Panera Bread’s Strategy
Panera Bread Company has expanded its business rapidly considering the demand of the US market; in addition, it focused on distinctive menu, prompt services, and signature café design to achieve long-term objectives and to become the dominant restaurant operator (Thompson 615).
However, this company has already launched a catering service in order to expand its market, for instance, people need such service to arrange parties or other gatherings; as a result, this company should carry out this type of effective services while it had earned more than $80 million in the fiscal year 2004/05 from this service.
Most closely fit strategy from the five generic competitive strategies:
Figure 1: The best strategy of Panera Bread
Broad differentiation strategy would fit with this company because Thompson (615) stated that the prime objective of Panera Bread is to attract local customers with quality food menu at reasonable price (typical meal costs $7 – $12) and achieve loyal customer base; however, type of competitive advantages are – it offers quality food items, atmosphere and rapid services to attract target consumers.
SWOT Analysis of Panera Bread Company
Figure 2: SWOT Analysis of Panera Bread Company
Source: self-generated
Strengths
Main strongest points are –
- High customer satisfaction rate in accordance with the survey report of Power and Associates’ and Sandleman & Associates;
- It has more than 66,000 loyal customers who like the products due to excellent taste, flavour and quality;
- Panera Bread is committed to offer healthy food items;
- It has well trained employees, chefs, and dealers;
- Panera Bread management team had long experience and outstanding leadership quality to develop good supply chain and distribution channels;
- It has already received several awards due to maintaining quality of food items;
Weaknesses
- Panera Bread Company needs to focus on the price of raw materials and operating expenses to compete with the rivals;
- Some competitors have more establishment and brand awareness;
Opportunities
- Thompson (2) stated that Panera Bread has opportunity to expand its business in the international market using broad market appeal, brand awareness and existing customer base;
- Rising demand and earning from franchise operation would create new business dimension to diversify product line;
- Financial strength creates new scope to consider vertical diversification;
Threats
- Many large competitors like Atlanta Bread Company offer similar products at affordable costs;
- Strategies along with marketing policies of the other competitors including franchise food companies;
- Location and menu selection
Core Competencies or Distinctive Competencies
According to the view of Thompson (167), Panera’s lineup of bread varieties, quality products and skilled employees are the key success factor and core competencies of this company; therefore, many food its including Panera’s signature sourdough bread, Asiago Cheese items, traditional Italian flatbread Focaccia, Tomato Basil, Artisan Sesame Semolina and classic French bread become more popular items day by day.
Panera’s Closest Competitors in Accordance with the Information of Exhibit 9
Thompson pointed out key variables of different fast-casual restaurant chains (about 21 renowned companies), such as, number of locations, financial condition and menu categories to assess completive position; however, considering the presence of different states, it can argued that Chili’s Grill and Bar, Cracker Barrel, and Starbucks are the main competitors of Panera Bread.
According to the data of exhibit nine, Cracker Barrel has about 527 combination retail stores as well as restaurants in 42 states, Chili’s Grill operates in more than 1074 sites in 49 states and 23 nations, Starbucks has business operation in 3000 places in the global market and more than 7500 locations in the local market.
However, number of outlets and business operation in the international place are not only criteria to find out closest competitors; however, California Pizza Kitchen, Jason’s Deli, Brinker International, Cracker Barrel, Qdoba Mexican Grill, and Starbucks offer some signature food items and popular dishes.
On the other hand, Thompson analysed the financial position, for instance, in 2005, Au Bon Pain earned $245 million, California Pizza Kitchen generated about $480 million, Qdoba Mexican Grill earned $2.5 billion and Starbucks generated $6.4 billion; however, Panera’s closest competitors is Starbucks considering all variables.
The Strategic Concerns and Problems Those Need to Concentrate by the Management
The management team of this company should broaden the target market because this company highly targeted urban employees and suburban dwellers to increase demand of the bakery and café; on the other hand, large competitors have focused more on the mass population.
At the same time, the management of Panera Bread Company has concentrated more on the marketing strategy to enhancing the quality and demand of its breads and baked items; however, other strategic issues and problems are –
- The company has experienced success by selecting suitable place for the restaurant; therefore, the management should always penetrate new market considering market survey reports and population of the area;
- The management team carry out new campaign like “chill out” campaign because they had gained competitive advantages by taking some successful marketing initiatives to develop awareness and increase multiple meal times;
- Since the position of the competitors is one of the main strategic concerns, the management needs to increase customer demand and new customer base;
- The management teams eager to open a number of franchised bakery-cafés in order to meet growth target, but the company not grant single unit franchises, which creates hindrance to expand its business