PANERA BREAD

COMPANY
Case Study of a Successful Bakery-Cafe
Chain

Panera Bread Company

Overview
Origin

1981 Au Bon Pain Company

founded by Louis Kane and Ron
Shaich.

Growth on US East Coast &

Internationally

1980s and 90s stores opened

in malls, airports, shopping
centers.

Acquisition of Saint Louis Bread

Co.

1993 mgt team studied fast

food restaurants which led to
overhaul of Saint Louis Bread
Companies

Sold Au Bon Pain bakery-caf

division

1999 sold for $73m to ABP

Corp. Renamed to Panera Bread
Company

Panera Bread Company

Overview

Strategic Intent

Make great bread broadly available to

consumers across the United States

2003 - TNS Intersearch Study

Scored the highest level of

customer loyalty among QSRs

2004 - J.D. Power & Associates

Restaurant Satisfaction Study of
55,000 Customers

Ranked Panera highest among

QSRs in Midwest & NE in all
categories
Included environment, meal,
service, and cost

2005 Sandleman & Associates

National Customer Satisfaction
Survey of 62,000 customers

For 4th straight year, Panera was

the best among 121 competitors
Also won Best of awards in
nearly every market across 36

Strategies

Panera sells hand made specialty artisan bread that

are baked at caf.
The dough for is prepared at dough factory then
distributed to the bakery-caf to reduce cost of
production and keep the quality constant.
the cafs have cozy atmosphere for family and
friends hangout.
Focuses more on market analysis. The menu is
reviewed frequently and customer review about the
menu is taken regular basis
Marketing strategy is based on demand pull strategy.
And most of the promotion is word of mouth.

Strategies

Intensive focus on franchising. Trying to

cover market through franchise. Strong
relationship with franchisee
Healthy food. (whole grain breads and
other low fat items)
Offers seasonal menu.
New items are invented in test kitchen
and then tested at some cafes to check
customer acceptance and consistent
quality.

Products

All bakery items are prepared fresh daily

and are used to make their signature
sandwiches

Seasonal menu items contribute to the

overall fresh quality that is expected from
Panera

Products Bakery Menu

Pastries & Sweets

Freshly baked breads

Use only fresh eggs and the best ingredients

Bagels & Spreads

Artisan and Specialty

Baked egg souffls

Brownies, cookies, cakes, muffins, scones, rolls

Signature bagels and flavorful spreads

Breakfast sandwiches

ALL NEW -- grilled with freshly baked Ciabatta bread

Source: Panera Bread

Products Caf Menu

Hand tossed salads

Over eight different varieties available
Sandwiches
Hot Panini, signature sandwiches, and cafe sandwiches
Drinks
Frozen, iced, hot or espresso drinks
Soups
Range from chicken noodle soup to vegetarian options
and other seasonal items
Panera Kids menu
Grilled cheese, peanut butter and jelly or a simple kids
deli sandwich served with a squeezable yogurt

Source: Panera Bread

Services

Via Panera Catering Coordinator

Day-End Dough-Nation

Help determine appropriate order quantities,

coordinate delivery and arrive ready to serve with
paper plates, bowls, utensils and napkins
Unsold bakery products packaged at the end of each
day and donated to local food banks and charities
donating over $12 million in product last year alone

SCRIP fund raising program

Allows non-profit organizations to purchase gift cards

at 9% discount and then resell the card at full price

Source: Panera Bread

Target Market

Suburban dwellers
Health conscious
Panera provides a comfortable and enjoyable
dining
experience. By offering high speed Internet in
every cafe,
they are encouraging all types of people to come
in.

Financial Ratios

ANALYSIS

Overview of the Industry

Growth Rate
925,000 food service locations in the U.S.
Are customers hungry for more?

Overview of the Industry

US restaurant industry growing at 5% annually

Where is the growth coming from?
$974 per person in 1994 spent on food away
from home
Growth potential in suburban markets?
85% of individuals aware a Panera Bread has

dined there at least once (trial)

57% of those did so in the last 30 days (repeat)
81% willing to try Panera other times of the day

Industry Analysis

Very labor intensive industry.

Full range of alternatives.
-This means high threat of substitute product.
Panera get their dough supply from their dough
facilities, still for other ingredient they need
other suppliers.
- It shows that bargaining power of supplier is
little bit reduced for the supply of dough.
-Because of availability of substitute and intense
competition switching cost of customer is low.

Competition

Industry members pursued differentiation

strategies of one variety of another, seeking to
set themselves apart from rivals via
-Pricing
-Food quality
-Menu theme
-Signature menu selection
-Dining ambience and atmosphere.
-Service
-Location

Competitors

Panera Bread competes against all the

large fast food & casual dining companies
such as McDonalds, Burger King, and
Wendys as well as cafes such as
Starbucks,
applebees,
chilis,
Chipotle. Indirect competitors include
fast food and sit down dining venues.

Competitors
High Food Quality
Full Service
Applebees
Chilis
Slower
dining
experience

Fast Casual
Panera
Chipotle
Bruggers

QSR
Wendys
McDonalds

Quick
dining
experience

Lower Food Quality

Analysis: Panera is in a highly competitive area. QSR and
full service arent competitors with each other. Fast Casual
is positioned between the two and competes with both.

Porters five
forces:

Threat of
substitute products
HIGH

Bargaining power
of suppliers
LOW

Rivalry among
existing competitors

Threat of
new entrants
LOW

Bargaining power
of buyers
HIGH

Porters Five Forces

Factor

Analysis

Impact

Threat of
substitute
products

Substitute products are easily accessible

(eat at home, convenient stores)
Economic downturn limits disposable
income substitute products become more
appealing.

HIGH

Bargaining power
of suppliers

Panera has multiple options to source

each ingredient they use.

LOW

Bargaining power
of buyers

Economic downturns affect on consumer

eating behaviors cheaper meal at home.
Over 21 direct competitors/alternative
eating establishments of Panera.

HIGH

Competitive
rivalry

Differentiation and constant menu

changes to appeal to consumer
preferences.
Many competitors in industry.

INTENSE

Threat of new
entrants

High investment threshold to enter

market

LOW

PEST Analysis for Panera

Category

Issue

Political

None

Economic

Restaurant business
extremely competitive

Threat

Due to recession in US
economy, sales at food
service locations is in
downward trend

Threat

Increasing level of
health consciousness
(ex. Good
carbohydrates)

Neither -- most restaurants react

quickly to changing consumer
tastes. Level playing field.

Consumers prone to
try new establishments

Threat existing markets

Opportunity untapped markets

Consumers loyal when

satisfied with
experience

Opportunity

Social

Technologi
cal

None

Threats/Opportunities

SWOT

Strengths

Good Franchise policy

Reliable Franchisee
Good market analysis policy and
technique.
High customer loyalty
Decoration
Good financial position
Number of available suppliers

Opportunities
Get existing customers to come at
different times of the day (ex breakfast
crowd to come for dinner)
Can tap into Canada and European
market through franchisee
Can tap into the south and western
region in USA
Introduce sweet items like pastries,
parfaits, sundaes for mid day menu
The company can take up long term
loan as they have strong financial

Weaknesses
No presence in large markets (south &
west)
Rely on franchise partners as key to
growth
Sales of company owned stores are
lower than Franchisee
Self service, while the price level is
more than fast food chain

Threats
Multiple types of competition fast
food, sit down restaurant, eat at home,
QSR, fast casual
Economic recession of USA
Competition from fast casual cum bar
cafes
Risk of transportation of dough to
bakery-cafe

Recommendation

As there may be recession in US economy,

further coverage in US market is not
advisable. Instead Panera can enter Canadian
and European market through franchise.

Introduce sweet items like pastries, parfaits,

sundaes for mid day menu

Introduce full service.