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Panera Bread Company

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  1. Panera Bread Company Case Study #8

  2. Company Overview • Au Bon Pain Company • Founded1978 in Boston, Massachusetts • Purchased Saint Louis Bread Company in 1993 • Sold Au Bon Pain Division in 1999 • Changed company name to Panera Bread Company

  3. Company Overview The Panera Bread Company’s name is derived from the words: • “Pan” which means bread in Spanish and Italian. • “Era” meaning period of time.

  4. Mission Statement “A loaf of bread in every arm”

  5. Strategy To provide: • fresh, high quality, organic meals to metropolitan citizens. • fast meals in a visually appealing, comfortable environment. • meals with reduced additives or preservatives.

  6. Product Differentiation • Panera Bread uses a market niche strategy based on differentiation; backward vertical integration. • Panera internally produces fresh dough for company-owned and franchised bakery-cafes.

  7. Product Differentiation • This competitive strategy focuses on a small group and caters to the wants and desires of that particular group of customers • Panera Bread’s marketing strategy wants these customers to feel as if they are getting something better and more wholesome for the same price as they would from the company’s competitors.

  8. Demographics • White collar, upper-middle class suburbanites and city dwellers. • Organics/healthy crowd. • Americans who are changing their eating habits by moving away from high calorie, or high cholesterol meals.

  9. Atmosphere “Panera Warmth” is: • Visually appealing décor • comfortable furniture that focus on catering to group settings. • Many locations contain fireplaces • Free Wi-Fi is available; which is an attraction for business meetings and college study groups.

  10. Panera Bread Company SWOT Analysis

  11. Strengths • High Customer loyalty • Menu options • Signature Café designs • Inviting ambience • Operating systems • Unit location strategy • Distinctive Menu • Seasonal menu changes • Demographical menu changes • Organic menu choices

  12. Strengths • Extensive employee training program • Extensive demographic study for new site locations • Free Wi-Fi access for customers • Competitive advantage from centralized dough making operations.

  13. Weaknesses • Low public awareness • Stringent franchising guidelines for new entrepreneurs • Lack of foreign development • Market competition with “specialty foods” has a low market niche • Lack of “traditional” dinner menu

  14. Opportunities • Lower stringent franchising guidelines for new entrepreneurs • Develop presence in foreign markets • Develop a better dinner menu

  15. Threats • Lagging economy • McDonald’s • Competition from the fast food industry leader • Subway • Offers fresh sandwiches for less • Starbucks • Direct threat to “Panera Warmth” • COSI, a copy cat company

  16. Panera Bread Company Financial Analysis

  17. Financial Analysis Sales vs. Cost of sales

  18. Financial Analysis Gross Profit

  19. Current Ratio: The ability to pay current liabilities using easily convertible assets to cash. Should be 1.0, ratios of 2.0 or higher are better. Panera’s current ration is narrowly above the 1.0 ratio.

  20. Financial Analysis Working capital represents a company’s ability to expand without the need to raise more equity or borrow money.

  21. Rival Companies Closest Rivals that also feature baked goods, soups, salads, sandwiches, coffee, and teas: • Atlanta Bread Company • Bruegger’s • Corner Bakery Café • Jason’s Deli • McAlister’s Deli.

  22. Locations As of June 2009, there were more than: 1,340 Bakery-Cafés 565 Company-owned Locations 780 Franchised Locations

  23. Strategic Problems Lack of foreign development Low market niche for “specialty foods” Lack of a “traditional” dinner menu

  24. Growth and Opportunities Two main growth drivers: • Growing its base of locations • Growth in sales at existing cafés

  25. Growth and Opportunities • Currently opening a bakery-café every other day. • The organics/ healthy crowd or Market niche group is growing at 15% - 20%. • Increase domestic locations by striving for 4,000 United States locations.

  26. Growth and Opportunities • Panera is currently opening restaurants in Canada. • Develop international locations of Panera Bread. • Management teams have created new menu options, new breads and sandwiches, to boost sales at already existing restaurants.