third quarter of fiscal 2009, average weekly sales ("AWS") for Company-owned new units increased to $36,930 compared to $36,383 in the third quarter of fiscal 2008. AWS for Company-owned new units year-to-date through the third quarter of fiscal 2009 was $37,068 compared to $36,505 in the same period of fiscal 2008. A schedule of the Company's third quarter fiscal 2009 AWS is attached as Schedule II.

During the third quarter of fiscal 2009, the Company and its franchisees opened 19 new bakery-cafes system-wide, resulting in 1,362 bakery-cafes open system-wide as of the end of the third quarter of fiscal 2009. The breakdown of Company-owned and franchise-operated bakery-cafes are as follows:

                                               Franchise-
                               Company-owned    operated     Total System
                               -------------- -------------  -------------
Bakery-cafes as of
 June 30, 2009                            566           779          1,345
Bakery-cafes opened                         9            10             19
Bakery-cafes closed                         -            (2)            (2)
                               -------------- -------------  -------------
Bakery-cafes as of
 September 29, 2009                       575           787          1,362
                               ============== =============  =============

Fourth Quarter 2009 Outlook and 2010 Business Outlook

Establishing Fourth Quarter 2009 Targets

Diluted EPS Target

For the fourth quarter of fiscal 2009, the Company is targeting earnings per diluted share of $0.85 to $0.87, net of $0.05 per diluted share of nonrecurring charges for expected asset retirement expenses during the fourth quarter.

The fourth quarter of fiscal 2009 has 13 weeks versus the 14 weeks of the fourth quarter of fiscal 2008.

The fourth quarter of fiscal 2009 diluted earnings per share target is built on the following key metrics:

Comparable Bakery-Cafe Sales Growth

Fourth quarter of fiscal 2009 Company-owned comparable bakery-cafe sales growth, when measured on a calendar basis, is targeted at 5.0% to 6.0%. The assumptions underlying this comparable bakery-cafe sales growth target for the fourth quarter are transaction growth of 2.0% to 2.5% and average check growth of 3.0% to 3.5%, with average check growth consisting of approximately 2.0% price and 1.0% to 1.5% mix impact on average check.

Company-owned comparable bakery-cafe sales growth on a fiscal basis for the fourth quarter of fiscal 2009, when targeted utilizing the same assumptions underlying the comparable bakery-cafe sales growth on a calendar basis, are 3.5% to 4.5%.

Comparable bakery-cafe sales on a calendar basis are different than those on a fiscal basis because, while comparable bakery-cafe sales on a calendar basis match specific weeks on the calendar in 2009 to the same specific weeks on the calendar in 2008, comparable bakery-cafe sales on a fiscal basis do not.

As stated above in this release, the fourth fiscal quarter of 2009 will have 13 operating weeks which is different than the fourth fiscal quarter of 2008 which had 14 operating weeks. In order to provide a clear comparison, however, the fourth quarter target was developed comparing the 13 operating weeks of the fourth quarter of fiscal 2009 versus 13 operating weeks in the fourth quarter of fiscal 2008. The 13 operating weeks on a calendar basis are different, however, than the 13 operating weeks on a fiscal basis.

To be specific, the fourth quarter of fiscal 2009 began on September 30, will end on December 29 and will include the Christmas holiday. The comparable 13 weeks of the fourth quarter of fiscal 2008 on a calendar basis began on October 1, ended on December 30 and included the Christmas holiday as well, while the comparable 13 weeks of the fourth quarter of 2008 on a fiscal basis began on September 24, ended on December 23 and excluded the Christmas holiday. The holiday shift results in the difference between the comparable bakery-cafe sales on a calendar basis and a fiscal basis.

The Company believes that comparable bakery-cafe sales measured on a calendar basis are a more stable and appropriate measure for investors to use when attempting to understand the Company's underlying fundamentals.

The Company is announcing today that Company-owned comparable bakery-cafe sales growth through the first 27 days of the fourth quarter of 2009 (beginning September 30, 2009 and ended October 26, 2009) when measured on a calendar basis were 6.9% and when measured on a fiscal basis were 8.2%.

On a calendar basis, the Company is targeting Company-owned comparable bakery-cafe sales growth of 4.25% to 5.75% in both fiscal period 11 and period 12. On a fiscal basis, the Company is targeting Company-owned comparable bakery-cafe sales growth of 0.75% to 2.25% in fiscal period 11 and 2.75% to 4.25% in fiscal period 12.

Operating Margin Improvement

In the fourth quarter of fiscal 2009, the Company is targeting 0 to 50 basis points of improvement in operating margin net of expected asset retirement expenses. If the expected asset retirement expenses are excluded, operating margin improvement would be targeted at 75 to 125 basis points. This projected improvement reflects the impact of sales leverage and the anticipated year-over-year savings in the cost of wheat, diesel fuel and other commodity costs, partially offset by the Company's plans to continue investing in initiatives intended to drive transaction growth and increased market share.

New Unit AWS and Development

The Company is targeting approximately 20 system-wide new unit openings in the fourth quarter of fiscal 2009. AWS for new Company-owned units is expected to come in at $38,000 to $40,000 for the fourth quarter of fiscal 2009 and finish the year in the top half of the range of the Company's full year target of $36,000 to $38,000.

Full Year 2010 Targets

Establishing Full Year Fiscal 2010 Targets

The Company is today setting its initial target for fiscal 2010 earnings per share at $3.05 to $3.15 per diluted share, which would represent an increase of 14% to 18% in year-over-year diluted earnings per share from the mid-point of the range for fiscal 2009. The continued volatility in the economy makes it difficult to set future targets, but many of the cost inputs for fiscal 2010 are already fixed and clearly understood.

The Company's fiscal 2010 target assumes Company-owned comparable bakery-cafe sales growth of 3.0% to 5.0%. This target assumes transaction growth of between 0% and 2% and average check growth of 2% to 4%. The Company is projecting that it will take modest price increases during fiscal 2010 to cover inflation in costs below gross margin.

In terms of operating margin expansion, the Company is targeting 25 to 75 basis points of improvement in operating profit as a percent of total revenues.

The Company is targeting approximately 80 to 90 new unit openings in fiscal 2010 with slightly more than half being Company-owned. Average weekly sales for new Company-owned units is assumed to be $36,000 to $38,000 in fiscal 2010.

Concluding Comment

Chairman and Chief Executive Officer Ron Shaich concluded, "Over the last several quarters, we've spoken about our commitment to invest in our business to benefit the customer and to utilize the recession to build competitive advantage. We believe our 35% EPS growth in Q3 and the strength of our comparable bakery-cafe sales (up 6.9% on a calendar basis Q4 to date), as well as our positive transaction growth, proves that this strategy is working and that we are indeed taking market share from our competitors.