Panera Bread was founded by Louis Kane and Ron Shaich in 1981, as Au Bon Pain Co. Inc. Au Bon Pain rapidly expanded and became one of the leading bakery-cafes throughout the east cost of the United States, in the 1980s and 1990s. In the early 1990s the company purchased Saint Louis Bread Company, which was a chain of twenty cafes in the St. Louis area. Following their rapid growth Saint Louis Bread Company changed their name to Panera Bread, and in May of 1999, all of the Au Bon Pain units were sold and the company put its main focus on Panera Bread. In 2007, Panera Bread purchased a majority of Paradise Bakery & Café who also followed the same bakery café concept with over 70 locations in 10different states, in 2009 Panera bought out the remainder of Paradise. According to Business Week’s Panera Bread was recognized as “ 100 Got Growth Companies,” and as of December 29, 2015 there are 1,972 bakery-cafes in 46 states, the district of Columbia, and in Ontario Canada, all operating under the names of Panera Bread, Saint Louis Bread Company, and Paradise Bakery &Café. This paper analyzes Panera Bread and their status
Company Analysis
Panera Bread is considered a gourmet bakery. It offers a variety of gourmet sandwiches, as well as bread and other bakery items. Their products are considerably more expensive than their substitutes (fast food). Their target market are health conscious individuals who appreciate freshly baked goods. The following is a SWOT analysis of Panera and their market abilities.
SWOT Analysis
Strengths
Panera Bread has a strong brand image across the county. Their aim is to offer quality health products to consumer in a bakery style manner. It is considered to be the first casual bakery in the industry. The company’s main products are considered artisan foods; artisan bread is a signature product throughout the industry. Furthermore, the company has strong customer loyalty. The company provides their loyal customers with an appealing and attractive menu that is catered to the health needs of their consumers (Panera Bread Company, 2015, p. 4).
Panera Bread is also known to have the highest quality of food that is available throughout the industry. Furthermore, the environment of the restaurants make their customers feel at home. They also offer Wifi throughout their facilities. One of the main strengths of Panera Bread is its cost advantage over their rivals. Panera has the ability to raise or lower their prices whenever it is necessary in order to keep their competitive edge throughout the market (Panera Bread Company, 2015, p. 4).
Weaknesses
Even though Panera Bread has strong brand image, their image is not as strong as other companies, such as Starbucks. If the company worked at increasing their brand image like Starbucks, then the company may be able to increase their profits (Thorn, 2016, p. 30). Furthermore, due to Panera’s restricted criteria, it is not as easy for the company to open franchise. For example, Panera Bread offers services to a specific type of consumer. Panera must place their franchises where their target market has easy access to their facility. This makes Panera Bread substantially limited when it comes to opening franchises, as compared to a fast food chain that can open chains virtually anywhere. Panera limits their target population by the foods they offer, thus, Panera is limited on the areas where they can open a franchise in order to remain profitable (Panera Bread Company, 2015, p. 4).
Also, Panera Bread is confined to North America. The company has not branched out of the continent yet. This is a weakness for the company. Not being able to create a market outside the country puts the company at a disadvantage when it comes to profit. The company may find monetary success if they branch out of the North American region. Due to this, Panera Bread earns less revenue than their competitors (Panera Bread Company SWOT Analysis, 2015, p. 2).
Opportunities
One of the major opportunities Panera has over their competitors is the ability to change prices. Panera is dominate enough in the industry to move prices up and down depending on what they need in order to maintain a competitive edge. If another competitor moves in right next door to one of their facilities, Panera has the ability to fluctuate their prices in order to remain competitive (Panera Bread Company, 2015, p. 4).
Furthermore, just because Panera has not branched out globally does not mean the company does not have the ability to. Panera Bread is fully capable of entering into the international market, like Europe and Asia. This can help Panera increase their geographical presence. Another way for Panera to increase revenues would be to incorporate a drive through option for their customers (Panera Bread Company, 2015, p. 4).
Lastly, the organic craze amongst consumers create a growing demand for Panera products. As the organic craze increases, so will Panera’s profitability. Due to the fact Panera offers consumers health friendly products, Panera’s profits will only increase the more health conscious consumers become (Panera Bread Company, 2015, p. 4).
Threats
One of the major threats to Panera Bread is the high competition throughout the market. As mentioned above, consumers are becoming more health conscious. This is increasing the amount of competitors Panera has. Another threat to Panera is their idea behind making sure each facility has fresh dough every day. This means the company must deliver fresh dough to each location. This could cause a ton of issues for the company. Weather and technical problems are two aspects that can affect the company’s ability to deliver fresh bread to all of their facilities.
Article Analysis
Smith’s (2014) article assesses Panera’s threats prior to Shaich’s renovating the company’s business plan. A couple of years ago, Panera was having trouble competing with their competitors. Panera was the first causal-bakery in the industry. Since their success, several other competitors have entered the market. Due to their competitor’s ability to better fit their consumers need with high-end technology and more room capacity, Panera’s competitors were fulfilling their mission better than they were. Thus, Shaich decided there needed to be changes when it comes to the way Panera operates their daily business operations (Smith, 2014, p. 65).
The first problem that effected Panera’s competitiveness was their inability to take on a greater capacity. Technology was the way around this situation. Through the use of mobile devices and apps, customers were able to predict pickup times in order to get their food. As a result, those customer are not standing in the restaurants utilizing space. By getting those customers in and out quicker, Panera was able to serve a greater number of customers. Therefore, by implementing technology into their business operations, Panera was able to increase their revenue (Smith, 2014, p. 65).
Panera also increased their catering services. In 2015, Panera opened 29 catering hubs. Being able to cater gives the company the ability to increase their revenue without having to worry about facility space. Panera has seen huge success with their catering services. Currently, Panera Bread is testing delivery services to see whether or not it is economically to include them into their business plan. “Panera has estimated that catering and small-order delivery, which currently is being tested, as well as branded products sold at retail, will grow to $1 billion businesses each” (Smith, 2014, p. 67). This is one way Panera Bread has overcome one of their disadvantages in order to remain competitive, while also increasing revenue.
Conclusion
Overall, Panera is able to maintain their competitive edge throughout the industry. They are considered one of the most successful companies in the gourmet food industry. They do have room for improvement, however. Panera should attempt to branch out internationally in order to gain higher profits. They should also reanalyze how the company offer’s their customer’s fresh bread. However, the company is still able to maintain their quality image throughout the industry. Given the increase in health conscious individuals, Panera should only become more successful in the future. If they can remain ahead of their threats, then the company should flourish in the future.
Works Cited
Panera Bread Company. “Company Overview”. Panera Bread Company SWOT Analysis.
Panera Bread Company SWOT Analysis. “Panera Bread Company”. (2015). 1-8.
Sam Smith. “Panera Builds on its Vision”. Restaurant Business, 115, (2014) 64-74.
Thorn, Bret. “Panera executive assesses digital advances. Nation’s Restaurant News, 50(3), (2016), 30-31.
