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Panera Bread Company Case Analysis Panera Bread Company’s Growth Strategy Case Analysis Among the crowded field of casual, quick-service restaurants in America, the distinctive blend of genuine artisan bread and a warm, comfortable atmosphere has given Panera Bread Company a golden opportunity to capture market share and reward shareholders through well-planned growth. With the objective of opening approximately 1,000 more bakery-cafes in the next three years, Panera Bread Company must make prudent strategy decisions about new store locations, supply-chain management and expanded offerings, all the while continuing its above-average earnings per share growth of at least 25 percent per year. With 170 stores in the development pipeline in 2007 and several hundred more to reach its goal, Panera Bread Company faces a task many companies have failed at time and time again, resulting in massive debt, contraction and contributing to the flame-out of a once promising brand and stock investment. The decisions surrounding how to expand should be based on analysis and evaluation of the successful operations and financial performance thus far. Specifically, the plausible proposition of growing franchisee-owned stores in contrast to company-owned stores is a driver and key success factor for Panera Bread Company. We discuss these trends and recommend expansion at a sensible pace by encouraging franchisee stores in untapped markets, and continuing the success of product offerings and the focus on quality control through wise supply-chain management. This company thrives on first-time customers and word of mouth to continue its growth. “The company’s marketing research indicated that 57 percent of consumers who have “ever tried” dining at Panera Bread had been customers in the past 30 days” (C-169). Panera Bread has accomplished a distinctive position in the restaurant industry, making it possible to market to a growing customer pool that desire better quality foods. The growth. -----------Panera Bread Company Panera Bread: A Case Study Misti Walker Panera Bread: A Case Study 1 Strategy Panera Bread’s strategy is “to provide a premium specialty bakery and café experience to urban workers and suburban dwellers.” This strategy is most closely aligned with a broad differentiation strategy, or being unique in ways that a broad range of consumers find appealing. Prior to taking the Panera concept nationwide, the owners performed cross-country market research and concluded that consumers could get excited about a quick, high quality dining experience. The concept is a mix between fast food and casual dining, or fast casual. By choosing this strategy, Panera is attempting to achieve competitive advantage in the unique offerings it provides, offerings that rivals don’t have and can’t afford to match. In this case, delicious handcrafted bread arriving fresh daily, served in an inviting atmosphere is the company’s competitive advantage and core competency. SWOT Analysis Strengths - Repeat customers, learning curve, word-of-mouth, fresh, quality food, rapid market penetration, economies of scale, customer service, good atmosphere Weaknesses - leased land, off-site dough preparation and delivery, many untapped markets, no sustainable competitive advantage, unclear strategic direction, unfavorable financial trends Opportunities – catering, national focus on health, dinner crowd, global sales Threats – bad economy, high gas prices, highly competitive industry Financials Net profit margin Return on stockholder’s equity Debt to Equity Ratio Current Ratio 2006 .071 14.8% .365 1.16 2005 .081 16.5% .381 1.18 2004 .081 15.9% .345 1.05 2003 .084 15.8% .239 1.58 2002 .076 14% .215 1.83 Return on Sales (by business segment) 2006 Company stores 18.5% 2005 19.6% 2004 19.8% 2003 20.7% 2 Franchises Dough Combined 88.0% 9.9% 23.3% 87.7% 9.0% 24.5% 88.0% 6.7% 24.6% 88.7% 7.0% 25.8% The franchise business segment is showing above average returns on sales. This is... -----Panera Bread Company Case 1)Ans: • Purpose: They are bakers of bread. Their main purpose is to produce and serve fresh breads daily. • Mission: A loaf of bread in every mouth. (ref: www.panerabread.com) • Strategy: Panera believes that key to leading an organization is to understand the long term trends at play and getting the organization ready to respond to it. So far, selling high-quality, high-priced fast food has worked just fine for Panera. They have an aggressive growth strategy to open as many stores as possible each year. 2)Ans: Ron Shaich has created values among the customers by satisfying their needs and demands. He has changed the trends by giving new features. For example, first of all, each location features an earth-toned décor with fireplace, comfortable couches, and current newspapers. Secondly, the menu features a wide variety of made-to-order sandwiches prepared with freshly baked artisan breads, desserts, crisp salads, homemade soup, and gourmet beverages. Thirdly, unlike other restaurants here food is served in baskets or in china plates and cups, and customers eat with metal silverware. Last of all, more than Panera’s 700 stores offer Wi-Fi facility to their customers. Because of these innovative adoption, Panera has achieved a tremendous growth rate which indicates, Ron Shaich has utilized the open market system model perfectly. 3)Ans: To meet their aggressive growth strategy Panera had to expand its market by opening many stores each year. Although they needed a lot of franchise, they maintained a ---Panera Bread Overview Panera Bread is ready for an epochal change in American eating habits. The company is a leader in the quick-casual restaurant business with more than 1,027 bakery-cafes in 36 states. Its locations, which operate under the Panera and Saint Louis Bread Company banners, offer made-to-order sandwiches built using a variety of artisan breads, including Asiago cheese bread, focaccia, and its classic sourdough bread. Its menu also features soups, salads, and gourmet coffees. In addition, Panera sells its bread, bagels, and pastries to go. Almost 400 of its locations are company-operated, while the rest are run by franchisees. Panera Bread's is trying to provide premium specialty bakery and café experience to urban workers and suburban dwellers. They want to make the experience of dining at Panera so attractive that customers would be willing to pass by the outlets of other fast-casual restaurants competitors to dine at a near-by Panera Bread. They have strong competition through-out the whole fast-food/restaurant business. Two main competitors that they have are Starbucks and Einstein Bagels. They are a proven company that is always looking for ways to move forward, and advance their business. 1. What is Panera Bread's strategy? What type of competitive advantage is Panera Bread trying to achieve? Panera Bread's strategy is to provide premium specialty bakery and café experience to urban workers and suburban dwellers. Panera is trying to be "better than the guys across the street." They are trying to make the experience of dining at Panera so attractive that customers would be willing to pass by the outlets of other fast-casual restaurants competitors to dine at a near-by Panera Bread. 2. What does a SWOT analysis of Panera Bread reveal about the overall attractiveness of its situation? Does the company have any core competencies or distinctive competencies? Panera's Resource Strengths and Competitive Assets: Leading bakery-café... -------Panera Bread Strategy Running head: PANERA BREAD CASE Title: Panera Bread Strategy Ron Johnson March 1, 2009 Southwestern College Professional Studies Abstract This case study is about Panera Bread Company and its strategy it wishes to employ to become the best brand name of fresh bread in the United States. Panera Bread’s use of a broad differentiation strategy has helped their profitability and growth and rivals have found it hard to compete with the competitiveness of Panera Bread. A SWOT analysis will reveal the competitive advantage Panera Bread has and why this company is in an attractive situation and what Panera Bread must do to strengthen its competitive advantage against rival chains. Panera Bread Strategy Neighborhoods and cities all around the country are enjoying a tradition of freshly baked artisan breads from Panera Bread bakery-cafes. A driving force behind Panera Bread was to create “a premium specialty bakery and café experience to urban workers and suburban dwellers” (Thompson, Strickland, & Gamble, 2008, pC-87). Heading into 2007, Panera Bread Company’s market presence was expanding rather swiftly. “Between January 1999 and December 2006, close to 850 additional Panera Bread backery-cafés were opened, some company owned and some franchised. Panera Bread reported sales of $829 million and a net income of $58.8 million in 2006. Sales at franchised-operated Panera Bread bakery cafés totaled $1.2 billion in 2006” (Thompson, Strickland, & Gamble, 2008, pC-87). Panera Bread’s strategy was and still is to make great bread and to make it broadly available. Part of that strategy is to make there cafés a home away from home, where people are comfortable and relaxed. What competitive strategy did Panera Bread use to grow its business? There are a number of ways that companies employ competitive strategies and that can depend on a number of things. Panera Bread’s competitive strategy approach is geared more to a broad differentiation strategy, where the... -------------------Panera Bread Case Study In 1993, AU Bon Pain Company purchased the Saint Louis Bread Company. In 1995, top management at Au Bon Pain instituted a comprehensive overhaul of the newly-acquired Saint Louis Bread locations. The overhaul included altering the menu and the dining atmosphere. The vision was to create a specialty cafe anchored by an authentic, fresh-dough artisan bakery and upscale quick-service menu selections. This acquisition proved successful for Au Bon Pain. Between 1993 and 1997, average unit volumes at the revamped locations increased by 75% and over 100 additional locations were opened. In 1997, the bakery-cafes were renamed Panera bread in markets outside of St Louis. The Panera business plan had worked well and management concluded it had broad market appeal and could be rolled out nationwide. The management team quickly realized the potential of Panera Bread to flourish into one of the leading fast-casual restaurant chains in the nation. With this realization came the need for a more focused management team and greater financial resources. It was not in their best interest to continue with both Au Bon Pain and Panera Bread. In 1998, they went exclusively with Panera Bread and sold their Au Bon Pain bakery-cafe division. After the sales transaction to ABP Corporation was complete, the new Panera Bread Company was restructured and had 180 St Louis Bread and Panera Bread bakery-cafes and a debtfree balance sheet. Over the next 8 years a combination of company owned and franchised bakery-cafes opened, for a total of 850 additional locations. Exhibit 1 shows their success between 2002 and 2006. Their financial stats remained strong, with a continuous increase in revenue and net income. Panera's strategic intent was to make great bread broadly available to consumers across the United States. They have plans to open 170180 cafe locations in 2007 and to have nearly 2,000 Panera Bread bakery-cafes open by the end of 2010. Management was confident that their attractive... ------------------Panera Bread Introduction If you analyzed the restaurant industry using Porter's five forces model, you wouldn't be favorably impressed. Three of the threats to profitabilitythe threat of substitutes, the threat of new entrants, and rivalry among existing firmsare high. Despite these threats to industry profitability, one restaurant chain is moving forward in a very positive direction. St. Louisbased Panera Bread Company, a chain of specialty bakery-cafés, has grown from 602 company owned and franchised units in 2003 to over 877 today. In 2005 alone, its sales increased by 33.6% and its net income increased by 35.2%. So what's Panera's secret? How is it that this company flourishes while its industry as a whole is experiencing difficulty? As we'll see, Panera Bread's success can be explained in two words: positioning and execution. Changing Consumer Tastes Panera's roots go back to 1981, when it was founded under the name of Au Bon Pain Co. and consisted of three Au Bon Pain bakery-cafés and one cookie store. The company grew slowly until the mid-1990s, when it acquired Saint Louis Bread Company, a chain of 20 bakerycafes located in the St. Louis area. About that time, the owners of the newly combined companies observed that people were increasingly looking for products that were "special"that were a departure from run-of-the-mill restaurant food. Second, they noted that although consumers were tiring of standard fast-food fare, they didn't want to give up the convenience of quick service. This trend led the company to conclude that consumers wanted the convenience of fast food combined with a higher-quality experience. In slightly different words, they wanted good food served quickly in an enjoyable environment. The Emergence of Fast Casual As the result of these changing consumer tastes, a new category in the restaurant industry, called "fastcasual," emerged. This category provided consumers the alternative they wanted by capturing the advantage of... -------Panera Bread Panera Bread Company 0. INTRODUCTION The Panera Bread legacy began in 1981 as Au Bon Pain Co., Inc. Founded by Louis Kane and Ron Shaich, the company prospered along the east coast of the United States and internationally throughout the 1980s and 1990s and became the dominant operator within the bakery-cafe category. In 1993, Au Bon Pain Co., Inc. purchased Saint Louis Bread Company, a chain of 20 bakery-cafes located in the St. Louis area. The company then managed a comprehensive re-staging of Saint Louis Bread Co. Between 1993 and 1997 average unit volumes increased by 75%. Ultimately the concept's name was changed to Panera Bread. Panera Bread has been recognized as one of Business Week's "100 Hot Growth Companies."As reported by the Wall St. Journal's Shareholder Scorecard in 2006, Panera Bread was recognized as the top performer in restaurant category for one-, five- and ten-year returns to shareholders. Today, there are more than 1160 Panera Bread bakery-cafés in 40 states delivering fresh, authentic artisan bread on a national scale. 1. STRATEGIC CHALLENGE Panera Bread’s major problem is its development in North America and the disparity of its implementation in general. The company has many cafés all around the United States, in major cities such as St Louis, Los Angeles, Philadelphia, Dallas… but big cities such as New York city, Phoenix, San Antonio, New Orleans,… do not have any Panera Bread Cafés. The strategic challenge for Panera Bread is to develop the implementation of the company all around North America before going to the international market. With its own characteristics and a good development, Panera Bread will be a major actor on the bakery-café market and will compete with big companies such as Starbucks or Subway. 2.COMPETITION ANALYSIS Core Competence -The company’s fresh-dough-making capability for fresh baked and quality goods served in a comfortable environment. SWOT Strengths: -Panera Bread is... -------------------------Business Strategy Panera Bread Business Stratgery / Case: Panera Bread Company / Igor Maas / 02.15.2008 The main challenge is to determine how Panera Bread can continue to achieve high growth rates in the future. Panera Bread is operating in an extremely high competitive restaurant market which forces the company to improve and to grow steadily for staying profitable. The company’s mission statement of putting “a loaf of bread in every arm” is just underlying Panera’s commitment for growing. They are now in a good financial situation and facing growth rates of up to 20% per year in a niche market that has a great growth potential. In the next 7 years the fast-casual market is expected to grow by 500% in sales to a total of $30 billion. Therefore I think that there are 3 alternatives which can be considered for the future. The first idea that came to my mind is to sell Panera or going join venture with one of the big players in the restaurant industry. Panera has an impressively high market value which is indicated by the goodwill estimation on the balance sheet. By getting together with a major franchising company like McDonalds or Burger King, Panera’s expansion could be supported with a much greater amount of money. The backside of this deal would be that Panera’s executives would lose their controlling power over the company’s operations and would allow the joined company to misuse Panera for own interests and goals. Considering these issues by getting together with another company opens up questions of the necessity of a joint venture which led me to the second alternative. The company should keep up with their strategy of a steady growth model and the production of high quality products. Panera was doing really good in the last couple of years and the fast casual market has a great undeveloped potential for the future. Nevertheless, Panera has to be aware of major franchisers competitors who have the power and willingness to compete with Panera for customers, market share and... ----------------------------Panera Bread Quality Improvement Operations Management Quality Improvement Introduction Following your advice at class, I decided to choose a different organization that I work for. I did this primarily for two reasons: to learn about the mission statement and operations strategy of another company and to apply the quality improvement concepts to a completely new operation’s environment. I chose The Panera Bread Company (NASDAQ: PNRA). That is the place I have been studying for the last year where I could observe how they operate. During this time, I have seen several areas that could be improved. For this assignment I chose one in particular that has a strategic importance according to the company’s mission statement. As a note, I utilized the company’s 10K for the mission statement and operations strategy research. Mission Statement Our MISSION is to provide high quality products and exceptional service to our customers. ”A loaf of bread in every arm®”. Operations Strategy To achieve their mission and competitive advantage, Panera Bread will conduct their business by reaffirming their commitment daily to the following strategic concepts: | |Diff|Resp|Service: always exceed the customers' expectations | | |eren|onse| | |tiat| | |ion | | | | |Neighborhood: maintain the position as THE friendly and quick neighborhood bakery in the | | | markets. | | | | | | |Community: engage in a working partnership with civic and charitable activities.... ---------------------------Panera Bread Case Study Panera Bread is a company of small beginnings, starting out as a chain of small scale bakery-cafes along the east coast to having over 1,200 locations in over 40 states. Panera is a company that strives to project an inviting atmosphere in all of its establishments. Panera’s stores are mostly located in suburban areas with heir target customers being urban workers and suburban dwellers. “A loaf of bread in every arm” is the mission statement of Panera Bread. Panera Bread bakes more bread each day than any bakery-cafe in the country. Panera’s menu spans from muffins and bagels to soups and salads to a variety of sandwiches. Panera Bread prides itself on providing the highest quality of food that customer enjoy. Panera’s competitors include restaurants in the fast-casual restaurant market such as Applebee’s, Baja Fresh and Fuddruckers. Panera Bread also has to compete with common fast food restaurants such as McDonald’s and Wendy’s. Although, competition is fierce in these markets, Panera has been able to differentiate itself from other competitors. One of the main problems that Panera Bread is facing is their pricing strategy. With the state of the economy today, it definitely affects the consumer’s ability to eat at places like Panera Bread, especially when there are less expensive options available. These competitors, most of which are in the fast food industry, offer less expensive food items, although they may be of a lesser quality, they still pose a major threat. Fast food restaurants such as McDonalds may operate differently, however they have a strong presence in suburban areas, which is where Panera is primarily located. There is approximately one Panera location for every ten McDonald’s. Also, full service restaurants such as Applebee‘s, are beginning to offer lower priced menu options. For example, Applebee’s recently began offering 2 for $20 deals where customers can get an appetizer and two entrees for $20.... --------------------------------------Panera Bread Swot SWOT Strengths Steady Fast growth: Panera is one of the fastest growing chains with sales over $200 million in 2001. According to exhibit 2 (Dess pg. 667) Panera Bread in 2002 ranked with the highest three-year sales growth rates as of June 2004. Panera Bread has about 1,027 baker-cafes in the United States, and is widely recognized for driving the nationwide trend for specialty breads. This is very impressive for this type of fast-casual food industry. Part of exciting market segment: The new fast-casual market segment is developing quite rapidly and these restaurants are becoming key players in the industry. This market is a combination of the quick service of traditional fast-food restaurants with the higher quality food products found in sit-down restaurants. It?s a $6 billion industry growing at 15 to 20 percent each year. (Dess) International Growth: By the en of 1997, the company had 96 bakery-cafes outside the United States, in Chile, the Philippines, Indonesia, Thailand, Brazil, and the United Kingdom. This is particularly important since international sales for the Top 100 chain restaurants are still at an increasing rate. Quality Ingredients: Panera only uses the highest-quality ingredients, with only fresh dough and preservatives and the bread is baked fresh everyday. Panera Bread has a strong presence in the bakerycafe segment. They have high quality food, including the award winning sourdough bread. Meeting Customer Demands: In there attempts to take substantial steps in meeting growing customer demands, they have equipped their restaurants with free wireless internet. By offering this amenity they can fully meet the needs of sophisticated and diverse customer base. Panera Bread has strong customer loyalty; they have a strong appeal to customers. They also have a wide variety of food which appeals to a large group of people. Commitment to the community: The Company established Operation Dough-Nation, a program that allows... ------------------------------Case Analysis Panera Bread Panera Bread's sales growth rate for 2003 was 28.1% and 38.1% in 2002; therefore the sales growth rate for the company is increasing at a decreasing rate. The decreasing rate of sales growth may be attributed to the company's current marketing strategy. The company's ad-to-sale ratio was only 2.1% compared to the category average of 4% Also; Panera Bread does not have a lot sufficient of bargaining power with its suppliers, which may affect its net income. A loaf of bread in every arm is the current mission statement for Panera Bread, which is a narrow statement and limits the scope of the company's activities in terms of products and services. Considering the company is in the casual dining industry, the mission statement is irrelevant and inappropriate. Revenues increased from $350.8 million in 2000 too $977.1 million in 2003 along with ROS, ROI, and ROE (see appendix 1); therefore leading to the conclusion Panera Bread has a quality top management team. Also, the company has a diversified Board of Directors with only one insider and five outsiders and the Board of Directors appears too be active in the company. Panera Bread has several external factors which may affect the company, such as climate, inflation rates, unemployment level, and wage levels. Climate can have a dramatic effect on Panera Bread. If crops, such as wheat, lettuce, and tomatoes are damaged due to severe weather the price of the crops will increase. The increase in the price of crops will force Panera to either suffer the loss to net income or pass the increased cost to consumers. An increase in inflation rates causes the general price level of products and services to rise, therefore decreasing the purchasing power of the dollar and forcing consumers to slow down their spending. If unemployment levels rise the labor force decreases, which decreases the buying power of those consumers. Wage levels can also have either a positive or negative impact on Panera Bread; if wage levels... --------------------------------------------Financial Analysis Of Real & Virtual Companies Financial Analysis of Virtual and Real Companies ZeroMillion.com, 2006, states The Current Ratio is one of the best known measures of financial strength. It is figured as shown below: Current Ratio = Total Current Assets / Total Current Liabilities A generally acceptable current ratio is 2 to 1. But whether or not a specific ratio is satisfactory depends on the nature of the business and the characteristics of its current assets and liabilities. The minimum acceptable current ratio is obviously 1:1, but that relationship is usually playing it too close for comfort Huffman Trucking and J B Hunt have a current ratio of 1:1 while Knight Transportation has a current ratio of 3.6:1. The current assets for Huffman Trucking and J B Hunt are almost the same as their current liabilities. Knight Transportation has current assets of $96,070 and current liabilities of $26,154. Knight should not experience any difficulty paying their obligations. Huffman Trucking and J B Hunt should look at other methods to increase their current assets or decrease their current liabilities. I was unable to calculate the current ratio for McBride Financial because they do not have a balance sheet listed on their website. The current ratio for Countrywide Financial is 0.3:1; which is below the minimum acceptable of 1:1. The current liabilities for Countrywide Financial almost four times their current assets; they need to determine what is causing their short/current long-term debt and other current liabilities and find a way to decrease them. As a lender, they should know the importance of a strong current ratio is necessary when obtaining outside financing. The current ratio for Accredited Home Lenders is 0.5:1; which is below the acceptable minimum. Accredited Home Lenders is purchasing almost of their assets through debt instead of with equity, which is decreasing their current ratio. The current ratio for Kudler Fine Foods is 17:1 and they should not have any difficulty paying... --------------------------------------------Panera Bread Evaluation Overview The food business is a broad range of businesses. Food is a basic need of consumers like clothing, and shelter. For a company to enter into the food business it has to assess the various segments of this business. These ranges from production of food, processing, and marketing. The company prior to entering a market in this line of business should assess its capabilities and compare these to the kind of needs of the consumers – would the customer be a processor, or a consumer?Is the product that the company can offer a raw material, processed food, or to serve a group of consumers who would like to eat and yet also need some little pleasure and not merely to satisfy their hunger? In the consumer segments of the market the company can classify these into consumers who eat at home, consumers who eat in restaurants, or they merely eat out say for camping. If they eat in restaurants would they prefer to eat in fastfoods because their concern is merely to eat something they don’t eat at home, or do not want to spend so much time as eating? Or would they want to experience once in while in a sit down restaurant where they eat, enjoy the view, or talk to friends while eating, or merely while away the time? Panera has assessed its capabilities and strengths and in the process has embarked to enter the food market on a very narrow segment of the market in terms of the uniqueness of its product – to serve customers who are looking for the fresh smell of home baked food, feel the joy of tasting fresh bread, enjoy the ambience of the restaurant and the view, or also to be able to work on their laptops and connect to the internet on a wifi. It has further narrowed its market segment by selling at a price that is above the fastfood market and thereby identify itself as not being with the crowd or mass market, and yet offer prices that is much lower than in a sit down, exclusive type of restaurants, or clubs. It is this understanding the marketing concept of... ---------------------------Panera Bread Marketing Mix Proposal Signature Frozen Yogurt Table of Contents Executive Summary For the past 28 years we have been committed to offering a wide variety of healthy entrée options at the highest quality for a reasonable price, however, we have never offered a selection of healthy option desserts and therefore have decided to launch a new product, the Signature Frozen Yogurt. This product is a secret blend of all-natural ingredients. One of the most important ingredients is real nonfat milk, which has been certified by the National Yogurt Association to carry the Live and Active Cultures. Regardless of the flavor, our crispy and tangy yogurt is designed to awaken the senses and blend perfectly with each of our freshly cut fruit toppings. It is low in fat, contains no cholesterol, no preservatives, is fortified with calcium, and is made of the highest ingredients. The competitive advantage of this product is the place the product will be sold, at our already established cafés. The café already draws in customers and now to complete their meal, instead of having to travel elsewhere for a healthy option desert, they have it already where they are eating, which means no extra traveling costs, or planning is required. The convenience factor is now added which is a very important in the American lifestyle today. Unlike the fast food competitors, our new dessert will keep us at the top of the fast-casual, bakery-café industry by continuing to provide for the millions of Americans who are looking to eat healthy. While competitors are struggling to keep up with today’s prominent healthy-eating trend, we remain a valuable asset to the cause. We will use mass marketing techniques in order to target our chosen market for the newly created Signature Frozen Yogurt .The initial market will consist of New York and California, two places which have seen a growing trend in the market for frozen dessert. The population will consist of individuals roughly between 19-35 years of age,... ----------------------------------------Panera Bread Panera Bread Submitted by ButterCutie111 on February 27, 2008 Category: Business Words: 1324 | Pages: 6 Views: 769 Popularity Rank: 7,696 Average Member Grade: N/A (Add a Comment / Grade this Paper) Overview Panera Bread is ready for an epochal change in American eating habits. The company is a leader in the quick-casual restaurant business with more than 1,027 bakery-cafes in 36 states. Its locations, which operate under the Panera and Saint Louis Bread Company banners, offer made-to-order sandwiches built using a variety of artisan breads, including Asiago cheese bread, focaccia, and its classic sourdough bread. Its menu also features soups, salads, and gourmet coffees. In addition, Panera sells its bread, bagels, and pastries to go. Almost 400 of its locations are company-operated, while the rest are run by franchisees. Panera Bread’s is trying to provide premium specialty bakery and café experience to urban workers and suburban dwellers. They want to make the experience of dining at Panera so attractive that customers would be willing to pass by the outlets of other fast-casual restaurants competitors to dine at a near-by Panera Bread. They have strong competition through-out the whole fast-food/restaurant business. Two main competitors that they have are Starbucks and Einstein Bagels. They are a proven company that is always looking for ways to move forward, and advance their business. 1. What is Panera Bread’s strategy? What type of competitive advantage is Panera Bread trying to achieve? Panera Bread’s strategy is to provide premium specialty bakery and café experience to urban workers and suburban dwellers. Panera is trying to be “better than the guys across the street.” They are trying to make the experience of dining at Panera so attractive that customers would be willing to pass by the outlets of other fast-casual restaurants competitors to dine at a near-by Panera Bread. 2. What does a SWOT analysis of Panera Bread reveal about... -------------------Company Analysis: Panera Bread Company Company Analysis Panera Bread Company is a small cap stock that sells on the NASDAQ with the ticker symbol of PNRA. Panera Bread Company operates in the retail bakery-café segment of the restaurant industry in the services sector. Under the control of CEO Ronald Shaich, Panera Bread Company functions under the names of Panera Bread Company and St. Louis Bread Company. Originally, Panera operated primarily only on the east coast but has now opened up operations in 35 states. Panera’s stores are located mostly in suburban areas near malls and other shopping centers. Panera Bread offers an assortment of breads, deli sandwiches, salads, and pastries among other products. Panera competes in the restaurant industry against such restaurants as McDonald’s and Wendy’s, but Panera’s differentiation from its competitors comes from its café environment including a more up-scale and healthy menu (see menu). Panera Bread Company began as Au Bon Pain Company in 1981 operating on the east coast. In 1993 Au Bon Pain Company purchased St. Louis Bread Company, which was comprised of 20 bakery-cafes in the St. Louis area. From the years 1993 to 1997, the bakery-cafe names changed to Panera Bread. In 1999, Au Bon Pain Company sold all business units except for Panera and the company was renamed Panera Bread Company. Since the companies restructuring Panera Bread Company has become one of Business Week’s “100 Hot Growth Companies.” Panera Bread Company has recognized large scale growth in recent quarters and is now on pace for large growth rates in the future. Panera currently has 429 franchise operated stores and 173 company-owned bakery-cafes. Panera’s ability to increase sales of franchises has enabled Panera to grow rapidly. Panera does not sell single-unit franchises but rather sells franchise agreements of generally 15 stores in 6 years. Panera has strict criteria that must be met to buy a franchise including a certain amount of capital that is required.... -------------------------------------Strengths An attractive and appealing menu (see case Exhibit 6)—Panera offers high quality food at a good price (the company delivers good value for the money); moreover, it has menu offerings for the more health/weight-conscious diner Bread-baking expertise (definitely a core competence)—artisan breads are Panera’s signature product Panera Bread is the nationwide leader in the bakery-café segment Panera Bread has high ratings in customer satisfaction studies A good brand name that management is continuing to strengthen The fresh dough operations and sales of fresh dough to franchised stores is a source of revenue and profit (see case Exhibit 1 showing that fresh dough cost of sales to franchisees run well below the revenues from fresh dough sales to franchisees) Initial success in catering—extends the company’s market reach Has attracted good franchisees—sales at franchised stores run a bit higher than those at company-owned stores (see case Exhibit 2) The financial strength to fund the company’s growth and expansion (see case Exhibit 1) without burdening the company’s balance sheet unduly with debt Weaknesses A less well-known brand name than some rivals (Applebee’s, Starbucks) Sales at franchised stores run a bit higher than those at company-owned stores—why is this occurring? Are franchisees better operators? Opportunities Open more outlets, both company-owned and franchised—there is untapped growth potential in a number of suburban markets as shown in case Exhibit 3 Open Panera Bread locations outside the U.S. as market opportunities in the U.S. begin to dry up Threats Rivals begin to imitate some of Panera’s menu offerings and/or dining ambience, thus stymieing to some extent Panera’s ability to clearly differentiate itself from rival chains New rival restaurant chains grab the attention of consumers and draw some patrons away from Panera—in other words, competition from other restaurant chains (either those in the fast-casual segment or other restaurant categories) becomes more intense Panera Bread begins to saturate the market with outlets, such that it becomes harder to find attractive locations for new stores and the company’s growth slows