panera bread company overview
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Panera Bread Company OverviewTRANSCRIPT
PANERA BREAD COMPANY
Case Study of a Successful Bakery-Cafe Chain
Panera Bread Company Overview
Origin 1981 Au Bon Pain Company founded by Louis Kane and Ron Shaich.
Growth on US East Coast & Internationally 1980’s and 90’s – stores opened in malls, airports, shopping centers.
Acquisition of Saint Louis Bread Co. 1993 – mgt team studied fast food restaurants which led to overhaul of Saint Louis Bread Companies
Sold Au Bon Pain bakery-café division 1999 – sold for $73m to ABP Corp. Renamed to Panera Bread Company
Panera Bread Company Overview
Strategic Intent “Make great bread broadly available to
consumers across the United States”
2003 - TNS Intersearch Study •Scored the highest level of customer loyalty among QSR’s
2004 - J.D. Power & Associates Restaurant Satisfaction Study of 55,000 Customers
•Ranked Panera highest among QSR’s in Midwest & NE in all categories •Included environment, meal, service, and cost
2005 – Sandleman & Associates National Customer Satisfaction Survey of 62,000 customers
•For 4th straight year, Panera was the best among 121 competitors•Also won “Best of” awards in nearly every market across 36 states
Strategies
Panera sells hand made specialty artisan bread that are baked at café.
The dough for is prepared at dough factory then distributed to the bakery-café to reduce cost of production and keep the quality constant.
the cafés have cozy atmosphere for family and friends hangout.
Focuses more on market analysis. The menu is reviewed frequently and customer review about the menu is taken regular basis
Marketing strategy is based on demand pull strategy. And most of the promotion is word of mouth.
Strategies
Intensive focus on franchising. Trying to cover market through franchise. Strong relationship with franchisee
Healthy food. (whole grain breads and other low fat items)
Offers seasonal menu. New items are invented in test kitchen
and then tested at some cafes to check customer acceptance and consistent quality.
Products
All bakery items are prepared fresh daily and are used to make their signature sandwiches
Seasonal menu items contribute to the overall fresh quality that is expected from Panera
Products – Bakery Menu
Pastries & Sweets Brownies, cookies, cakes, muffins, scones, rolls
Freshly baked breads Artisan and Specialty
Baked egg soufflés Use only fresh eggs and the best ingredients
Bagels & Spreads Signature bagels and flavorful spreads
Breakfast sandwiches ALL NEW -- grilled with freshly baked Ciabatta
breadSource: Panera Bread
Products – Café Menu
Hand tossed salads Over eight different varieties available
Sandwiches Hot Panini, signature sandwiches, and cafe sandwiches
Drinks Frozen, iced, hot or espresso drinks
Soups Range from chicken noodle soup to vegetarian options
and other seasonal items Panera Kids menu
Grilled cheese, peanut butter and jelly or a simple kids deli sandwich served with a squeezable yogurt
Source: Panera Bread
Services
Via Panera Catering Coordinator Help determine appropriate order quantities,
coordinate delivery and arrive ready to serve with paper plates, bowls, utensils and napkins
Day-End Dough-Nation Unsold bakery products packaged at the end of each
day and donated to local food banks and charities donating over $12 million in product last year alone
SCRIP fund raising program Allows non-profit organizations to purchase gift cards
at 9% discount and then resell the card at full priceSource: Panera Bread
Target Market
Suburban dwellers Health conscious
Panera provides a comfortable and enjoyable dining
experience. By offering high speed Internet in every cafe,
they are encouraging all types of people to come in.
Financial Ratios
ANALYSIS
Overview of the Industry Growth Rate
925,000 food service locations in the U.S. Are customers hungry for more?
Overview of the Industry US restaurant industry growing at 5% annually Where is the growth coming from?
$974 per person in 1994 spent on food away from home
Growth potential in suburban markets? 85% of individuals aware a Panera Bread has
dined there at least once (trial) 57% of those did so in the last 30 days (repeat) 81% willing to try Panera other times of the day
Industry Analysis
Very labor intensive industry. Full range of alternatives. -This means high threat of substitute product. Panera get their dough supply from their dough
facilities, still for other ingredient they need other suppliers.
- It shows that bargaining power of supplier is little bit reduced for the supply of dough.
-Because of availability of substitute and intense competition switching cost of customer is low.
Competition
Industry members pursued differentiation strategies of one variety of another, seeking to set themselves apart from rivals via
-Pricing -Food quality -Menu theme -Signature menu selection -Dining ambience and atmosphere. -Service
-Location
Competitors
Panera Bread competes against all the large fast food & casual dining companies such as McDonald’s, Burger King, and Wendy’s as well as cafes such as Starbucks, applebee’s, chili’s, Chipotle. Indirect competitors include fast food and sit down dining venues.
CompetitorsHigh Food Quality
Quick dining experience
Full Service Applebee’sChili’s
Lower Food Quality
Slower dining experience
Fast CasualPaneraChipotleBrugger’s
QSRWendy’s McDonalds
Analysis: Panera is in a highly competitive area. QSR and full service aren’t competitors with each other. Fast Casual is positioned between the two and competes with both.
Porter’s five forces:
Rivalry among existing competitors
Threat of substitute products
HIGH
Bargaining powerof buyers
HIGH
Threat of new entrants
LOW
Bargaining power of suppliers
LOW
Porter’s Five ForcesFactor Analysis Impact
Threat of substitute products
• Substitute products are easily accessible (eat at home, convenient stores)• Economic downturn limits disposable income – substitute products become more appealing.
HIGH
Bargaining power of suppliers
• Panera has multiple options to source each ingredient they use. LOW
Bargaining power of buyers
• Economic downturn’s affect on consumer eating behaviors – cheaper meal at home.• Over 21 direct competitors/alternative eating establishments of Panera.
HIGH
Competitive rivalry
• Differentiation and constant menu changes to appeal to consumer preferences. •Many competitors in industry.
INTENSE
Threat of new entrants
• High investment threshold to enter market LOW
PEST Analysis for PaneraCategory Issue Threats/Opportunities
Political None
Economic Restaurant business extremely competitive
Threat
Due to recession in US economy, sales at food service locations is in downward trend
Threat
Social Increasing level of health consciousness (ex. Good carbohydrates)
Neither -- most restaurants react quickly to changing consumer tastes. Level playing field.
Consumers prone to try new establishments
Threat – existing marketsOpportunity – untapped markets
Consumers loyal when satisfied with experience
Opportunity
Technological
None
SWOTStrengths
•Good Franchise policy•Reliable Franchisee•Good market analysis policy and technique. •High customer loyalty•Decoration•Good financial position•Number of available suppliers
Weaknesses•No presence in large markets (south & west)•Rely on franchise partners as key to growth•Sales of company owned stores are lower than Franchisee•Self service, while the price level is more than fast food chain
Opportunities•Get existing customers to come at different times of the day (ex – breakfast crowd to come for dinner)•Can tap into Canada and European market through franchisee•Can tap into the south and western region in USA•Introduce sweet items like pastries, parfaits, sundaes for mid day menu•The company can take up long term loan as they have strong financial history and have no debt.
Threats•Multiple types of competition – fast food, sit down restaurant, eat at home, QSR, fast casual •Economic recession of USA•Competition from fast casual cum bar cafes•Risk of transportation of dough to bakery-cafe
Recommendation
As there may be recession in US economy, further coverage in US market is not advisable. Instead Panera can enter Canadian and European market through franchise.
Introduce sweet items like pastries, parfaits, sundaes for mid day menu
Introduce full service.