Panera breads business model is, “to provide a meal and dining environment of sufficient high quality that customers would gladly pay for that quality – at a price that would also make the company financially successful” (Panera Bread Case). Through Panera Bread’s business model one can see that they took the marketing technique of higher quality for slightly higher prices. Panera bread differentiated itself from many competitors through its superior quality and welcoming environment. This business model deemed successful at first and helped the company to grow and maintain profits, but over the recent years Panera has been running into some obstacles. Personally I like their business model and it has been proven with their early success, …show more content…
With long-term debt Panera Bread is not obligated to pay back the entire loan within a year and will be able to slowly pay it off over the course of many months. This will have a much smaller financial impact on Panera from month to month as the repayment amount wont be as much as short-term debt. With the use of long-term debt the company can get back on track and increase their growth while maintaining margins. This will lead to an influx of revenue that can be used to pay off the long-term debt. In addition to this once the company reaches their growth goals they will be able to increase prices to increase the margins again, once again helping to pay off the remaining long-term debt issued. Short-term debt is more desirable for a brand new company that has uncertain costs. Panera Bread has been established for several years and has a relatively good idea on what their costs should be. With short-term debt you cannot borrow as much, and the millions of dollars that would be needed might be too much to repay within a year for the company. The company simply needs too much money to use short-term debt. Long-term debt gives the firm the time and money they need in order to meet their
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The Panera Bread legacy started in 1981 as AuBon Pain Co., Inc. In May of 1999, all of the AuBon Pain Co., Inc.’s business units were sold, except for Panera Bread, thus the company was renamed Panera Bread (Panera). As of December 2015, there are 1,972 bakery-cafes in 46 states, the District of Columbia, and in Ontario Canada (Panera, n.d.). Today, Panera Bread has a market capitalization of $4.5 billion and continues to be on a journey to serve food, as it should be. They continue to strive on serving quality foods that are free of artificial ingredients and making sure customers have a great experience.
Another organizational crisis arose in 1995 when efforts to expand the Saint Louis Bread chain in order to increase brand awareness backfired as consumers favored Saint Louis Bread over its parent company. To solve this conflict, new divisional presidents were created for each chain, and in 1999 Shaich convinced the board of directors to sell all the Au Bon Pain cafes and restructure the Saint Louis Bread chain under the name Panera Bread. Panera’s current organizational structure utilizes vertical integration, with 17 fresh dough facilities that deliver to 1,591 cafes and franchises (“Our History”). Upper level managers now make menu and pricing decisions and overlook the marketing, franchise, concept development, legal, technology, supply chain, and human resource departments (“Organizational Chart”). Lower level
Panera Bread Bakery and Café boast of its quality of food and market it as freshly baked breads prepared everyday. But with this kind of strategy involves a lot of spoilage, contributing to the high cost that the company is incurring. In the statement provided in the case, despite the increasing operating profit since 2001, the profit margin remains to be low.
A key aspect of Panera Bread’s business that protects the company from direct competition in the fast food industry is their product niche, artisan fast food. Fast food chains are often criticized for offering unhealthy foods. But, Panera Bread focuses on a higher nutritional value in their products. Dine in restaurants are very susceptible to drops in consumer spending, so Panera Bread’s
Taking out long-term debt would make sense for Panera. Given the fact that their goal is to continue their long-term growth, a long-term note payable would be a better fit than a short-term revolving line of credit. While short-term debt would be ideal if Panera were trying to cover short-term supply or inventory needs, long-term notes payable would allow Panera to borrow at a lower interest rate over a stable period of time.
Expanding the target market of Panera Bread is a good growth opportunity for them. This can be achieved by product line (menu options) extension or by entering international market outside the American continent so as to increase their geographical coverage. In addition, Panera has an opportunity to get additional market and growth by adapting rapidly to changing market and customer preferences. They need to advertise and market themselves as a healthy option for eating out. Health oriented food or food that are low in calories, sugar, cholesterol, etc. is getting very important as people started becoming very health conscious and selective. Their effort to roll out new products with fresher ingredients such as antibiotic-free chicken needs to be further expanded. Recognizing the health risks associated with transfat, Panera had completely removed all transfat from its menu by 2006. Organic food, non GMO, etc. They could increase number of their franchises. A number of markets were still available for franchise development. The have opportunity in front of them to open more outlets, both company-owned and franchises. They could open within North America and mainly in areas where they are not present now, and those areas where the growth potential is good, like some of the suburban markets. Many good locations for fast casual dining options are available in many of the untapped areas. Panera has a good market opportunity outside the small urban niche where greater growth
Panera Bread has established itself as one of the most popular, fast growing “bakery-café” restaurants in the United States as well as in Canada. With 1,800 locations in 45 states, the franchise appears to be unstoppable. This in part is due to the superior customer service experience that keeps customers coming back time and time again. Just to give you an example, in 2012; the most recent year that data is available, Panera Bread brought in an astounding $2.13 billion in revenue, about $1 billion more than its revenue in 2008.
Panera has three business segments: Company-owned bakery-café, franchise operations and fresh dough operations. The company’s growth strategy was “to grow their store profits, to increase transactions and gross profits per transaction, use capital wisely and put into place drivers for concept differentiations and competitive advantage” (Vincelette & Fogarty, 2010, p7.). In 2009 while everyone else was experiencing the hard economic times Panera Bread was sticking to their strategic plan. Panera did not lay off employees, or worry about closing underperforming stores. Instead, they continued to add menu items and even increased prices on existing items. This strategy worked for them and they were able to take advantage of clientele that came from fine dining. The company has
The Panera Bread Company is starting 2007 with unfinished goals and missed targets previously set and a review of their strategy is in order to continue their ongoing success. The company has grown substantially since its inception in the competitive restaurant industry; however, an aggressive target of 2,000 Panera Bread bakery-cafes will require a focused strategic plan. The company has a strong base with loyal customers who appreciate Panera’s unique dining atmosphere with a focus on quality products at a reasonable price. Panera will need to continue its market research and focus on environmental issues, which are an important core value. The opportunity for
As with most restaurants, Panera depends on their customers to come in and spend money. If those customers stop or slow down on their spending habits because unemployment, increased gas prices, or an increase to their overall home expenses, it could affect the Panera’s income greatly. According to the National Restaurant Association, “household income registered a solid increase in 2015” (HowDoesHousehold) giving a benefit to restaurants across America. This increase allowed Panera to continue their expansion of Panera 2.0 café’s even if it wasn’t to the rate at which they had initially hoped for.
The generic competitive strategy that Panera best fits is broad differentiation. This is primarily because Panera sought to be the first choice for patrons looking for fresh-baked goods, a sandwich, soup, a salad or a beverage in a pleasing environment. In this platform Panera has set their eyes on people who may not necessarily be looking for an expensive meal, but might also not want cheap, fast food but instead are looking for a fresh meal that can be enjoyed in a relaxing environment. In this Panera is looking for a
The rivalry among competing sellers, often the strongest competitive pressure, is also fairly high for Panera in the restaurant industry. No switching costs, numerous competitors, and an increase in the availability of healthy food
By leveraging their company, California Pizza Kitchen adds value to their Total Market Value of Capital. They also increase their share price. It should be considered that as they increase their debt to equity ratio, they also increase their risk of default.
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.
Panera Bread is considered to be one of the U.S. most successful fast-casual restaurants. The company is one of the revolution makers in the industry of fast food, which managed to transform the traditional image and perception of to-go products that are available at an acceptable price on the market. As its initial founding company was established in 1981, Panera Bread managed to gain up to 4.5 billion USD in sales by the year of 2015, whereas the average sales per one store made up to 2.5 million USD annually (Thompson). Nevertheless, the company that once managed to upgrade bread and pastry into a trend of fast and healthy eating, today is struggling with massive competition on the fast food market. Its previous strategic strengths now became a burden that stops innovation and creativity and does not