Panera Bread Case

  • Uncategorized

PANERA BREAD CASE 9

PaneraBread Case

Question1

PaneraBread is a business that operates as a bakery chain. The organizationhas more than 1,600 locations in the U.S. The identity of the entitybecame rooted in its fresh-baked artisan breads produced with acraftsman’s attention to quality and detail (Thompson, 2015). Threekey elements drive the company’s strategy, and they includetechnology, economy, and society. Adjustments in the economy such asa rise in the unemployment rates, inflation, and a decrease in wagesinfluence the behavior of the consumers. When the economy faces harshconditions, buyers may have less money to be used for dining out.Alternatively, technology has been critical in the firm’soperations (Thompson, 2015). The organization has been takingadvantage of the changing technology, which has enabled the entity tooffer faster services. Computer chips have been added to the bakingequipment and iPads provided at the table to facilitate consumerordering. Besides, mobile phone apps allow customers to order and paywhat they require. On the other hand, societal changes, especiallythose that depend on healthy lifestyles, are crucial in drivingchanges in the firm’s industry. Panera Bread is adopting thesocietal changes through cutting out all artificial ingredients andpreservatives.

Question2

Thestrategy that best fits Panera Bread is differentiation. Theorganization is in a position to offer a first-class quality bakeryand café experience to urban employees and suburban inhabitants whoare the intended clients in the market. The strategy of the companyis supported by the idea of the entity to develop a specialty caféthat is anchored by an authentic, fresh-dough artisan bakery as wellas upscale quick-service menu selections (Thompson, 2015). Theexpansive differentiation strategy of the business has an objectiveof attempting to be exceptional in a section of consumers. The firmattempts to expand the frontiers such as repeating dinner andneighbors. Also, the administrators have been able to develop adifferentiation strategy that offers an ideal balance for shoppersatisfaction. Panera Bread has created differentiatingcharacteristics in exploring and checking fresh commodities, as wellas chain distribution, in providing daily new products (Thompson,2015). Moreover, the company has integrated various productattributes where they concentrate on providing commodities at a lowprice while paying attention to environment and quality.

Question3

Adifferentiation strategy makes a company develop a commodity orservice with adequately distinctive characteristics that are criticalin setting a business apart from the competition (Hill &amp Jones,2012). From the strategy of the organization, the entity has anadvantage of being in a position to charge a premium to thecustomers. The additional payment received from clients may help thecompany in raising additional revenues, which would be significant tothe profits of the entity. Another merit of the strategy is that itwould aid the organization in enjoying a competitive advantage fromits competitors (Hill &amp Jones, 2012). Despite the benefits of thedifferentiation strategy, the firm may experience the disadvantage ofhaving some resistance in the market. Customers may not be willing topay for an extra charge that the company may request for itscommodities (Hill &amp Jones, 2012). Apart from this con, PaneraBread may also encounter competition problems as a result of itsrivals copying its strategy. In instances where the competitorsemulate Panera Bread’s strategy, it may be difficult to maintaincustomers.

Question4

Strengths

  • The company has different strengths, which include the following

  • Bread-baking expertise

  • High ranks in client contentment studies

  • Financial strength

  • Fresh dough operations and sales to franchised stores

  • Superior brand name

  • Nationwide leadership in the bakery-café section

  • Attractive and appealing menu

  • Initial success in catering

Weaknesses

  • A less well-recognized brand name compared to some competitors such as Starbucks

  • Inadequate menu for dinner

  • Brand knowledge is poor in fresh markets

  • Off-site dough making and distribution

  • Sales at franchised stores are higher compared to company-owned stores

Opportunities

  • There in unexploited growth possibility in numerous uptown markets

  • The business is growing the product line to comprise recent trends

  • The entity has opportunity to have increased international expansion

Threats

  • The market may become saturated making it difficult for the company to get attractive locations

  • There is competition from other chains, which may even increase shortly

  • The rivals have the possibility of imitating the menu offering of the company or the dining ambiance offered by the organization

Question5

FromExhibit 1, it is apparent that the total revenues of the company havebeen increasing from 2002 to 2006. The net income for the company hasalso been increasing since 2002 through 2006. The following tableshows the revenues for the company from 2002 to 2006

Year

2002

2003

2004

2005

2006

Total Revenues ($)

282,225

363,702

479,139

640,275

828,971

Ratioanalysis

Currentratio = total current assets / current liabilities

Currentratio 2002

=59,262 / 32,325

=1.83

For2003

=70,871 / 44,792

=1.58

For2004

=58,220 / 55,705

=1.05

For2005

=102,774 / 86,865

=1.18

For2006

=127,618 / 109,610

=1.16

Fromthe analysis of the current ratio, it is clear that the company has astrong financial performance since it is in a position to pay for itsshort term liabilities using its assets. This is indicated by currentratios that are more than one.

Operatingprofit as a % of total revenues (operating profit margin)

2002

2003

2004

2005

2006

12.0

13.7

12.9

12.7

11.0

Fromthe operating profit as a percentage of total revenues, it can beindicated that the company has been profitable since this proportionhas been averaging above 10% implying that the entity has been in aposition to make profit more than ten times its revenues.

Question6

PaneraBread operates in a very competitive industry. The company competesagainst different large fast food entities. The closest rivals of thefirm are Chili’s Grill and Bar, Chipotle Mexican Grill, Starbucks,and Cracker Barrel. Chili’s Grill has 1074 locations in 23countries while Chipotle Mexican Grill has more than 500 locations.Alternatively, Cracker Barrel has 527 retail stores and restaurantsand operates in 42 locations while Starbucks has 3000 internationallocations, and more than 7500 locations in the United States(Thompson, 2015). Starbucks is a significant rival to Panera Breadbecause it has eight times revenue and ten times more locationscompared to the firm.

Question7

Inthe industry that Panera Bread is in, there is a need to satisfycustomers since winning the satisfaction of consumers would result inenhanced image of the firm (Perry, 2009). In improving the image ofthe company to the clients, the entity needs to look at differentmarketing activities such as meal waiting time, food quality,cleanliness, price, menu variety, and appearance of the staff (Perry,2009). The shape of the economy may also become a threat or anopportunity to the organization. The management should respondappropriately based on the condition of the economy. Also, the desireto grow by considering an alternative route may face problemsemanating from the distractions of managers. Furthermore, thefranchise policy seems to have issues, and the firm would need topursue efficiency in the area. Moreover, the entity would also needto address the matter of competition since rivalry may increase inthe future.

Question8

Fromthe analysis of the company’s environment, there are no majorthreatening issues that require fixing. Thus, there would be no needto do an overhaul of the organization’s differentiation strategy.However, there are some actions that the firm can consider so as tostrengthen the competitive position. The company should secure primeretail locations in urban areas where it has little or no marketpenetration. This would offer the business an increase in the marketshare and help it to acquire additional revenues that can be used inincreasing its aggressiveness in the market. Another action should bethe control of expenses. The business needs to look at ways ofmitigating its operating costs so as to enhance the profit margins(Hill &amp Jones, 2012). Furthermore, the organization shouldconsider working hard in the development of new menu items, whichwould be crucial in driving traffic counts up, especially during theevening meals when the customer turnout is low. This would becritical in enhancing the profitability of the firm.

References

Hill,C. W. L., &amp Jones, G. R. (2012). Essentialsof strategic management.Australia: South-Western/Cengage Learning.

Perry,M. P. (2009). Business-drivenPMO setup: Practical insights, techniques, and case examples forensuring success.Fort Lauderdale, FL: J. Ross Pub.

Thompson,A. A. (2015). Craftingand executing strategy: The quest for competitive advantage: conceptsand readings.New York, NY: McGraw-Hill Education.

Close Menu