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Business Model - Panera Bread Company

Essay by   •  April 5, 2011  •  Case Study  •  1,389 Words (6 Pages)  •  3,311 Views

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Panera Bread Company's chairman and CEO Ron Shaich

"As we say here at Panera, it's our Product, Environment, and Great Service (PEGS) that we count on to deliver our success"


Panera Bread Company has stated their vision for the next four years. They want to open 170-180 new café locations by the end of 2007, and have nearly 2,000 Panera Bread bakery-cafes open by the end of 2010


Panera's Bread Strategy lays on their distinctive menu, signature café design, inviting ambience, operating system, and unit location strategy. This driving concept behind Panera Bread's strategy is to provide premium specialty bakery and café experience to urban workers and suburban dwellers. Its competitive strategy is a broad differentiation strategy style. It drives on being unique in ways that give their consumers an entire dining experience rather than by attracting costumers based on price only. Panera specializes in fresh baked goods, made-to-order sandwiches on freshly baked breads, soups salads custom roasted coffees, and other coffee beverages.

Organization Values

Provide crave-able food that people can trust, served in a warm, community gathering place by associates who make our guests feel comfortable.

Key Problems

1. - The first and most important problem that Panera Bread Company faces is the lack of power market if you see chart 1. It clearly shows that in cities like Miami (2 Paneras for 1.12 million people) or Seattle, and places like Northern California even Los Angeles. Every one of these locations' population by Bakery-Café is over a million people per Café.

2.- A key issue that Panera is facing right now is the strategic location. We are talking about key strategic locations at the mall, that competitors might already had taken, also not only the mall locations. Also we could identify business areas, where the competition could have already established.

3.-Ingredients from a single is a big problem for Panera. We never know what could happen to the single supplier. There are many things that are a threat for the supplier. Starting with them going out of business (it is a possibility), also it could burn down. There are many threats of this nature that can cause this supplier to stop supplying the ingredients to Panera, and it doesn't look like they have an alternative solution.

SWOT Analysis


One of their biggest strengths right now is their operating profit. As you can see in exhibit 1 Panera Bread Company has a percentage growth of 10% compared to 2005. This tells you that the company is in excellent shape to grow even more, and it is in great shape for expansion.

Let's look at their total revenue, from 2002 to 2006 the company had a 66% exhibit 3 grow in only four years. This is one great company. It looks like their sales are just going upward in the upcoming years as well.

In 2004 J.D. Power and Associates ranked Panera Bread highest among quick-service restaurants in the Mid-West and Northeast regions of the United States in all categories which included environment, meal, service, and cost. In Addition to this in 2003, Panera scored the highest level of customer loyalty among quick-casual restaurants.

Roughly 11% increase on their Gross Profit Margin (see exhibit 3). That is a huge advantage that Panera has over a lot of the other companies. Not many companies have double digits in their Gross Profit Margin, with that 11% you could reinvest in the company, pay off some debt( if there is any), and benefit the share and stakeholders.


Their main weakness is the way they operate their franchises. You would have to Open 15 Panera Bakery-cafés in 6 years if you wish to open up a Panera franchise. In addition they want them to have 10 million dollars' worth of cash. They also want them to have real estate experience. It is just a little too much. Just from looking at those numbers they could cut down the number of potential franchise buyers.

Truck drivers are definitely an issue for Paneras



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