Running head: Panera Bread Company: Strategic Analysis
Panera Bread Company:
Strategic Analysis
November 25, 2013
Panera Bread Company: Strategic Analysis
Michael McDonnell
Company Overview
General Strategy
Leadership
Nick Caiazzo
External Analysis
Driving Forces
Key Success Factors
Porter’s Five Forces
Elvis Mejia
Internal Analysis
SWOT Analysis
Resource Capabilities
Value Chain
Austin Leff
Financial Statement Analysis
Comparative Industry Analysis
Michael McDonnell
Porter’s Generic Strategy
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Panera Bread Company: Strategic Analysis
History
In 1978, Louis Kane founded Au Bon Pain, a fast casual restaurant that focused on artisan
breads. Kane merged Au Bon Pain with Ronald Shaich’s company The Cookie Jar in 1981. In
1993, Au Bon Pain looking to move away from their urban niche market, acquired the St. Louis
Bread Company, a 19 store company with a more suburban marketplace. In 1999, after
performing market research and studying their newly acquired bakery-concept, the company
decided to sell Au Bon Pain and form a new concept Panera Bread.
Business Description
Panera Bread Company (Panera Bread) is a national bakery–cafe concept involved in
providing bakery products through a network of bakery-cafes. It is one of the largest food service
companies in the US, serving over seven million customers per week system-wide. Its products
are freshly baked goods such as a variety of bagels, breads, muffins, scones, rolls, sweet goods,
made-to-order sandwiches, unique soups and side items, hand-tossed salads, custom roasted
coffees and cafe beverages which include hot or cold espresso, cappuccino drinks and smoothies.
The company operates under the trademark names Panera Bread, Saint Louis Bread Co. and
Paradise Bakery & Cafe. Panera Bread operates through three business segments, namely
Company Bakery-Cafe Operations, Franchise Operations, and Fresh Dough and Other Product
Operations.
The Company Bakery-Cafe Operations segment operates through 809 company-owned
bakery-cafes which are principally located throughout the US and in Ontario, Canada. The
company-owned bakery-cafes conduct business under brands such as Panera Bread, Saint Louis
Bread Co. or Paradise Bakery & Cafe. These bakery-cafes offers fresh baked goods, made-to-
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Panera Bread Company: Strategic Analysis
order sandwiches on freshly baked breads, soups, custom roasted coffees, salads, and other
complementary products through on-premise sales as well as catering services. For the fiscal
year ended December 25, 2012, the Company Bakery-Cafe Operations segment accounted for
81.93% of the company’s total revenues.
The company operates the Franchises Operations segment through 843 franchise-
operated bakery-cafes, which are located throughout the US and in Ontario, Canada. As of
December 25, 2012, the company operated approximately 51% of its bakery-cafes, comprising
38 franchise groups with an average of approximately 22 bakery–cafes per group. During 2012,
the company also received commitments to open 159 additional franchise-operated bakery-cafes.
For the fiscal year ended December 25, 2012, the Franchises Operations segment accounted for
4.45% of the company’s total revenues.
The company’s Fresh Dough and Other Product Operations segment provides fresh dough
and other products daily to the company-owned and franchise-operated bakery-cafes. As of
December 25, 2012, the company’s fresh dough and other product operations consisted of 24
fresh dough facilities including 22 company-owned units and two franchise-operated units,
which are located throughout the US and one in Ontario, Canada. This segment delivers fresh
dough and other products daily to the bakery-cafes through a leased fleet of temperature
controlled vehicles. For the fiscal year ended December 25, 2012, the Fresh Dough and Other
Product Operations segment accounted for 13.62% of the company‘s total revenues.
During 2012, the company opened 123 new bakery–cafes system-wide including 59
company-owned bakery-cafes and 64 franchise-operated bakery-cafes. In addition, 12 bakery-
cafes closed system-wide, including six company-owned bakery-cafes and six franchise-operated
bakery-cafes.
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Panera Bread Company: Strategic Analysis
The company’s Franchise-operated bakery-cafes follow the same standards for in-store
operating standards, menu, product quality, site selection and bakery-cafe construction as the
company-owned bakery-cafes. Its franchisees purchase all of their dough and other products
from sources approved by the company. Panera Bread’s fresh dough facility system supplies
fresh dough products to practically all franchise-operated bakery–cafes. Panera Bread uses
independent distributors to distribute sweet goods products, and other materials to bakery–cafes.
Except for the products supplied directly by the fresh dough facilities, all other food products and
supplies for its bakery-cafes such as paper goods, coffee, and small wares, are contracted and
delivered by vendors to an independent distributor for delivery to the bakery-cafes.
Mission Statement
“A loaf of bread in every arm”® (Company Overview)
Because of its narrow focus on one product the Panera Bread mission statement falls
short in its ability to guide employees at any level in their daily operations, interactions, and
decision-making. Panera should expand on their mission statement to give direction to their
employees. A better mission statement might be:
To continue to be a leader in the fast-casual dining and quick service industries by
putting an emphasis on employee development and providing our community with healthy food
choices while maximizing profits for our shareholders.
General Corporate Strategy
Panera Bread’s strategic intent focuses on maintaining its leading position by focusing on
the enhancement of its store profits, high-yield investments, and offering quality products to
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Panera Bread Company: Strategic Analysis
customers to drive differentiation and competitive advantage. On the product front, the company
focuses on product innovation and new product launches. On the operational front, the company
is on an expansion spree as it opened nearly 123 new bakery-cafe outlets during fiscal year 2012.
Panera currently uses and will continue to use 5 distinct strategies in their operation:
Market penetration:
Panera is committed to improving the customer experience in ways they believe few in
the industry have done. They execute a broader market strategy, not simply to build name
recognition and awareness but also to build deeper relationships with their target customers
whom they believe will promote the brand. To reach their targeted customer group, they use a
marketing mix of radio, billboards, social-media, television and in-store sampling.
Market development:
Panera’s domestic expansion in 2012 consisting of 123 new bakery-cafes is a clear
indicator of their commitment to expansion. Panera expanded their operations into the Canadian
market by opening two franchise-operated bakery-cafes in the fourth quarter of 2008 and a third
at the beginning of the first quarter of 2009. Panera Bread Company plans to continue their
expansion in Canada and is actively looking for other potential international markets.
New product development:
Panera adds new items to their menu each year in order to respond to current trends and
to give customer greater options. They believe their menu innovation is one reason that value
scores with customers remain so strong. A 2012 Zagat’s consumer generated National Restaurant
Chain Survey for eating on-the-go rated Panera Bread number one among chain restaurants with
fewer than 5,000 restaurants in following categories: Most Popular, Best Health Option, Best
Salad, and Best Facility. In 2012, they also placed as the number one Healthiest for Eating on the
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Panera Bread Company: Strategic Analysis
Go by Health magazine. Staying on top of current and future trends as well as providing
interesting and fresh items gives Panera a strong competitive advantage.
Strategy of focus (Concept Essence):
Panera Bread clearly identifies that bread is their platform and the entry point to the
Panera experience. It is the symbol of the quality that Panera provides and a reminder of the
totality of the experience the customer receives and can take home to share with friends and
family. Panera constantly strives to offer a memorable experience with superior customer
service. Panera Bread Company has distinguished this strategy as Concept Essence, which is a
blueprint for attracting and retaining the targeted customers that they believe differentiate them
from their competitors. Concept Essence begins with artisan bread, quality products and a warm,
friendly and comfortable environment. It calls for each the bakery-cafes to be a place customers
