In the following paper we are establishing the foundations of a company audit on Panera Bread Company based on their performance, decision making, and strategies applied during the years, and internal analysis (till 2010). Panera Bread Company is a corporation, which started small. They were doing business in a field that people were accepting as commodity in 1976(providing with bread). Later on in the 1980s started selling sandwiches on a go as a fast food company. Nowadays, the industry has a ready negative image and the Panera Bread Company was willing to avoid negative association even then.
The companies which constantly change its strategic decisions in order to improve the quality of operations, expand the business, and build long-term customers relationship. Strategic View and Decision Making Panera Bread Company`s concept changed during the years. They tried to build a stable image and reputation establishing the fast casual restaurants. Panera Bread Company even from its beginning has involved in series of strategic and innovation growth projects. The following part of the report examines more of the strategies implied by Panera Bread during its business operations.
Panera Company Essay Example
If we have to look at the big picture we can easily say that the Strategy that the company is implementing from years since its beginning is growth strategy. Their insights and “catch the moment” attitude helped them to establish a strong connection with their customers. There were several moment during the company history when Panera Bread Company was able to find the strategic window and go further in its development. Their continuous innovation and eagerness to be better than the average food chain provider get them to the top position on customer satisfaction chart (p. 11). Growth Strategy
The company experienced expansion through many franchises. These franchises helped Panera to grow more rapidly, since they contributed resources and staff capabilities to strategies created by the firm originator. The franchise element in Panera’s operations was strategically implemented, because in order to sign a franchise contract, the franchisee was required to open 15 bakery-cafes in the next four to six years. This franchise contract was called Area Development Agreement. Furthermore, the franchisee was required to have strong capital performance and almost minimal liquidity considerations.
Through all of these agreements, Panera was able to increase market share and experience moderate expansion opportunities. The company has chosen to concentrate in particular areas of operations, where enough bakery cafes were developed, so that a sufficient distribution system could be implemented. Market development Panera expanded its offerings into the Canadian market by mainly establishing new franchise cafes. This strategic decision has its considerable implication as well. The company had to consider the exchange rate, since operations in Canada were conducted with Canadian dollars.
Furthermore, attention must be paid to elements like taxes, inflation, economic situation, tariffs and quotas, government restrictions, etc. These facts could have a direct influence on company’s financial situation and operational decisions as well. Market penetration Panera is constantly trying to enhance customer’s experience, when purchasing company’s products. Management believes that they are able to deliver a quality service, which is hardly provided by the competition. Going forward, Panera is implementing a marketing strategy targeting a strong customer relationship. These customers are seen as ‘’a tool’’ to promote the brand.
Many marketing methods of advertising like radio, television, newspaper, magazines, etc. are used by the company to attract this specific group of customers. Panera focusing on marketing campaigns, because it increases brand awareness and builds strong relationship with sound customers. Product development As stated earlier in this report, Panera Bread is constantly offering new products, so that consumer preferences and tastes are being served appropriately. This continuous innovation helps the company to keep sound customer relationship and to enhance the value of the products offered.
When there is some new product added, there is high probability that regular customers will return to company’s cafes and restaurants to taste this product. Keeping track of current and prospective industry developments, Panera is actually achieving a competitive advantage, since constant innovation is hard to achieve by some of its competitors. Differentiation (according to Porter) Differentiation strategy is used by various companies to experience market growth, enter new markets, expand product portfolio for existent and prospective markets, etc.
The aim of this strategy is to offer unique products for various customer segments. This strategy is usually used, when the company actually implemented it, has a competitive advantage over its rivals and can allow high advertising expenses. As indicated in the case, Panera’s bread products are prepared with high quality fresh ingredients as well as new recipes and flavors are constantly added. The entity often upgrades its menu by offering new products in order to satisfy the change in customers’ preferences and interests, and to develop existing products.
All of the changes and menu improvements were designed to strengthen the value of the products and to consequently gain competitive advantage. The company itself describes value as providing its customer with more than average experience. “Panera zigged while others zagged. ” The interesting fact is that the company could be seen as a first mover. They not only wanted to provide the market with their product and create a connection with the customer, but on top of them they were also game changer. They created a niche market between fast food and restaurants dining and called it fast casual.
To add more to this in the hard times for the industry they were clever enough to be one of the few who were not going with the flow and waiting for the bad times to past but they were eager and innovated driven. They are aiming broad target and have the unique selling point and characteristics. The investment decisions that they took drove them to the current momentum of branch leader. Good example appears in the text proving the success of the differentiation strategy implemented by Panera Bread. The breakfast made by bakers, a competitive alternative to microwave sandwiches offered by Panera.
A market research conducted by the company proved that majority of its customers prefers fresh products. Vertical Integration As theoretically defined, vertical integration appears when companies in the same industry and at different stages of production merge or when one company acquires another. In the latter, there are two types of integration: backward and forward. When a particular company acquires some of its suppliers individually, there is a backward integration. On the other hand, when a company acquires another company from its distribution chain, there is a situation of forward integration.
In the beginning of the story when Panera did not even exist; there was the merge of The Cookie Jar bakery in Massachusetts and the Au Bon Pain bakery that formed Au Bon Pain Co. Inc. A couple of years later on, they also acquired Saint Louis Bread Company known as Panera (known as “time for bread”). The good thing was that they did not demolish the Panera Brand at that point but the opposite developed its better features and build on the image and the selling experience that they are managing nowadays.
Having in mind that Panera Bread acquired some of its competitors in the cafe restaurant sector; it could be considered as a forward integration. Concentration Strategy (Focus Strategy) Concentration strategy is used by many companies in the business world. This approach involves companies in choosing to focus their capital and resources in developing a specific product or a basket of products that matches customer needs and preferences. The singular objective of a concentration strategy is to provide focus on particular product line and the market associated with it.
Panera bread focuses its cafes and restaurants in urban and suburban areas, where people can gather together with friends and relatives. These cafes are designed in such a way that in provides customers with a comfortable and enjoyable environment. Additionally, in terms of operations, Panera Bread is focusing on constantly providing high-quality products to its customers. Panera Bread makes it clear to its customer that high quality bread is its main product. Furthermore, the company provides extraordinary experience in its cafes, allowing its clients to have a friendly environment.
Panera believes this environment is what differentiates the company from its competitors. Competitive advantage Panera Bread Company has experienced an increase of revenue as well as an increase of share price from 2000 until 2009, with Ronald Shaich as CEO. During that period the company has outperformed the shares of its restaurant competitors. The key to success had to do with the differentiation strategy that the company has been applying; being able to offer the best quality products to their customers. The company believed that the ability to create ong-term dining concept differentiation was the main key to its big success, in the 10 years they were operating under Shaich as CEO. As mentioned, the differentiation strategy of the company is what makes them so special. By focussing on their production, customer service and quality standards the company are enabled to offer the best possible experience to its customers. The production of Panera’s products is different compared to its competitors, because of its unique supply chain. Its products like dough are brought in on a daily basis, while they bake the loaves later in the morning to ensure freshness.
Next to that the company also uses antibiotic-free chicken as well as organic food products; this enabled the company to stay ahead of the competition, but also showed the society on how important those implementations are. While Panera Bread has a competitive advantage with its differentiation strategy, they also have an advantage regarding customer service. Their focus is to deliver high customer service by hiring performing employees; those employees are hired and trained during programs to ensure high performance, but also maintain its quality of service.
The skills that those employees have are essential for the company, as it helps them to deliver the best possible service to customers and come up with ideas that could help the cafe to go forward. While other companies in the industry decided to fire employees, during the crisis in order to save money, Panera Bread did the opposite. Instead, the company decided to invest more on their employees, the reason why they did this is to avoid longer waiting times, slower service and employees that are getting tired. A concept that Panera Bread uses is; we are zigging while others were zagging.
Another advantage that is linked to customer service is the decoration of their cafes; they are designed in an enhanced way that it is different to their competitors. The company found that business people were not satisfied with the working environment of other cafes, which they used to create a relaxing, clean working space with free Wi-Fi connection. Finally, the quality standards that the company has set ensure that the products that are sold do have a high quality level. The company is continuously improving its value; things they did to do so is, improve the freshness of lettuce, but also include fresh ingredients.
The improvement of value and unique recipes that were used for their products gave them a competitive advantage. Core Competencies The core competencies of the company are linked to their high quality products. The foundation of this quality comes from their bread baking expertise; the employees of the company understand what is important and respond to food. They are also open to any demands customers have, in which they can adapt for the future. Anytime the company was about to update their offerings, they would first look at what the customer preferences are.
In that way they would be able to know what they want and try to offer it to the customers, in this way they want to keep customer interest and involvement high. This also helps them to come up with different ideas and improve their products or even baking process. The Artisan Crafted bread could be seen as a signature product of the company. The production of it includes; water, natural yeast, flour and salt, while no other ingredients like, preservatives or chemicals are added. Next to that the company also uses the highest quality ingredients and the most unique recipes to make the products even more unique and special.
Instead of testing new products in a test kitchen, they would do the testing in the cafes and introduce it to customer if they think that the food is perfect enough. They are fully focused on having the most fresh and highest quality bread. The bakers that are involved in the baking process are professionally trained; the company trains them how the baking process works and how it looks like from the beginning till the end. The preparation of fresh dough and bread is a unique capability of the company that gives them a competitive advantage; it is baked in the morning which would be offered freshly to customers when the cafes open.
In short it can be stated that the combination of baking expertise as well as fresh bread preparation and delivery makes the process so unique. The continuously improving of products, quality and baking process is essential for the company. This core competency drives Panera Bread’s operations and allows them to earn capital. In their case it is not about offering bread, but about the experience the customers have. Business portfolio By gradually developing, the company also acquired many shops, bakery cafes, restaurants and broadened the lines of the products from fresh baked breads o fresh sandwiches, soups, salads and all different food items for fulfilling customer’s needs at different time slots. Panera operated in three business segments: Company owned bakery- cafe operations Franchise operations Fresh dough operations The table is given below for more reference: *This is quite a big menu list and some menu is still in planning phase to be launched in the market. All the three categories of products are contributing to sales highly. The sales growth rate for the three categories is 0. 7%, 0. 5% and 0. 5 % respectively compared to past years. Business development
Panera Bread Company is making a very high profit out of the product lines it is offering and according to the overall business overview, company is making rapid growth in terms of acquiring more market share. The company is providing the best service facilities, best quality with healthy life style and quick service which has positioned the company image on the top in consumer minds. This is why consumers are responding to the company strategy and the products are getting more part in bringing revenues inside. The products are overall playing positive role in the company growth.
This overall illustrates that products are still in their growth stage and company is growing rapidly on the regional level of USA mostly as well as Canada. Being in a competitive environment the growth is still expected and more revenues are easily brought in. The mix of healthy ingredients and customized services with great time factor is working out effectively which has been set up as a source of diversification for the consumers. Since the company began when it was simply providing starters to the customers, it set up a uniqueness determining the needs of customers.
This trend continued on and year by year the development in the company took a new shape with segmenting for more extensive products lines and creating more business opportunities for the company. Company and franchisee revenues from 2000-2009 rose from $350 million to $1353. 5 million consisting $1153. 3 million from company owned bakery-cafe sales, $78. 4 million from franchisee royalties and fees,$121. 9 million from fresh dough sales to franchisees, franchisee operated bakery-cafe brought in revenues of $1640 million. The shares of the company rose from $3. 8 in 1999 to $67. 95 in 2009, which is an increase of over 1600%. Abell type model: Panera operated in three business segments for serving all different types of customers coming across the segments. Customer Groups: Fast food eaters Fresh & healthy food and diet conscious people Office workers Suburban market Business people Children Technologies: The simple technology used behind bringing success in the company and satisfying the customers was hand -made fresh breads, made to order grilled sandwiches, various products instead of using microwave technologies.
Panera Company also tried to reduce the time of bringing in fresh vegetables to customers in shorter time than ever before. Determining the need of customers and providing very fresh bread, Panera was baking all day long for strengthening value of the products. Panera provided nutritional calculator on its website for many years in order to make customers aware of the nutritional products they could buy form the company. For satisfying customers and bringing more in the market company also brought in e-learning facility for employees to learn more recipes and add best flavors and brings best tastes.
Needs of customers: The needs of customers were really perceived by the company and competitors were also trying to capture some market opportunities by providing healthy food. The need of people were getting extended In terms of fresh, quick, with full nutrition and very customized products for breakfast, lunch and a casual food. Customer’s needs also one of the core competencies of this company and that is the best quality product for which they even were willing to pay more. The customer needs on all basis was completely followed by the company for making even better attachment with the customers.
On all levels Panera Company always tried different techniques for receiving more responses and customer feedbacks to strive for more improvements and bring in the desired outcome. Panera provides breads and all its products as the actual products whereas the services and all its competitive advantages are used to provide best quality services in proper time. The most important thing is that they perceive the value of their products and they believe that people also believe in their product commitments.