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Panera Strategy
deli-style menu with an inviting ambience for its customers. The company’s
This menu delivers quality foods for consumers who do not have time to eat
as customers know that they will not be served stale bakery items or bread.
Panera focuses its cafes in urban and suburban areas where customers
can gather with friends. The cafes had a signature style that created a
breakfast, lunch, daytime and early evening meals. The company strives to
be more successful that “the guys across the street”, attracting potentials
which produce fresh dough for each bakery-café. These facilities are
products. Multiple suppliers provide Panera with its other essential goods,
from its unique dining experience to its fresh menu of bakery items and
customers feel as though they are eating at home. Furniture and fixtures
neighborhood. While many rivals have flooded the market with restaurants,
many serving smaller numbers of consumers per store, Panera has taken the
company to efficiently enhance its menus and café designs, while being seen
as a unique place to visit. Panera’s cafes offer patrons fresh deli sandwiches
and breads which can only be found at two or three other rivaling
catering to the healthy crowd as well as consumers who are looking for a
fuller meal. Its prices are low compared to traditional restaurants, and
patrons can get there meal quickly and have plenty of time to enjoy the
aesthetics.
have arisen. Panera’s delivery trucks drive from 300 to 500 miles each day
to deliver fresh dough to only six cafes. Due to the restaurants being spread
from each other, the company spends excessive amounts of money using
to the high profit margins of company and franchise operated cafes, the
dough operations bring in a much smaller margin under 10%. Panera has
than one dozen restaurants at once, Panera has limited the number of
potential owners. Owners must invest a large amount of capital, more than
strategy. The company does not have to compete directly with market
leaders, because most do not focus on the niche market. Panera has been
able to focus on one niche, where the market has many different niches. The
company offers deli products and coffees, while other restaurants provide
competitors are focusing on the same target market, so the company can
create strong loyalty within its patrons. By grabbing a significant market
SWOT Analysis
Panera provides its patrons with fresh products that are not easily replicated
company, since Panera produces its own dough for its breads, while many
successfully caters its menu to consumers who want a quick, casual dining
experience.
restaurant industry, since it has less than half of many lead competitors. The
during the evening. The company’s stringent policies for potential owners
of capital needed and the requirement of only using approved vendors limits
market. The restaurant has yet to tap markets in more than a dozen cities,
cities that Panera has already penetrated have a lot of room for expansion,
since the restaurant services more than 500,000 people per café. Panera
than $80 million in 2005. Since the company produces its own fresh bread,
restaurants are very low. Diverse menus from other restaurants create
restaurants already offer successful evening menus, which can reduce the
Company and Au Bon Pain. These cafes offer similar menus, as well as
where the company can improve. Though sales have been increasing by
more than $100 million since 2003, the growth of return on sales has fallen
1.5%. For the past five years, the return on sales and return on assets have
been flat until 2006. Return on sales fell to 8.8%, while return on assets
dropped 1% to 10%. This is due to the slowing growth of net income, with
overhead costs increasing significantly from 2004. The company has seen
its operating profit margin decrease by 2% since 2002 due to its operating
2003. Net working capital has not been an issue for the company; with little
to no debt, Panera has increased its net working capital by $16 million since
competitive in the fast-casual food industry. Net profits have been slowing
during the past several years, mainly due to the increasing competition
within the industry. Selling and administrative costs have been increasing at
a greater rate than overall expenses. This is due to the strict operating
criteria set forth by Panera. By forcing owners to open at least 15 cafes at
once, Panera has made it difficult for new owners to curb costs.
While Panera has been able to lure new customers into its restaurants,
has heavily penetrated some larger markets, it has neglected other areas
which provide more opportunities for the company. Many other restaurant
have few cafes within those areas to compete with Starbucks and Atlanta
Bread. Currently, only two restaurants are located in the Miami area, while
the Dallas area has less than a dozen locations. In order to curb costs for
transporting dough, Panera should open more restaurants in the Dallas area,
as well as begin penetrating the Austin and San Antonio markets. By having
more locations within 300 miles of each other, truckers can deliver dough
more efficiently to these metropolises. These costs will allow decrease as
more restaurants are found in a closer proximate within the same area.
Panera also needs to expand its locations in Miami and Los Angeles,
while opening cafes in New York City. These areas thrive with people
allow potential owners to locate their cafes within the same area, allowing
them to work more efficiently with their clientele. The owners will gain a
familiarity with the area much more quickly, and will be able to cater to any
changing needs within their respective markets. In this manner, owners will
their markets.
While Panera expands its operations in its current and new markets,
Since the company has a strong reputation already within its communities, it
can efficiently cater to new consumers who may become customers of its
cafes later. With fresh dough already arriving at the local cafes, Panera can
quickly meet the needs of its customers. Panera can expand its operations
and gain a larger market share on its competitors by opening more cafes.
By not overloading one area with cafes, Panera will not be seen as a