Panera Bread

Strategic Management

Katie Martinescu

Panera Bread

1. What strategic issues and problems does Panera Bread management need to address?

-Competition

Competition is a huge threat for Panera Bread. Between existing rivals and new competitors entering the market, Panera Bread’s management is faced with a tough decision on how to differentiate themselves. Management need to address an issue on how to increase traffic in their restaurants.

-Financial performance

Panera Bread also needs to re-evaluate and take action on their company-owned financials. They need to reconsider the use of long-term debt in financing their operations. It appears that franchised locations are doing a much better job with that which results in higher profits and higher return on equity investment. Also, management need to consider actions on how to bring company-owned restaurants profitability to the same level as franchised locations.

-Growth challenges

Although Panera Bread reported strong financial and operating results for the first quarter of 2011, management was expressing their concerns related to aggressive growth plans. Due to weak economic conditions they had to lower their average growth forecast at existing bakery-café locations to 4.5%. Further management must consider whether or not to reduce growth plans.

-Dinner menu selection

Panera Bread is struggling with traffic during dinner time. Management need to make a decision whether to try to boost the sales during that time or maybe just become a breakfast, brunch and lunch place.

1. What is Panera Bread’s strategy?   What type of competitive advantage is Panera Bread trying to achieve?

Panera Bread’s identity was rooted in its fresh-baked artisan breads made with a craftsman’s attention to quality and detail, and its breads and baked products were the platform for the dining experience. Panera Bread’s target market is urban workers and suburban dwellers that would enjoy quick meal at esthetically pleasing environment than other fast food places would offer.

Some of the key objectives of Panera Bread’s strategy include the following:

• Growth: In order to compete with companies like Starbucks or McDonalds that have their stores on every corner, the company must heavily focus on expansion. Panera Bread’s growth strategy was to capitalize on Panera’s market potential by opening both company-owned and franchised Panera Bread locations as fast as prudent.
• Differentiation: Panera Bread provides a wide range of menu items to appeal to different tastes of their consumers at different times of the day. They provide high quality products that would attract consumers at any time of the day including breakfast, AM “chill”, lunch, PM “chill”, dinner, and take home through both on-premise sales and off-premise catering.
• Brand recognition: management’s long-term objective and strategic intent is to make Panera Bread a nationally recognized brand name and to be the dominant restaurant operator in upscale, quick-service dining.
• Concept Essence - Panera management’s blueprint for attracting and retaining customers which includes serving a high quality product at prices that represented a good value; diversified menu; providing excellent customer service; providing aesthetically pleasing and inviting environment.
• Fresh dough-making capability: management believed the company’s fresh dough-making capability provided a competitive advantage by ensuring consistent quality and dough-making efficiency.
• Vertical integration: Panera Bread is integrating backward into dough-making process and the supply of certain ingredients and products.
• Social responsibility: Panera Bread opened several non-profit “Pay-what-you-want” bakery-café locations to enhance their image of a socially responsible company.

Some Key Success Factors in order for companies to compete in the restaurant industry includes the following: attractive environment, high quality product, location, customer service, menu variety