Panera Bread Evaluation

1908 WordsJul 28, 20098 Pages
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…show more content…
There is of course the growing popularity on ecological concerns and organic food that Panerashould continue to explore for expansion. Its weakness is its main dependence on the U.S. mainland and in some areas in the mainland and in large cities. Perhaps it is because its product image is freshness. Although Starbuck which is in the same market segment has expanded overseas. Its dependence on the organic raw materials for its product is a threat to the expansion of its market. Assessment of Financial Performance Panera has strong financial condition and profitability. It has grown in its assets and its debt to equity ratio is has been reduced from 38% in 2006 from the preceding year. While its return on equity reduced in 2006 from 2005 its earnings per share increased from 1.69 to 1.88 over the same period. Its gross revenues continue to increase although its net profit rate and gross margin rates have gone down. The reduction in gross margin is perhaps due to a lower pricing scheme which was compensated by increase in volume. The advantage of the restaurant is the low level of receivables. The restaurant business is mainly a cash business. Likewise, it has a low inventory level in relation to its revenues. As shown above the inventory is only 5 days or a turnover rate of 71 times per year. The low current assets and current liabilities is shown by the lower working capital appears to be

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