Panera Bread Co. Case study
Pane Bread Company’s strategy is to differentiate from other fast-casual chains and lull-service competitors with their quality products and attention to detail. The way Penitentiaries this is by offering reasonably priced freshwater items, counterinsurgencies and soups in a dining environment that is esthetically pleasing. Pane also offers a wide variety of products to draw In customers throughout the day such as bagels In the morning as well as pastas, sandwiches and soups for lunch and dealer.
Another way that Pane Bread differentiates from Its competitors Is that the breads and pastries are guaranteed fresh because they are baked In-house every day. Pane also has an aggressive growth strategy.
An example of this is their franchise agreement. When a franchise agreement is made it typically includes a requirement where the developer to open 1 5 bakery-cafes in a six year time period. The company works close with franchisees to broaden the market and to uphold Pander’s values and strategies. In 2010, Pane Bread Co. Had an average of six million customers patronize Pane locations system-wide each week”. (Gamble) Pane continues to grow throughout the country.
They “currently have over 1500 locations In 41 US states and Canada”. (Corporate Office WHQL)The bakery locations are either company-owned r franchises. The competitive strategy that most closely flats Pander’s approach is the best-cost provider strategy. This strategy is a combination of a low-cost provider and a differentiation strategy. They aim to satisfy buyer’s expectations with their attractive attributes at a low cost.
Pane has placed themselves in a segment that creates competition with both dining and fast food restaurants. Because of this,Pane has to offer hightail products that are as valued as quality restaurant food and at a price point to compete with fast food chains. The way they differentiate is by having a angel of full service and self service locations where customer service is courteous, capable and efficient. (Gamble) Also, they differentiate with their wide variety of freshly baked food that Is unique to market as well as being baked In their In-house bakery that Is designed to be pleasing to the eye and Inviting.
I nee competitive advantage Tanat Pane Is trying to conclave Is Transliteration tongue their high quality goods and welcoming cafes. Soups, sandwiches, and bagels can be bought in a number of places but Pane is unique because they offer freshly baked products, great service and a comfortable environment.
Their competitive advantage is also their strategy. 2. What does a SOOT analysis of Pane Bread reveal about the overall attractiveness of its situation? Does the company have any core competencies or distinctive competencies? A SOOT analysis is an examination of a company’s strengths, weaknesses, opportunities and threats.
The following is an analysis of Pane Bread Co: Strengths Weaknesses Opportunity Threats Affordable prices Mismanagement in debt Growth to more locations Company’s expanding into market Numerous Locations Not a strong brand International expansion Easy to copy Variety of menu Costs of products in relation to price Company is strong financially Food is prepared quickly Esthetically pleasing environments Strong customer service catering Drive-thru Leader in bakery-cafe© market Pane Rewards card Fresh baked food Pane has a long list of strengths.
They offer catering, drive-through, and a full- service dining experience.
Another strength is quality customer service. They strive to provide “courteous, capable, and efficient customer service”. (Gamble) As a result of great customer service, customer loyalty has risen resulting in an average of 6 million customers a week. As a result of their customer service and fresh baked food they are amongst the leaders in the bakery-cafe© market. Another way they establish loyalty is their customer rewards card that gives loyal customers rewards points every time a customer buys any godhood’s a Pane location.
Also, Pane abnegation’s the leaders in the market leads to another strength which is financial stability. According to Yahoo Finance Pane has a gross profit of $195,746 (in thousands) as of September 24th 2013. (Yahoo Finance) Pane is a strong company but there are weaknesses. One weakness is that Pane as mismanaged their long term debt. Evidence of this is that the Pane locations that are franchise owned have recorded higher revenue than the company-operated stores.
Pander’s company-operated stores revenue in 2010 was $1321. 1 million dollars and the franchised stores revenue $1,802. Million dollars. If Pane had done what their franchisees did then they would be more profitable at their company-owned locations. Another weakness is the lack of brand name recognition. Pane should implemental stronger marketing strategy to reach consumers who are looking for an alternative to unhealthy fast food options.
Pane should use social media like Group and Faceable to intrigue new customers. Also, they should market their customer rewards card because people love getting free store itemized wall Keep returning to receive tenet Tree rural or pastry.
One opportunity is international expansion. Pane could expand into markets in Europe or Asia to present a healthier American quick-service restaurant. Once established they can offer franchise opportunities there as well.
As there is plenty of opportunity for growth internationally, there is also a large opportunity for growth stateside. Pane competes with fast food chains and restaurants and is out numbered. If Pane could expand to more locations and penetrate the market with their bakery-cafe©s, then they would be able to reach more potential customers and in turn yield a higher profit margin.
There are a few threats such as ease of entry into the market due to an existing large amount of competition. Fast food chains are everywhere and the powerful ones such as McDonald’s and Taco Bell will out-number the amount of Pane Bread Co.
Locations. Due to their strong financial status they also can afford to set up more actions to be around Pander’s to give the customers more options. Also fast food restaurants are adding higher quality items to their menu to compete with places like Pane such as Wend’s pretzel bun pub burger, Hardens gourmet thick burgers and McDonald’s new Supreme wraps.
Another threat is that Pander’s food strategy is easily copied. Another business could start producing fresh baked bread and soup and salads without much trouble.
Cataracts is implementing that strategy now to try and take a share of the bakery-cafe© market. The company’s core competence is their bread-baking expertise. Artisan breads are Pander’s signature product along with other signature items. I believe that even with other business’s trying to imitate Pane; they won’t be able to match the high quality standards of Pander’s signature products. 3.
What is your appraisal of Pane Bread’s financial performance based on the data in case Exhibits 1, 2 and 7? How well is the company doing financially? Use the financial ratios in the Appendix of the text as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Pander’s recent financial performance. As discussed in class, since the case study is a few years old, it would be preferred to do financial research of information from Yahoo Finance and from an updated Pane Bread Co. Financial data sheet. (Harrison). First analyzed was Pander’s gross profit margin is 28.
5 percent as of September 24th, 2013. Their gross profit margin is down from 30. 5 percent in 2010. What this means is that Pane can use 28. 75 percent of revenue to cover operating expenses and still report a profit.
Next is the operating profit margin which shows the profitability of current operations without regard to interest charges and income taxes. The operating profit as of September 2013 is 13 percent which is up 1 percent since 2010 and in 2009 it was 10. 4 percent. Their operating profit margin is not high but it is good to have the menders continually Increase.
Next Is teen net pronto margin wanly Is 8 23 percent.
It has increased 0. 98 percent from 2010 which was 7. 25 percent according to the financial data from the case study which is good because it shoes that profit per dollar of sales has increased. The company’s current ratio, which shows Pander’s ability of paying off current debt by turning current assets into cash for 2010, is 1. 6 which is down from 2.
23 in 2009. This is bad because it means that Pane can cover its liabilities 1. 56 times which doesn’t give them room to have a fluctuation in revenue in a negative way.
The working capital shows Pander’s ability to pay off its current liabilities as well as finance inventory expansion and have a larger base of operations without having to take out loans. Pander’s working capital in 2010 was $119,169 (in thousands) which was also down from sass’s working capital of $179,825 (in thousands). Although there was a decrease of almost $60,000 there is still capital to work with.
Lastly, I analyzed the ROE or return on equity which measures a company’s ability at generating profits from every unit of shareholders’ equity.
The ROE as of September was 17. 27 percent. This was down from 18. 78 percent in 2010. A reason why the number decreased even though the stock price is a lot higher in 2013 than 2010 could be the treasury stock increased the last quarter.
Overall, Pane is having financial issues due to profit margins decreasing since 2010. The return on equity decreased as well but that was due to the company increasing their treasury stock. The Company’s stock is currently being sold at almost 100 percent higher than it was in 2010 which indicates financial strength of the company.
The company can cover its liabilities but it should figure out a way to increase its current ratio to help build financial security. 4. Based on the information in case Exhibit 3, which rival restaurant chains appear to be Pander’s closest rivals? For a restaurant to be considered Pander’s close rival there would have to be a similarity in amount of stores, price of products or products offered.
A close rival would be Chipolata Mexican Grill. Chipolata has almost 1100 locations which is similar to Pane. Chipolata offers fresh gourmet Mexican food at a lower price than full- service restaurants and a competitive price with fast food prices.
The amount of revenue the company produces per unit is close. Spittle’s locations have an average revenue of 1.
8 million dollars and Pander’s average revenue per store is 2. 1 million dollars. Both stores offer high quality food in a casual environment. Another close competitor is Einstein Brows. Bagels.
Einstein offers similar products such as fresh-baked bagels, made-to-order hot sandwiches, and soup which is a age reason why they are close rivals to Pane. Another reason why they are considered a close rival is their geographic locations.
Although Einstein has a significantly lower amount of stores, its company is spread out in 34 states and the Dialect AT Columbia wanly Is salary to Pane. The other close competitor is Cataracts. Cataracts acquired a bakery chain La Boilable that will get Cataracts involved in the food industry.
This will draw in a larger amount of customers for all three meal times similar to Pander’s food strategy. Cataracts is a lot bigger and spread out geographically including its 5,900 international locations, but they will have a difficult time competing with Pane because “Pane currently dominates half of the roughly $7 billion U.
S. Bakery-cafe© marketplace. “(Router) Pane is a unique business that focuses on customer service and a casual yet gourmet experience that is hard to match or compete with.
The three closest rivals are similar in various ways but they don’t have Pander’s combination of product, place, and customer service which is why they are successful. 5. What strategic issues and problems does Pane Bread management need to address? Some of the strategic issues that Pane Bread’s management needs to address such as product offering issues, high-quality low price issues, marketing issues, site selection and environment issues.
The first issue to address is the product offering issue. This includes having to change the menu seasonally to attract customers but also hold onto its signature items.
Also, because they emphasize on the freshness of their product ingredients and the quality of the final product they should specifically train chefs to make sure they can succeed and keep the brand name strong. The next issue is the high-quality low price issue which is high quality and quick food for a low price.
This is an issue because since the products are made at each individual store daily, product costs are higher which hurts their profit margins. Another issue is marketing, which is important to grow the brand name. There are a lot of marketing strategies that Pane have not utilized such as coupons, seasonal specials or a strong social media presence. If they can reach their customers they can effectively get the message out about their high quality product at a low price.
Using social media to market their business could be an easy way to reach customers who have heard of Pane but don’t know what it is exactly. Lastly, the site and environmental issues include location of stores and insuring customer traffic but also the way the stores look inside such as their inviting atmosphere. There has to be constant moves to growing the business into new areas. The company could also do customer polls and ask for feedback to see how they are doing. 6.
What does Pane need to do to strengthen its competitive position and business prospects visit–visit other restaurant chain rivals? There are no big or threatening problems/issues that need fixing or correcting.
No need to overhaul or do major surgery on the company’s broad differentiation strategy. Some possible actions: There are a few things that Pane could do to strengthen their competitive position: continue to move open locations In roan areas winner Pane NAS II tile or no stake in currently.
This will spread awareness and introduce them to a new market of customers. Attack the causes of the diminishing operating and net profit margins which would include managing their debt and cutting back on spending. Create new menu items that will attract a dinner crowd. This also includes expanding their seasonal items such as attractive flavors of soup and coffee.
Marketing needs to be stronger so that Pane is known as the healthier option of fast food but also emphasize the quality of the fresh food.
This could be done through television commercials, mailed out coupons, and emphasize on their customer loyalty cards. Based off of my research it is evident that Pane Bread Co. Is a strong company. They are currently the leader of the bakery-cafe© market, but there is room for growth and improvement. With emerging competitors quick to imitate the business model that Pane has created, it is necessary to continue to focus on attaining a competitive advantage through innovation of new products while maintaining a comfortable dining experience and emphasizing on great customer service.