Le Pete Bread Company is a national bakery-cafe concept with1,380 Company-owned and franchise-operated bakery-cafe locations in40 states and in Ontario, Canada. The company has grown fromserving approximately 60 customers a day at its first bakery-cafeto currently serving nearly six million customers a weeksystem-wide, becoming one of the largest food service companies inthe United States. Sara Lee Corporation is a global manufacturerand marketer of high-quality, brand-name products for consumersthroughout the world focused primarily on the meats, bakery andbeverage categories. Selected financial information about eachcompany follows:
Sara Lee Le Pete Bread Sales $ 10,793 million $ 1,353.5 millionNet Income $ 527 million $ 86.8 million Return on Assets (ROA) 8.32% 11.55 % Profit margin 7.05 % 6.45 % Asset turnover 1.18 % 1.79Required:
Why is Sara Lee less profitable than Le Pete Bread? Return onassets and return on sales in the bakery industry are 4.85% and8.16%, respectively. How do these two companies compare to theirindustry and what might explain any noted differences?
