Panera Bread Company: Case Study

Introduction

Panera Bread Company originates from the organization that started operating under the name Au Bon Pain in 1976. It was a demonstration bakery owned by Pavailler. In two years the organization was bought by Louis Kane, who opened 13 stores in Boston. Unfortunately, the business was not very successful at first, but a new partner, Roland Shaich, saved it. The suburban population became the main customer of the stores. The business got into a groove and expanded. At the beginning of the 1990s, Saint Louis Bread Company was purchased. It turned out to become the fundament, on which Panera Bread Company was built. The owners realized that it would be more beneficial to give up on their urban store concept and create a bakery-café where people could gather in business or just to have good time. As a result, a combination of “coffee shops, the food of sandwich shops, and the quick service of fast food” occurred (Wheelen et al. 567).

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Since the end of the 20th century, Panera Bread Company operates in the restaurant industry. Being not only a bakery, it is now known as the “fast casual” restaurant, which allows it to reach a larger population. The menu, which includes not only various breads but also sandwiches, soups, and other simple dishes, attracts numerous customers. They come to have a cup of tea or coffee in winter and soda in summer. The company targets at college students and provides an opportunity to study inside. Customer loyalty is the main thing that influences Panera and makes it successful. Providing fresh baked goods and various advantages for the clients (such as customer rewards card), the organization gains an opportunity to remain achievement-oriented. Even though its competitors like McDonalds or Starbucks offer their unique product, the company is still running and appeals to numerous clients.

Panera Bread Company

Panera Bread Company expanded greatly during the 2000s. It grew through “franchise agreements, acquisitions, and new company-owned bakery-cafés” and owned more than 1300 locations in the US, Ontario and Canada (Wheelen et al. 567). By 2009, it became one of the largest companied in the industry in the US and served almost 6 million clients a week. The company had about 600 bakery-cafes in the US only. Almost 800 facilities of franchise segment could be found in the US, Ontario, and Canada. Except for that, Panera was occupied in fresh dough operations with more than 20 facilities. The items were supplied every day, which allowed the company to earn $1,353.5 million. Panera Bread Company provided dine-in and take-out services. It also offered Via Panera, “a nationwide catering service that provided breakfast assortments, sandwiches, salads, and soups using the same high-quality ingredients offered in the company’s bakery-cafes” (Wheelen et al. 570).

The first CEO of the company was Roland Shaich. With the course of time, he dropped this position but desired to remain the Executive Chairman. Top manager, William Moreton was considered to become new CEO of the organization. Before that time, the board of directors was divided into three classes of Directors. There were six Directors, but Shaich and Franklin were the main ones. There were also three committees: the Compensation and Management Development Committee, the Committee on Nominations and Corporate Governance, and the Audit Committee. They could be found in headquarter, which is located in Saint Louis.

The organization believed that its main advantage was artesian breads that entered the market being just baked and were always fresh. The high quality of the products and their excellent taste attracted numerous, which made Panera competitive.

Key Issues

Even though the company seemed to operate efficiently, it faces a range of problems and has several weaknesses. Panera Bread Company is located in rather distant territories. Of course, being a national restaurant chain, it has an opportunity to reach a larger audience, but, on the other hand, it prevents the creation of tightly connected loyal clientele. Panera did not suffer much because of the recession. However, if the economic situation in the country continues to get worse, there is a chance that the population will not be able to afford the company’s products and services. As delivery is seen as a vital operation for Panera, the prices on fuel are likely to influence its costs. Except for that, the raw materials may become more expensive. It is also rather critical that company’s corporate sales are much lower than franchisee ones. The competitors that operate along with Panera offer cheaper products and seem to be more expanded, which is one more threat for the organization. The menu of the cafes is rather limited and is based on carbohydrates, which may not appeal to some customers. There is also no online ordering, which is rather popular nowadays and allows to attract more clients. Trying to make cafes comfortable for students, the company fails to meet the expectations of other clients.

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Of course, all the drawbacks that were mentioned are critical, as they will or already have an adverse impact on the success of operations. Still, the main issue that the company constantly tries to deal with is the existence of competitors that may be more popular among the general public.

Business Responses to the Issues

Operating on the market for many years already, Panera Bread Company is aware of the problems and threats that have an adverse impact on the business. That is why, it makes steps to deal with them.

Trying to create a tightly connected loyal clientele, Panera Bread Company makes the bakery-cafes targeted at people from the neighborhood and students. When all other businesses yielded to the recession and made their products cheaper or just left the price as it was, Panera started to sale food and drinks referring to the increased prices. The company realized that some clients would not use its services anymore but was willing not only to enhance profit by attracting more clients but also through the prices. The organization found the audience who was ready to pay more to receive healthy food of high-quality, which allowed it to achieve success and solve this issue. Moreover, when actively advertising its products in this way, Panera attracted people who were not satisfied with the quality of fast food. Thus, sacrificing some clients, it attracted new ones and gained more. Such strategy also allowed to increase profits regardless external influences. Panera as no opportunity to control prices for fuel and raw materials, but in this way the company will still earn more even if its expenditures increase. As the competitors are more expanded and have more facilities on the same territories where Panera operates, it opens new cafes. The company also receives the feedback from its clients to be sure that they are satisfied with the services and products. It is also a good basis for future changes.

Recommendations

Even though the company responded to the issues, some more steps could be made. It might be beneficial for the company to consider globalization. Healthy food attracts people from all over the world, so they are likely to be attracted by Panera. It would also be advantageous if the food was delivered to the offices and sold online. Many people prefer to stay in office or at home instead of going somewhere. Such changes would provide Panera an opportunity to reach more clients. It seems to be an advantage to make the menu adapted to meet the needs of a more diverse population instead of focusing on particular. The variety of dishes could be increased. Still, they should remain healthy for the company to be unique.

Conclusion

Panera Bread Company is rather successful due to its focus on healthy products of high quality. The organization remains competitive even though it operates in the same market with such companies as McDonalds and Starbucks. It offers rather expensive products but is targeted at the clients who are willing to pay more for the quality. Panera faces a range of problems and threats that prevents it from reaching more achievements. They are connected with the clientele, menu, types of ordering, and competition, and treats of increasing costs for fuel and raw materials. Still, the company responds to them and tends to solve. It would be beneficial if Panera also considered globalization, extended menu, provided an opportunity to order the food online and targeted at a diverse audience.

Work Cited

Wheelen, Thomas, David Hunger, Alan Hoffman and Charles Bamford. Strategic Management and Business Policy: Globalization, Innovation and Sustainability. New York: Pearson, 2014. Print.

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NerdyTom. (2022, July 30). Panera Bread Company: Case Study. Retrieved from https://nerdytom.com/panera-bread-company-case-study/

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"Panera Bread Company: Case Study." NerdyTom, 30 July 2022, nerdytom.com/panera-bread-company-case-study/.

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