Bargaining power of supplier
Bargaining power of supplier:? The bargaining power of supplier is low for Panera bread because their main ingredient is the bread for which they have their own manufacturing facilities owned by the company and franchised as well. These establishments make their own dough, bake and supply it to all the company owned and franchised bakery cafés of Panera.? They only have to rely on the suppliers for other ingredients like sweets and other items that they sell for which they can always find a substitute seller.? The only problem they can face is from meat because Panera uses antibiotic free chicken in their menu for which they have limited sellers, but an alternative can always be used in any case.• Bargaining power of buyer:? Consumers in the food industry are the driving forces for the company. They are highly price sensitive.
Their switching cost is high as they have a lot of options to choose from and this builds competitive pressure.
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Panera needs to market their brand enough so that consumers become aware of them.? Nowadays consumers have a trend of trying new food places with good quality food and welcoming ambience and Panera has got it all.? Consumers have become smarter and are aware of quality and nutrients in food, so if Panera wants to attract consumers to their store they have to provide good quality food at a price consumer would be willing to pay.• Rivalry among competing sellers:• The strongest competing pressure is amongst the already existing rivals in the industry. Since there are no switching costs for the consumers, it becomes difficult for the industries to charge a perfect price which is competitive with its rivals. Panera bread should• Threat of new entrants:• Barriers to entry in a food industry is moderate for a non-alcoholic restaurant.
The only barrier they face is how would they survive in front of the already existing big brands. Maintaining a brand reputation is important.• Panera possesses a strong advantage because it already has a strong brand reputation. Over the year, Panera has received a number of awards for their services and products.• Substitutes:? There is a high availability of substitutes with better or similar quality and higher switching cost.? Since there is a lot of options for a consumer to choose from they would prefer to go to a place with great service, less wait time, good quality of food and appealing ambience, and Panera bread cafes have got it all the only thing they should worry about is the switching cost. The consumer has no switching cost, it is the cost of meal a consumer pays.
They should either come up with some discounts or lower their prices to attract more customers and retain their loyal ones.