Panera Bread Case Study

The formation of Panera Bread began in 1978 when Louis Kane bought Au Bon Pain, a retail producer of baked goods. Kane changed it to a wholesale business by opening two cafes and staffing them with bakers and employees, but high production costs made it impossible to cover his overhead. In 1981 Kane decided to remain responsible for site selection and financing, but he chose Robert Shaich to help turn the company around as President of internal operations ("Au Bon Pain History").

As mentioned in the case study, Panera Bread Company is known to be one of the leading bakery/café that offers freshly baked pastries and French inspired entrées across various states in the US. However in the recent years, Panera Bread faced a decrease in their usual high growth rate from 9.1% and 12.0% in the year 2000 to merely 0.2% and 0.5% of comparable sales and annualized unit volumes respectively.

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

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

Panera is able to gain the trust of the people that shop there thanks to their attitude and atmosphere. They are dedicated to the healthy and close culture that often comes with a healthy restaurant. The CEO himself goes to all the restaurants to make sure that things go well and in his own words “Everywhere I go in this country people get it and they come up to me and go thank you for coming here. Americans understand this, they understand quality” (Shaich). They couple this kind of relationship with good service and fast food. They provide a quality product to people while also maintaining ability across all of their restaurants to be fast and effective at their delivery of it. I know that personally, I have never had a bad time at Panera

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

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

Panera Bread has experienced an extreme amount of success since it was established in 1981.

Panera Bread’s intention is “to make Panera Bread a nationally recognized brand name and to be the dominant restaurant operator in the specialty bakery-café segment.” Panera experienced competition from many numerous sources in its trade areas. Their competition was with specialty food, casual dining and quick service cafes, bakeries, and restaurant retailers, including national, regional, and locally owned. The competitive factors included location, environment, customer service, price, and quality of products. Panera learned from its competitors, none of its competitors had yet

1. Continuing their commitment to provide crave-able food that people trust, served in a warm, community gathering place by associates who make guests feel comfortable

As a result, Panera’s “fast casual” niche (between casual dining and fast food) contributes to its relative success; this positioning allowed it to avoid discounting wars and maintain its margins by attracting customers with a higher quality product perceived to be a good value for the money.

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