Panera Bread Analysis
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 Bread’s mission statement is “a loaf of bread in every arm”. I find this to be very shallow, lacking direction for employees and meaning. For a company, as successful as Panera, I expected a more developed mission statement. It fails to address some of the key criteria that belongs in effective mission statements. For example, it doesn’t guide employee behavior, address the customers experience and doesn’t tell the employees how the company wants to operate and what type of company it is. Back when its main focus was just on bread this mission statement might have been suitable but now I believe it should show their growth and expansion over the years.
Strategy
The driving concept behind Panera Bread is to provide a premium specialty bakery and café experience to urban workers and suburban dwellers. Panera can compete at a high level in the quick food industry because of what they offer customers better than their
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
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
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.
In order to know how Panera can benefit and grow in the coming years and increase market share moving forward, an analysis of their business gives an idea of where they 've been, where they are, and where they want to be. By analyzing their past performance we are able to determine their situation moving forward. In this analysis we will identify what external factors have and will continue to influence Panera, the strengths, weaknesses, opportunities, and threats as they pertain to Panera, key decisions that need to be made in order to overcome their slowdown, explore any alternatives that may provide benefit, and our recommendations for Panera Bread Company today to capitalize on their successes as well as improve from their failures.
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
Panera is also consistently referred to as “the leader in the fast-casual industry.” This leads us to believe that there are not a plethora of competitors with equal size and competitive strength at the moment. Panera also has one of the most loyal consumer bases in the industry. TNS Intersearch conducted a study in 2011 that scored Panera the highest level of customer loyalty among quick-casual restaurants. They are less likely to switch to rival competitors.
While rivalry of the fast food restaurants is great, Panera Bread did distinguish itself by not only catering to those fast food lovers but also those who prefer casual dining experience. It has entered both markets, almost flawlessly to lessen the competition and expand their market share. When talking about the threat of substitutes, Panera Bread executive team not only provided customers with artisan bakery that uses only fresh and high-quality product with a vast assortment of products but also by providing an atmosphere that is pleasant, not too loud and enjoyable. People can hold a meeting there, friends can spend quality time, some go there to study or write, and space is often large enough for all of those events. This many options that they give to customers are not easily replaceable.
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
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’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
Over the last few decades there has been a huge change in operations. This change has occurred due to the demand for time consuming goods to be delivered faster and faster to the public. The growing population wants goods quicker and more efficiently than ever before; Panera Bread would be
Threat of substitute products – Since food is a commodity that everyone has to have, the restaurant industry in not in danger of substitute products putting them out of business like what happened to blockbuster when online streaming movies and DVD kiosks came along. The threat will be from within the industry creating a similar experience and atmosphere to Panera. A large part on Panera’s advantage is that they cater to all types. Panera has angled themselves in the market to be appropriate for a working lunch, business meeting, quick coffee stop off, family lunch or late night study group.
Panera bread’s growth strategy was to capitalize on Panera’s market potential by opening both company-owned and franchised Panera Bread locations as fast as was prudent (A. A. Thompson). Panera Bread work closely with franchised branches in order for the company to broaden its market penetration (A. A. Thompson). Panera Bread has taken the appropriate measures to gain a competitive advantage to make franchising a successful market for the company to enter. Considering Panera Bread Company keeps interaction with the franchised branches to ensure success gives them the upper hand to ensure continued success.
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
Panera knows what it's good at and has used that as their foundation. Their menu was designed to provide target customers with products built on the company's bakery expertise. They specialized in fresh baked goods, made-to-order sandwiches on freshly baked bread, soups, salads, custom roasted coffees, and other cafe beverages. They offer over 20 varieties of bread.