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

StrategyTo 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 AnalysisPanera Bread Company

Financial AnalysisSales 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

LocationsAs 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.