Panera BreadCase study 5

Team members:

MarioMA1N0225

MariaMA1N0229

OogiMA1N0216

History

• Panera Bread is a casual made-to-order fast food restaurant that offers specialty breads, sandwiches, tossed salads and soups.

• Saint.Louis Panera Bread, specialty bakery-cafes, has grown from 602 company-owned and franchised units in 2003 to 1270 today.

• In 2008 alone, It sales increased by over 23 percent .• What ‘s Panera’s secret? - Key of success of Panera

Bread’s is positioning and execution.

• Changing Consumer Trends – Panera established in 1981, founded by Au Bon Pain Co.

The company grew slowly until mid 1990,when it acquired a company, chain of 20 bakery–cafes located in the St. Louis area.

– Owners observed that people were increasingly looking for products that were special from run-of-the-mill restaurant food.

– They led to trend the company that good food served quickly in an enjoyable environment.

• The Emergence of Fast Casual– As a result of these changing , a new category in the

restaurant industry, called “fast casual,” emerged. This category provided consumers the alternative they wanted by capturing advantage of the both fast food category (speed) and casual dining category (good food).

– The owners of Au Bon Pain and Saint Louis Bread Company felt that they could help pioneer this new category, so they repositioned their restaurants, named Panera Bread.

– The position that Panera moved into is depicted in the graphic titled “Position Strategy of Various Restaurant Chain”.

“Position Strategy of Various Restaurant Chain”

Panera’s Version of Fast Casual– They established fast-casual category and added a

bonus to mix – specially food. – The company has become known as the nation’s bread

expert and offers a variety of artisan breads, pastries, and baked goods.

– Panera Bread’s restaurants are open for breakfast, lunch and dinner and also offer hand-tossed salads, sandwiches, hearty soups, hot and cold coffee drinks.

– The company also provides catering services through Via Panera catering business.

– Panera even suggests new time of day to eat specially foods, calling the time between lunch and dinner “chill-out” time.

– Panera Bread is now the acknowledged leader in the fast casual category, sales were $941 billion in 2008.

– It is unique blend of fast-casual service and specialty foods also continues to gain momentum.

• Present Status and Goal for the Future– Panera’s leadership in the fast-casual category and

financial performance has drawn considerable attention to the company.

– The company’s goal remains to make Panera leading national brand.

– The company is counting on its unique positioning strategy and its signature foods and savvy execution to make this goal reality.

Questions and Answers1. How has Panera Bread established a unique position in the restaurant

industry? How has this unique position contributed to its success? • Panera Bread created a new category fast casual. They merged the

advantages of fast food and casual restaurants.• Hence,they take care to have good quality of food while having fast service.• The idea appeales to the customers speciality and quality food served in

a fast way in beautiful neighbor-like atmosphere cafes. • Appart from the traditional meal times they have chill-out time. Their

menu is rich in different food, from bread based meals to warm meals or refreshing salads. They provide catering services.

• That’s the key to their success.

Q1: Positioning strategy of Panera Bread and other restaurant chains

1. (Cont)Do you think Panera Bread will reach its goal of becoming a leading national brand in the restaurant industry? Why or why not? • Yes, since they already are regarded as a nation’s

bread expert. However, they are still developing and expanding. Their positioning as well as the execution of their vision are very strong.

• 2. Analyze the restaurant industry using Porter’s five forces model. In what ways has Panera Bread successfully positioned itself against the forces that are suppressing the profitability of the restaurant industry as a whole?

Factor Analysis Impact

Threat of substitute products

• Substitute products are easily accessible (cooking at home, ready-made meals)• Economic downturn forces some consumers to turn to cheaper substitute products.

HIGH

Bargaining power of suppliers• Since Panera uses common ingredientes they can choose the best offer of supplier.

LOW

Bargaining power of buyers

• Economic downturn causes consumers spending less money on food e.g. cooking at home.• Buyers may turn to the company’s major competitors.

HIGH

Competitive rivalry

•Many competitors in resttaurant/food industry.• Competitors constantly change menu to meet consumers’ preferences.

INTENSE

Threat of new entrants • Since it’s a recipe for success, many restaurants would like to go casual fast.

HIGH

• 3. What barriers to entry has Panera Bread created for potential competitors? How significant are these barriers?

• The threat of new entrants is very high for Panera.

• “Primary competitors include specialty food and casual dining restaurant retailers” .

• The barriers to entry are low, and people are always looking for new and interesting places to eat (which is one of the reasons why Panera was so successful).

• Buyers have a lot of power because there are a lot of other places they could eat. Paneras are often located in busy places, such as malls or busy streets. This means that they usually have several other eateries around them.

• Economies of Scale• Product Differentiation• Capital Requirements

• Cost advantages independent of size• Access to Distribution Channels

• Government Policy

• 4. What are Panera Bread’s primary sources of competitive advantage? In your judgement, are these sources of advantage sustainable? Why or why not?

• Product differentiation or brand’s recognition• Even though it was “casual”, it was fast at the same time.

(fast-casual)• Healthy food• Brand Equity

• Industry Analysis• Pioneer’s prestige

• Experience

• Panera’s strengths come in their ability to provide fresh meals to consumers, keeping up with the growing demand and trend for such products.

• They also do this at a reasonable price.• They’ve also remained true to their initial vision, offering artisan

breads, while still expanding and offering many other menu options.

• Their positive reputation attracts new customers, and their friendly environment keeps them coming back.

• They have proven skilled at training new managers and in choosing only extremely qualified candidates for their franchise openings.