penaroma brade

8/19/2019 penaroma brade

1/23

Introduction:

Panera Bread Company is operating in 'Fast casual' restaurant category with a defined mission of

providing the best and differentiated customer experience. Panera bread has its roots from 19!

with "u Bon Pain which was then sold to #ouis $ane. Further transitions included its merger

with coo%ie store to form "u Bon Pain Co. &nc led by $ane and haich. (ue to growth

limitation) the business expanded to serve more customers from suburban categories that

included the ac*uisition of aint #ouis Bread Company in 199+ which later become the platform

of Panera Bread. ,he ba%ery-caf gained popularity under aint #ouis Bread co and resulted in

immediate results. ,his brought the store to the pinnacle of success by increasing sales)

expanding business and gave birth to the concept of fast casual category. ,he first mover

advantage in fast casual category gave Panera Bread the competitive edge that leads it to

maintain its leadership even in recessionary period. ,he goodness of artisan bread coupled with a

serene environment provided its consumers the prompt services of fast food at the luxury of fine

dining environment

Panera bread resources lie in its leadership that focuses on the vision of serving highest customer

value. ,he leadership included the founders who envisioned Panera Bread as the leader in fast

casual segment. /onald haich who served as C0 was the master mind behind the organi2ation

success as he reali2ed the potential of artisan bread offerings to customer in a ba%ery-caf

atmosphere.

,he top management is one of the prime resources that evolved Panera. ince the target mar%et

demographics for organi2ation is 34 to 45 years old the top management falls close to this age

range within 63-4 years and thus contributing through their own range of experiences that

reali2e the demand pattern of the demographics while considering the business aspect of

organi2ation.

,he financial strength of Panera also contributed in its overall growth and mar%et leadership. ,he

evolution of Panera was based on a debt-free condition that increased the influx of capital into

establishment of ba%ery-caf restaurants. "lso) since it focused on franchising its business with

almost 47 of its cafes owned by franchises) it served as a mean of contributing to its financial


2/23

resources.

Panera's resources also included its ability to setup ba%ery-store at strategic positions that lead to

stronger sales even in recessionary period. ,his was possible as Panera had a profitable financial

statements and strong management s%ills that made it a desirable tenant for these locations. ,he

human resource is prime resource of Panera considering it is operating in services industry.

Panera recruited s%illed associates for its ba%ery-cafes) dough facilities and support center

operations and also designed different training programs in order to increase its level of

operations. ince the organi2ation was witnessing boom it also lead the managers to en8oy the

success which helped in capturing the highly s%illed and experienced human capital that

ultimately funneled .

I .Current Situation:

A. Current Performance

Founded by /onald hiach "rtisan breads and ba%ed goods Corporate head*uarters in t #ouis

Panera has over 1 billion in revenue &ndustry stoc% outperformer #eader in fast casual category

/onald hiach resigned as C0 3515

ver 1)+55 locations : and Canada 0mploys ;13)555 full time employees.

Mission

Panera commits to provide customers with freshly ba%ed artisan breads and *uality delicious

food that customers can trust.

Objectives

,arget of 17-357 0P growth

Focus on innovative differentiation - salads and paninis

/oll out improved versions of several Panera classics


3/23

II. Corporate Governance

,op planned to resign as Chief 0xecutive fficer immediately followingthe had been Chief perating fficer and subse*uently Co-Chief

perating fficer since


4/23

*red (. *oul%es: =age !@>) was a (irector since une 355+. (r. Foul%es had been a Professor of

rgani2ational Behavior and had been the (irector =and founder> of the uman /esources

Policy &nstitute at Boston :niversity chool of ) was a (irector since ) was a (irector since 355@.

,homas -. )'nch: =age 45>) was a (irector since management has designed and executed a strategy for becoming

the best brand name of fresh bread. Panera is %nown as a casual fast food restaurant) which

means that they are a fast food provider but produce a higher *uality product and offers a uni*ue

dining environment. PBC has designed a broad differentiation strategy which has helped their

profitability and growth in addition rivals have found it hard to compete with the

competitiveness of PBC. ,his PBCGs strategy is Hto provide a premium specialty ba%ery and caf

experience to urban wor%ers and suburban dwellers.I

Political *actors : PaneraGs operations.#egal and regulatory factorsE Panera Bread should

be aware of regulations and laws withwith all :.. restaurants must comply such as those

set forth by the Food and (rug"dministration. #aws dealing with safety) cleanliness) and

food preparation and storageare among these.

-conomical *actors: ,his area includes factors of economic growth) interest rates)

exchange rates and inflation rate. &n the region of interest) what are the economic

conditions - inflation rate) stability of money value) interest ratesJ &s the area economy

growing in or decliningJ Khat's the future hold economicallyJ ow will this affect the


5/23

firm and the mar%et for Panera BreadJ

/ead moreE httpELLwww.mar%etingprofs.comLeaL*stM*uestion.aspJ

*stidN1@9+Oix22+t00dK+Q

Social *actors: ,he environment may has an influence on Panera Bread in that

theweather affects what %ind and how much food it sells. For example) it may sell more

soupduring cold months or in certain regions. ,here is also the possibility of the

environmentaffecting suppliers

,echnolo"ical *actors: ,he advancement of technology such as in research

anddevelopment or management information systems could help Panera Bread better

serveits customers. "dvancements that allow reduction of costs or preparation time may

alsobe of importance to Panera

&.Industr' -nvironment

/. Porter0s *ive *orces:

,hreat of 1e2 -ntrants: )o2

,he threat of new entrants is very high for Panera. HPrimary competitors include specialty

food and casual dining restaurant retailers)I according to /epetti and Aincelette. ,he

barriers to entry are low) and people are always loo%ing for new and interesting places to

eat =which is one of the reasons why Panera was so successful>

&ar"ainin" Po2er of Customers: 3i"h

http://www.marketingprofs.com/ea/qst_question.asp?qstid=17893#ixzz3tEZEdW3Ghttp://www.marketingprofs.com/ea/qst_question.asp?qstid=17893#ixzz3tEZEdW3Ghttp://www.marketingprofs.com/ea/qst_question.asp?qstid=17893#ixzz3tEZEdW3Ghttp://www.marketingprofs.com/ea/qst_question.asp?qstid=17893#ixzz3tEZEdW3G


6/23

Customer power is high in ma8ority of restaurant industry) not as high in the fast casual. Buyers

have a lot of power because there are a lot of other places they could eat. Paneras

are often located in busy places) such as malls or busy streets. ,his means that they

usually have several other eateries around them

&ar"ainin" Po2er of Suppliers: )o2


7/23

Competitive Rivalr' bet2een -istin" *irms: 3i"h

,he restaurant industry provides intense rivalry among competitors) as does the fast

casual restaurant industry. Khile Panera was once one of the only businesses in this

industry) it has been rising in popularity. ,heir competitors do include fast food

restaurants including


8/23

made to order

". Or"ani$ational Activities Anal'sis

Mar%etin"

&n 3559 there were approximately !55 fast-casual establishments in the :.. /ivalry for

this mar%et is strong. ,here are hundreds of fast casual establishments that offer *uic% and easy

food. ,his ma%es rivalry high. ,here is always a threat of a company brea%ing into the mar%et

with a new idea that will steal consumers and revenue. ,his threat causes companies to try

whatever it ta%es to have an advantage over their rivals. =ena) 3511>

ne of the main pulls of fast casual restaurants is the experience and ambiance of dining

in one of their establishments. ,he experience that they put forward is closer to a sit down

restaurant rather than a fast food establishment. ,hey can be a perfect place to read) study or hold

a casual meeting. ,his industry is usually trying to capture their audience with the healthy

options that they believe in. ,he food is a pricier than a fast food restaurant and can range

anywhere from @ to 14. ,his food is of better *uality and is more nutritious for the consumers

overall health. ,his is how they differentiate from fast food. &t is the scope of competitive rivalry.

*inance

&n reviewing the financials for Panera Bread they had some impressive numbers that stood out

and represented the success of the company. &n their letter to investors that was published on

their website they go on to say)I &n 3511 with 33+ million of cash on our balance sheet and no

debt. Ke have been able to deploy more than 655 million in excess capital since the first half of

3515 to increase shareholder value and drive 0P. ,he ration of their cash to debt is very

impressive and it is definitely a driving factor in the financial success of the business. &n 3511

they opened 113 new stores) and these ba%eryGs averaged a wee%ly sale of 61)!+ which is asolid number in helping pay off the building and costs of start up *uic%ly and upfront. Khat

really stood out to me however was Panera breads stoc% price) which is currently 1!3.9. 0ven

more impressive is how *uic%ly this stoc% price per share made its 8ump. "t the start of 3559

Panera Breads stoc% was around + dollars. &n only 6 years) thatGs roughly a 6+97 increase)

which is incredibly impressive to me. ,hey go on to expand on their emphasis of return on

investment) HKe believe that our strategy of increasing our store profit through investing in the


9/23

*uality of our customersG experience to drive differentiation and competitive advantage) unit

growth) driving operating leverage and deploying our excess capital in high-/& investments

positions us well to continue to deliver our targeted long-term 0P growth rate of 147 - 357

annually.I udging from Panera Breads success in their past and their goals and drive to perform

well in the future) & believe that financial success will continue to boom for them. ,hey have

high li*uidity ratios and turn impressive profits every year) not to mention the ways that their

stoc%s have performed which %eeps investors satisfied. ?ot only is Panera a company that does

business the right way) the do it in a highly profitable way

3uman Resources

"s of (ecember 39) 3559) the company employed

approximately 13)555 full-time associates =defined as associates who average 34 hours or

more per wee%>) of whom approximately !55 were employed in general or administrative

functions) principally in the companyGs support centers approximately 1)355 were employed in

the companyGs fresh dough facility operations and approximately 15)+55 wereemployed in the companyGs ba%ery-caf operations as ba%ers) managers) and associates.

Panera Bread has a Broad (ifferentiation strategy. Panera Bread Company has evaluated that in

certain areas of "merica people are willing to pay for their uni*ue product. ,hey li%e fast food

but Panera Bread has created fast casual. ,hey have healthier meals and they also appeal to many

different customers with their wide variety of tastes and flavors on their menu. &t is not a deli but

it is a fast food service that is conscious of the calories that they put in their food. Panera is

gaining a competitive advantage by offering goods and services that rivals canGt afford to match.

Panera Bread offers handcrafted bread that is fresh daily it is a huge advantage over other fast

food restaurants. PBC has created a home-li%e) comfortable environment that people en8oy. &t is alot li%e tarbuc%s) by creating the + rd place. Khile PBC might not have a H+ rd placeI as their main

goal they try to differentiate from other fast food restaurants by creating a comfortable

environment for people to sit and have a meal with friends or wor% alone. Panera offers slightly

higher prices than most fast food services but the customers are willing to pay the price for the

*uality. ,he company has proven itself to have excellent customer service and customer

satisfaction willing the trust and loyalty of many buyers. =Qustavo) 3515> =,hompson) Peteraf)

Qamble) tric%land) 3515.>

Mana"ement Information S'stems

,he company began offering Ki-Fi in its ba%ery-cafs in 355+. By 3515 most ba%erycafs

provided customers free &nternet access through a managed Ki-Fi networ%. "s a result)

Panera hosted one of the largest free public Ki-Fi networ%s in the country.153

&n 3515) Panera began to pilot test a loyalty program) H


10/23

,he company expected to complete the pilot by year-end 3515 and hoped to begin

leveraging the data to better understand its high fre*uency customers and to Hsurprise and

delightI them in a way that was tailored to the customersG buying habits.

Capabilities4 Core Competencies of the *irm

&n our research we have concurred that Panera Bread is doing a very good 8ob at implementing

its strategies. ,hey are doing a great 8ob at raising their companyGs *uality awareness in terms of

their storeGs environment) product and exceptional services. ,heir cafes appeal to higher end

customers that are loo%ing for a comfortable environment with their dining experience. ,heir

ba%ery-cafe has done this very effectively. 0lements such as fireplaces) couches) warm lighting

and a *uiet studious environment have propelled Panera Bread in this category. "ll of their bread

is ba%ed fresh and in house as they have been striving towards providing the best *uality food

and products for valued customers. ,his lounge and home away from home environment is veryappealing to their customers and is one of the %ey factors to Panera BreadGs success.,hey have

also done incredibly well in terms of growth and expansion their C"Q/ for total revenue from

3553 to 355! was +5.97. owever one negative that could be seen about this is that the ma8ority

of these expansion restaurants have been franchises rather than ma8orly company owned. ,hey

have room to move and continue to grow which will surely help their performance and profits in

the future) as they have showed in the past few successful years of their expansion. pening 13+

new cafe-ba%eries in 3513 alone) and 113 brand new stores in 3511. ,he opening of new stores is

due to the amount of cash revenue the stores has produced) while proudly being able to say that

the company has no debt.

A. Summar' of Internal *actors

Panera has shown that they are a groundbrea%ing company with programs such as Panera

Cares. ,his means that they would probably be open to experimenting with more

sustainable building and operating options. For example) a Panera run with solar energy

would be a very interesting opportunity for the company to explore. ,his would also

li%ely improve their reputation among HgreenI groups) and increase their word-of-mouth

mar%eting.

Internal *actors Anal'sis Summar'

5I*AS6


11/23

Internal factors ei"ht Ratin" ei"hted

Score

Comments

Stren"ths

/.eavy focus on fresh

ba%ed and *uality goods

35 6 @5 Privately owned - no bias for short

thin%ing to satisfy Kall treet

7. PaneraGs strong brand

image

35 6 @5 ,he value propositionE price

convenience

8. Panera has a strong

presence in its niche

segment

35 6 @5 Competitive advantage

ea%ness

/. Panera is fairly

expensive in comparison

to other options average

meal is ;@.45

35 + !5 igh turnover L labor challenges

7. Panera is concentrated

heavily in only ?orth

"merica

15 + !5 &ncreasing operating cost structure


12/23

8. #ac% of extra

disposable income due to

absence of globali2ation

15 6 65 #ow performance

,otal 155 +@5

-ternal *actors Anal'sis Summar'

5-*AS6

-ternal factors ei"ht Ratin" ei"hted

Score

Comments

Opportunit'

/. Prime locations for fast

casual dining options are

available

34 6 155 &mproving sales productivity

buildings

7. Fresh high *uality

meal opportunities are

craved

35 6 @5 &mproving supply chain opera

+.T 95 percent and

growing of the population

is still employed and has

disposable income

14 + 64 Qood positioning


13/23

,hreat

/. Competition is on the

rise due to retail spaceand ease of access in the

industry

35 6 @5 &ncreasing proportion of cons

significant margin impact

7. T 0conomic condition

decline

15 6 65 0conomic pressures on core c

=fuel) unemployment6

8. Close competitor

heavy growth

15 + +5 #oss position

,otal 155 6+4

S*AS Matri

Strate"ic *actors:elect two important

pportunities L ,hreats

from 0F" and two

important trengths L

Kea%nesses

ei"ht

5out

of/996

Ratin"

5/

;6

ei"hted

Score

+uration

Comments

S

3

O

R

I

1

,

-

R

M

-

+

I

)

O

1

G


14/23

, A

,

-

/.eavy focus on fresh

ba%ed and *uality

goods

15 + +5 U

table products to control

shoc%s in different

product mar%ets

7. PaneraGs strong

brand image

14 6 !5 U igh level of security

7. Panera is

concentrated heavily inonly ?orth "merica

35 4 155 U

#ow investment in

mar%eting

0xtremely high end

products

8. #ac% of extra

disposable income due

to absence of

globali2ation

4 1 4 U 0xtremely high end

products

/. Prime locations for

fast casual dining

options are available14 6 !5 U

&mproving sales

productivity of existing


15/23

buildings

7. Fresh high *uality

meal opportunities are

craved

15 + +5 U

&mproving supply chainoperations

/. Competition is on

the rise due to retail

space and ease of

access in the industry

14 4 4 U

&ncreasing proportion of

consumables has

significant margin impact

7. T 0conomic

condition decline

15 + 4 U 0conomic pressures on

core customers =fuel)

unemployment>

,otal /99

trategy "lternative O1

Continue to create high growth by expanding presence outside of current target consumers and

mar%et development.


16/23

+ standing committees

rgani2ational Performance

1)+@5 locations as of (ecember 3559

(elivered 347 0P growth in 3559

toc% Price increased 1147 from (ecember 355 to


17/23

0conomic

/ecession but 957 still emplyed

,echnology

&nternet popularity

Kireless and mobile sources are in high demand

Point of sale and other information systems

ocial

(ining ,rends

(ieting

Catering

0xternal "nalysis

Competition in the industry

ther fast casual dining restaurant options

Chipotle


18/23

T (ieting trends are in growth and healthy dining options are being sought out

T Fresh high *uality meal opportunities are craved

,hreats

T Competition is on the rise due to retail space and ease of access in the industry

T 0conomic condition decline

T Close competitor heavy growth

T &ndustry growth of 6.47 leading to encouraged competition

&nternal "nalysis

rgani2ational Qovernance

T Founder and C0

T PaneraGs Board is made up of ! members.

T ,he board had established three standing committees

rgani2ational Culture

T Panera strives to achieve HCorporate 0ssence.I

rgani2ational /esources


19/23

rgani2ational /esources

perationsE

T Panera supplies its ba%ery-cafes through there 3+ fresh dough facilities. ,emperature controlled

truc%s) driven by Panera employees) travel an average of +55 miles.

T "ll products not supplied directly from fresh dough facilities come from independent

contractors that Panera assures is high-*uality and from reliable sources.

Or"ani$ational Resources

uman /esourcesE

Panera places high priority on staffing its facilities with s%illed associates and investing in

training programs to ensure the *uality of its operations.

&n order to maintain stability among the business Panera created oint Aenture programs to select

general managers and multi-unit managers that were comprised of a multi-year bonus program

based on cash flow.

trengths

T " strong connection with their corporate and franchise operated stores

T eavy focus on fresh ba%ed and *uality goods

T PaneraGs strong brand image

T Panera has a strong presence in its niche segment

T #eaders in the fast casual industry

T &n strong demand and command of consumer finances

&': Ashle' Carver< &obb' )ambert< &r'ce &ell< Renee !ohnson< Russell #andermeeden

Case Anal'sis

Kea%nesses

T Panera is fairly expensive in comparison to other options average meal is ;@.45

T Panera is concentrated heavily in only ?orth "merica


20/23


21/23

Focus on reaching more consumers by promoting their uni*ue and superior value in their

products) and developing more locations in booming mar%ets.


Qeneric strategyE

PorterGs Qeneric trategy of (ifferentiation Focus

(escription of strategyE

Provide uni*ue and superior value to more consumers instead of 8ust certain consumers in the

economy. (evelop in highly populated areas such as universities) large downtown areas) and

corporate districts.

"dvantages W (isadvantages

T ,argeting more consumers in different economic classes will create more profit growth for

Panera =">

T (eveloping in university areas may cause more loitering among customers due to free Ki-Fi

=(>

T (evelopment in college university environment may deter families =(>

T Casual dining experience in corporate districts will attract more business related meetings)

which means larger orders and profit =">


&ntroduce artisan menu and more healthy meal options to more consumers.

Business #evel trategy

E Focusing on improvement of competitive position in industry through the products and services

offered.


Qeneric trategyE

PorterGs Qeneric trategy of (ifferentiation

(escription of strategyE


22/23

Aalue is provided to customers through uni*ue features and characteristics of products rather

than by the lowest price. ,his is done through high *uality) uni*ue features) and high customer

service.

"dvantages W (isadvantages

T Panera too% the approach of %eeping labor consistent with sales and continued to invest in its

employees as a way to better serve its customers through high *uality customer service =">

T &ntroduced innovative salads utili2ing new procedures to further improve *uality =">

T Fresh Hin houseI ba%ed breads and goods offers customers a guarantee of fresh products =">

T "ppeals to only certain consumers in the mar%et due to higher prices =(>

T Prices are higher than competition) @.45 lunches compared to 4.55 lunches =(>

/ecommendations

&ntegrate both alternative strategies for continued success.

"lthough Panera has continued to meet andLor exceed its earnings targets =347 0P Qrowth in

3559> and its stoc% has continued to increase =1147 from (ecember 355 to )

targeting a broader mar%et base is imperative for continued growth and dominance in the fast

food industry.

,hrough the introduction of their artisan menu and healthy alternative options to a broader health

conscious audience) profit and competitive advantage will continue to thrive.

Xuestions and ConcernsJ

tructure

1+@5 locations as of (ecember 3559

Corporately owned and franchised

?ew C0 as of


23/23

Panera is in the Hfast casualI restaurant category) specifically providing ba%eryLcaf

products in a very welcoming and co2y environment. ,his means that the average chec%

of a customer is between ! and 9) they follow a limited service format) and the food is

made to order =/epetti and Aincelette +5-6>.Business trategy

Panera competes through differentiation. ,hey pride themselves on their healthy) fresh

foods. "ny new branch must comply with protocols in order to ensure that each piece of

bread is up to PaneraGs standards. ?ot only do they create fresh) great tasting foods) they

also create a welcoming environment. ,hey ma%e sure that while no Panera loo%s

identical) they all have a co2y feel. ,he pro8ect the warmth of a fireplace) and ma%e sure

that every customer feels welcome to stay for as long as theyGd li%e =/epetti and

Aincelette +5-16>. ,his means that Panera provides a meeting place for business people

and families ali%e

Documents

penaroma brade