PANERA BREAD COMPANY
Case Study #8
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
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.
“A loaf of bread in every arm”
Mission Statement
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.
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.
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.
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.
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.
SWOT Analysis
Panera Bread Company
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
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.
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
Opportunities
Lower stringent franchising guidelines for new entrepreneurs
Develop presence in foreign markets
Develop a better dinner menu
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
Financial Analysis
Panera Bread Company
Financial Analysis
Sales vs. Cost of sales
Financial Analysis
Gross
Profit
Panera’s current ration is narrowly above the 1.0 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.
Current Ratio:
Financial Analysis
Working capital represents a company’s ability to expand without the need to raise more equity or borrow money.
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.
1,340 Bakery-Cafés
565 Company-owned Locations
780 Franchised Locations
Locations
As of June 2009, there were more than:
Lack of foreign development
Low market niche for “specialty foods”
Lack of a “traditional” dinner menu
Strategic Problems
Growth and Opportunities
Two main growth drivers:Growing its base of locations
Growth in sales at existing cafés
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.
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.