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Panera Bread Company Strategic Analysis

Essay by   •  May 11, 2013  •  Case Study  •  2,531 Words (11 Pages)  •  1,777 Views

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Panera Bread Company Strategic Analysis

I.) Environment

Currently with the economic state, the situation would not have a devastating impact on Panera. Sales revenues have dropped due to consumers lowering disposable income. Although household incomes are at a low, consumers will still desire greater quality in food and dining experience. Panera continues to have continual business throughout Northern America. Growth is estimated to greatly continue into the future. Panera growth expansion has on extended outside North American into foreign markets. Panera's future for the company looks bright even though we are in dark times.

Cultural trends for consumers lay in the health conscious mindset. Consumers are growing more aware of the food choices have on their health. Consumers are leaning towards healthier alternatives compared to fast food. Panera offers food choices that suit a healthier lifestyle. Along with healthy food choices, consumers desire a more quality experience. Panera offers a fast, but causal setting that allows fast service along with relaxing quality experience. There is a growing demand for fast-casual experiences due to consumers are growing tired of the fast food experience.

Panera has expanded their restaurant to allowing Wi-Fi access for their customers. By allowing this, customers have a better option than going to local coffee shops that only service coffee. Customers have the option to dine in a great setting allowing them the freedom to utilize their time with personal assignments. These tend to give the image to a more relaxing, cozy environment for customers to enjoy their experience.

Panera has recently implemented the use of a Real-Time inventory system. This allows Panera have a more in-depth knowledge of the companies specific inventory activities. Having this system puts more emphasis of inventory and where resources are being allocated. Having efficient systems in place, gives internal strength to the company.

Panera willingly participates in the adhering to government regulations. Panera meets specific requirements regulating safety, cleanliness, and satisfactory food products. Panera takes pride in the fact that the company highly exceeds all expectations within the regulations set by city and local government.

Panera's threats will account for the competitors grasp on consumers demand for the fast causal experiences. Panera will compete with competitors that also gear their efforts to providing a fast causal experience along with offering healthy choices. The industry for fast casual restaruants is highly competitive. Panera is very vulnerable to competition due to that it is a component of several markets. Panera can be labeled in the specialty foods, quick service, casual dining.

II.) Industry

Panera is a part of the bakery/café industry. The café menu consists of variety of deli sandwiches, soups, and salads. These main courses are accompanied by chips, fresh fruit, or bread. The bakery consists of specialty drinks, pastries, bagels, and bread loafs. Panera specializes in offering quality food options that can be served quickly. Panera is considered to be a fast-casual restaurant that provides a quality dining experience.

Panera's major competitor would be Einstein Noah Restaurant group. They are a leading company in the quick causal restaurant industry. They offer products such as coffee beverages, deli sandwiches, salads, and varieties of soups. This company consists of Einstein Bros, Noah's New York Bagels, and Manhattan Bagel restaurants. In all there are over 815 restaurants in 40 states. Einstein revenue over the past year has increased by 1.2%, from 10.4 million to 11.5 million. There have currently been 61 stores that have opened in 2012. Einstein Company has seen substantial growth, and will continue into the future. Einstein and many other competitors also use differentiation strategy to be set apart in the market. Their strategies can come from pricing, food quality, menu theme, signature items, and atmosphere. These factors can be used to distinct the company within the market. Fast casual competitors strive to market themselves as being different from the other leading competitors.

The threats of new entrants into the fast casual industry are high. Competitors can easily enter the market with diverse menu options giving consumers greater choices. New rising companies that offer change from the traditional fast food industry will be desirable among consumers. Consumers demand alternative choices which can gear customers' away current companies in the market. In terms of proximity, consumers are willing to try newly opened restaurants. If consumers are pleased, the customer's loyalty will increase for that particular restaurant. With consumers' openness to new establishments, this leaves great leeway for new restaurant to enter the market.

In this market there will always be substitutes. Consumers will seek other substitutes such as eating at home, convenient stores and fast food alternatives, and competing fast causal establishments. When disposable income decreases, consumers have different options to save money. With the food industry being saturated with competition, rooms for substitutes are very high. If products provided end up undesirable in price or quality, consumers will turn to substitutes.

Supplier's power is low due to a wide array of suppliers for every product they carry. Panera holds business with a large number of suppliers that are based on close proximity to each store. Currently Panera uses a network of 20 regional dough facilities to supply there fresh dough. If these suppliers change in product or price, Panera can easily find alternative suppliers. This gives suppliers less power due to Panera has many alternatives to choosing a supplier. This gives Panera an advantage toward negotiating.

Buyer power is high do to the many choices of fast food that are available. Panera's leading competitor also aspires to the fast casual setting that consumers strive for. This leads Panera to be conscious of their prices in relation to demand. Market is heavily saturated with competitors; buyers have very high bargaining power. If prices or quality become unreasonable, buyers will find alternative substitutes.

III.) The Organization

Panera's objectives are to provide high quality products and great service to their customers. Panera strives to offer customers healthy, premium quality specialty food and bread at an affordable price. While doing so, the goal to gain sales and market share by having affordable prices, good performance,



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