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Panera bread case study according to industry analysis
Panera bread case study current situation
Panera bread case study current situation
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Sandra Acquaah
Individual Case Analysis
PANERA BREAD
SUMMARY
Panera bread is one of those few companies which have maintained continuous profitability throughout the recession. Panera Bread has been very successful in its niche market over the years but like many other companies in the industry, there are some areas which need improvement. After careful analysis of the case and outside readings, my conclusion is that although Panera Bread is doing very well, the company’s current strategy isn’t strong enough to sustain growth and profitability for the long term considering how competitive the market is. The major problem which I discovered is that the restaurant is operating under its full potential. In order to maximize its potential and take advantage of opportunities currently available, Panera Bread has to:
a. Enhance its brand image and customer service proposition by undertaking intensive market penetration strategies as well as market development strategies to expand into untapped geographical markets both locally and internationally.
b. Undertake a major overhaul of its value chain and eliminate those activities which have no value added proposition to its customers so as to reduce operation costs and increase profitability.
These strategies are very important because, it will create more awareness about the company and what it has to offer, ensure continuous and sustained growth over the years and make it a more potent competitor in its current industry.
EXTERNAL INDUSTRY OVERVIEW
Panera Bread competes in the industry of fast-casual dining. The growth in this industry was at 14% in 2006 but dropped drastically from 2008 to 2010 during the worst of the recession. However growth has started picking up again the outlook...
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...y success factors are what my two above recommendations will seek to do.
References:
Tice, Carole – September 11, 2012, “1,000 New Independent Restaurants Open -- Crazy, or Canny?”- retrieved from: http://www.forbes.com/sites/caroltice/2012/09/11/1000-new-independent-restaurants-open-crazy-or-canny/”
Christina – May 2013 “Fast Casual Takes Over New York” retrieved from - http://thetrendly.wordpress.com/2013/05/30/fast-casual-takes-over-new-york/
Burger Business – May, 2012, “Fast-Casual Still Outpacing Industry Growth” retrieved from: http://www.burgerbusiness.com/?p=10723
Waltrous, Monica – July 2013, “What’s hot in fast-casual”, retrieved from: http://www.foodbusinessnews.net/articles/news_home/Food
Company overview – Panera Bread, retrieved from, “https://www.panerabread.com/en-us/company/about-panera.html”
Appendix:
Fig 1.1
1.2
Fig 1.3
The article discusses how Panera Bread had to rethink its service model seven years ago. Customers had to wait in line approximately eight minutes to place an order. Furthermore, ten percent of the time, the orders were incorrect. As a result, the company decided that online ordering was the solution to their problem. In 2012, the organization opened a Panera prototype in Braintree, Massachusetts to test the elements of “Panera 2.0”. “Panera 2.0” consisted of self-order kiosks, delivery, digital ordering and a new practice of bringing food to customers’ tables. Getting the right process took Panera Bread over six years. However, all the time spent and money invested paid off for the company. Panera is now recognized as one of the best-performing chains in the industry. In addition, a quarter of the company sales come from online ordering and customers waiting time to place an order reduced to one minute. In 2016, the company posted its best sales growth in four years, outperforming the industry average by 6.5% points.
With a high turnover, it can mean two things for a company. Panera Bread is either ineffective in
The threat of new entry for the industry is low, as considered by high costs and intense price competition, which make the industry’s profit margins very low. In the United States the market is concentrated, where the 50 top firms, including: Wal-mart, Kroger, Safeway
Did you know Panera Bread is one of the fastest growing franchises in America (Panera Bread Franchise)? The restaurant must have great qualities for people of all kinds to love it as much as they do. Visiting Panera Bread I had an awesome experience mainly because of its physical environment. Panera Bread has a great environment which is ideal for encouraging consistent business.
The fast food restaurant industry, which includes quick-service and fast-casual restaurants, is highly segmented with the top 50 companies accounting for only 25% of the industry’s sales. The $120 billion industry includes over 200,000 restaurants with 50% of those specializing in hamburger entrees. (hoovers.com 2008) The major competitors in the industry include McDonald’s, Burger King, Taco Bell, Subway, and KFC – Chick-fil-A’s major competitor in chicken sales. Chick-fil-A’s unique position in the market, specializing in chicken-based entrées, has lead to a competitive advantage which the company has been able to capitalize on. Recently, many competitors have added chicken entrees in order to compete in the market segment. Through marketing strategies and company initiatives, Chick-fil-A has tried to stay distant from competitors, offering a fresh alternative to the ordinary fast food restaurant.
Some strengths that Panera Bread has over it’s competition is that is provides the high and good quality ingredients to its customers. It also gives these customers a difference dining experience compared to McDonalds and Five Guys just to name two competitors. They have catering, fresh baked goods and quickly prepared foods. They also have a great brand name over the years. They have been able to continue on growing financially over the years. Studies also show that majority of customers are very satisfied with Panera Bread.
PepsiCo can potentially acquire California Pizza Kitchen and integrate it in the company’s decentralized management approach. Since PepsiCo executives have experience in the quick service food industry, it should not be a reach for the company to successfully run this casual dining restaurant. For this venture to be successful, it is imperative that management cut down the operating costs at California Pizza Kitchen through the PepsiCo Food Systems distribution network and improve on the 3.1% operating margin that California Pizza Kitchen is currently operating at.
Thompson, Arthur A. "Panera Bread Company in 2012 Pursuing Growth in a Weak Economy." Thompson, Peteraf, Gamble, Strickland. Crafting & Executing Strategy. New York: McGraw-Hill/Irwin, 2014. C-96-C-113.
• Considering the two forces of competition and predict what McDonald’s Corporation might do to improve its ability to address these forces in the near future.
The restaurant business is a challenging industry and if a company has a strategy that works for them as well as their employees, it should stay the course and tweak as needed.
The main challenge is to determine how Panera Bread can continue to achieve high growth rates in the future. Panera Bread is operating in an extremely high competitive restaurant market which forces the company to improve and to grow steadily for staying profitable. The company’s mission statement of putting “a loaf of bread in every arm” is just underlying Panera’s commitment for growing. They are now in a good financial situation and facing growth rates of up to 20% per year in a niche market that has a great growth potential. In the next 7 years the fast-casual market is expected to grow by 500% in sales to a total of $30 billion.
Since going public in 2000, Krispy Kreme Doughnuts has posted strong growth in same-store sales each quarter, with a consistency that would make most competitors envious. According to the Krispy Kreme’s most recent quarter, which ended August 3, 2003, it posted an 11.3 percents rise in system wide same-store sales, including 15.6 percents growth at company operated units (Peters, 2003). From the financial report of second quarter in 2003, it could foretell there would be more earnings growth in the future as long as Krispy Kreme finds more new markets in which to launch doughnut shops. Its average weekly sales are in large determined by newly opened stores. This also demonstrates that the doughnuts specialist’s soaring results and rise to the top echelon of industry performers can be attributed to successful expansion.
Subway is an American fast food restaurant franchise founded by Fred DeLuca and Peter Buck in 1965. Throughout the years, the company has gained substantial amount of growth in franchises and has become one of the largest single-brand restaurant chain in the world. Subway continues to display fierce commitment to provide a wide range of taste, healthier food choices while considering environmental footprint and creating a positive influence in the communities they serve. The objective of this report is to investigate and identify how Subway competes in the market through identifying the main performance objectives and examining the measures implemented within the operation, in order to maintain their desired level of performance. It will explore
The adaptation of the major business strategy to all the markets where the company’s products are presented.
I would recommend the continual implementation of the current strategy. The strategy is working and there is no reason to deviate from it. The company has been very successful in expanding its operations in other countries. I would recommend that the company continue to do that. I would also recommend spending extra resources in the development of new products to keep a competitive advantage over other competitions. The competition is only going to rise because the market has not reached saturation yet. In order to stay ahead of the competition, the company needs to keep researching new products, and stay in sync with the ever changing technology.