Analyzing The Strategic Management Of Panera Bread Company

Overview of Panera Bread Company

The report helps in analysing the strategic management of the Panera Bread Company which will help in managing and identifying the different kinds of growth strategy which is adopted by the company. Furthermore, the external and internal analysis will be performed in order to analyse and adopt the different strategies which will improve the growth of the company in an effective and appropriate manner.

Panera Bread Company is the American chain of bakery café which is the fast-casual restaurants based in United States and in Canada. The headquarters of the company is situated in Sunset Hills, Missouri. The company was founded in the year 1987 which was 31 years ago and the founder of the company was Ken Rosenthal and Louis Kane. The offerings include soups, salads and sandwiches.

The mission of the company helps in describing the path in which this has helped them in managing the different kinds of offerings which are provided to the individuals in an effective manner.

The vision of the company is to focus mainly on producing various soups along with different sandwiches. The vision helps in describing the path wherein the organization is heading and there are different reasons behind the same as well.

The values of the company is to provide the different customers with cleaned along with nutrient rich food items which is essential in nature.

• To differentiate their products from the other competitors in the market
• To target the urban individuals and analyse their dining experience
• To open more than 100 outlets in different other locations

Political Factors- play a significant role in gaining long term profitability of the company in an effective manner. Proper analysis of the risk of the military evasion is required to be analysed wherein there are different trade regulations and tariffs related to the different services (Hill et al. 2017).

Economic Factors- It plays a significant role wherein the economic factors have a significant impact on the business. The purchasing power of consumers along with supply of the money is wherein it is working as the economy. The impact of the economic factors is high on the business of Panera Bread Company.

Social Factors- This affects the business in an effective way wherein the trends and culture of the surroundings keeps on changing in an effective manner. Furthermore, as the society is growing towards the entire trend of being more health conscious in nature. The social factors have positive impact on the business.

Technological Factors- This is the other factor wherein effect of the technology is greater in the business and company has introduced 2.0 app in which it helped the customers in differentiating between dine in and large orders. At the end of the 2015, Panera Bread was successful in their mission of attracting more than 20 million members in an effective manner.

Mission and Vision

Legal Factors- This is the other factor wherein there are different threats faced by employees in 2012 as there was engagement of different union activities. Furthermore, the legal risks need to be solved by the company by introducing different legal rules and acts and the legal factors have moderate impact on the company as well.

Environmental Factors- The different environmental factors such as change in climate and pollution and this affects the business in an effective manner. The impact of the environmental factors do not have much effect on the Panera Business.

Threat of new entrants- It has been seen that the new entrants are introducing innovative strategies and this is affecting the brand image of Panera Bread Company.

Bargaining power of the suppliers- It can be seen that the suppliers are in dominant position and this can decrease the margin and this affects the morale of the morale of the employees.

Bargaining power of the Buyers- It can be seen that buyers demand a lot and they prefer to the choose the ones which will provide the same products at a less price and this affects the brand name of Panera Bread.

Threat of Substitutes- This can be seen that there are different other competitors such as Starbucks which provide same kind of food and this will create huge pressure on the company as well.

Rivalry among the competitors- This is the other concern wherein there is rivalry among the existing competitors and this affects the entire brand image of the company in a negative manner

Products- Panera Breads is famous in owning and franchises different kinds of restaurants within the entire fast food industry. The restaurant helps in offering fresh baked goods, made to order sandwiches, soups and salads along with different kinds of providing catering services.

Target Market – The different customers that Panera Bread Company aims is to capture the families and individuals who pursue healthy lifestyles. Additionally, these are the different customers who are technologically inclined towards purchasing the different products and services in an effective manner and they earn a salary of more than $75000 per year. The marketing development of the company helps in focusing mainly on the families and the smart well-being.

Positioning of the product- The product position of Panera Bread Company has not been clear in the recent era. The CEO of the company came with the letter describing in which the future of the company has been seen and analysed. The main goal of the company is to promote the healthy environment which will bring proper sustainability in the market.

Objectives

As it has been mentioned previously, the main competitor of Panera Bread Company is Starbucks. Starbucks has tried to expand the offerings beyond only offering coffee to the customers and they try to enhance the competition in drastic manner as well. The menu of the Starbucks will include more options of food such as different kinds of sandwiches along with salads. Furthermore, Starbucks has tried to add different drive thrus to different locations which will help in managing the different locations in an effective manner (Hill 2017).

Starbucks, which is the main competitor of Panera Bread company has the different customers who are technologically kind of inclined and the company wants a place wherein the customers can spend quality time and food along with different beverages. The competition is keener in nature between the two companies as Panera Bread Company and Starbucks have overlapping the target audiences. On the other hand, the other major competitor of Panera Bread company is Chipotle Mexican Grill which is the major competitor (Robson 2015).

Both the organizations are the companies which tries to operate food chain restaurants which are considered to be fast casual kind of food and this will help them in managing the differences in an effective manner. The segment of fast casual of the entire market helps in tending which shares different kinds of similarities which includes quality ingredients along with more upscale kind of décor of the restaurant and customizable food options for the customers who visit the restaurants.

The sales figure in the respective table below illustrates that both Panera Bread Company and Starbucks Corporation along with Chipotle Mexican Grill which have experienced greater success in the sales than the Panera Bread Company over the last three years.

 

Figure 1: Total Sales in Comparison of Panera Bread Company’s Competitors

From the above figure, it can be analysed that the three-year stock performance of Panera Bread Company, Chipotle Mexican Grill and Starbucks Corporation helps in showing that the stock prices of Panera Bread Company are fluctuating in a higher manner in comparison to the different other two competitors in the market that includes Chipotle Mexican Grill and Starbucks Corporation (Rothaermel 2015).

Proper competitor analysis is essential which is required to be analysed in an effective manner as to understand the moves of the competitors and this will help the company in managing the sales effectively as well. Furthermore, it has been seen and identified that the positioning of Panera Bread is such that it is the fast-casual chain of restaurants which helps in serving good and fresh quality breads along with coffee and different bakery products as well. Furthermore, the competitor analysis will help the company in understanding the threats which can be faced by them along with the opportunities that can be utilised to adopt such strategies to improve their growth and focus mainly on the quality in an effective manner.

Macro Environment

The business model of Panera Bread helps in incorporating the main focus on the high-quality foods which are offered to the customers at low costs. Furthermore, this has been observed that there is growing trend within the food industry especially for the quick service restaurants. In the previous scenario, it can be analysed and seen that the different restaurants mainly focused on providing the clean kind of facilities along with proper and efficient customer service as well. These are the different cost-effective methods which are the different ways to save money and bring more individuals into the restaurant.

Furthermore, Panera Bread has tried to insert another kind of technique by adding the other concept which includes the creative recipes that helps in featuring cheap proteins as this helps the company in making profit while this will help the customers in saving the money as well. Panera Bread Company is the fastest growing chains in the United States and there are more than 1400 stores which helps them company in gaining huge amount of profit as well (Hitt and Duane 2017)

Analysis	Impact or Influence
PESTEL	Positive
Five Forces Model	Positive
Driving factors	Positive
Strategy Group Map	Positive
Key Success Factors	Positive

Particulars	Panera	Starbucks	Chipotle
Critical Success Factors	Rating	Score	Rating	Score	Rating	Score
Brand Image and Reputation	3	0.39	4	0.52	4	0.53
Location of the different facilities	2	0.24	4	0.48	3	0.36
Advertising	1	0.11	3	0.44	2	0.44
Quality of the product	3	0.34	4	0.33	1	0.11
Customer Service	4	0.44	4	0.33	2	0.22
Loyalty of the customers	1	0.12	3	0.12	2	0.21
Variety of the products	1	0.24	2	0.44	4	0.44
Competitiveness of the product	3	0.21	3	0.32	3	0.33
Total	–	1.7	–	3.33	–	3.12

From the above competitive price profile matrix, this can be analysed that the total weight score of 1.7 helps in indicating that the position of Panera Bread Company does not have strong position within the fast-casual market. Both Chipotle and Starbucks have scores above 3 and this means that they have a strong kind of position in the entire market.

Furthermore, both Panera Bread Company and Starbucks are analysed with the help of these kind of factors which are critical in nature as they are being critical success factors to the success of the company within the entire foodservice industry. This is based on the entire scale of 1 to 4 wherein 4 depicts the major strength and 2 means the minor strength and 1 means the major weakness.

The CPM of Panera Bread of 1.7 helps in indicating that is the lowest kind of competitor in regards to the other competitors in the market. This helps in analysing that the Panera Bread Company has to work accordingly and properly on strengthening the areas such as expansion, location along with customer loyalty. Both Chipotle and Starbucks have strong kind of CPM scores which places them above Panera Breas in a competitive manner (Barney 2017).

The value chain analysis is essential to be done by the company as to review the secondary and primary activities. The ABC costing helps in evaluating operations, distribution and marketing of the different costs as to deliver profit. The data which is essential in nature for analysing the position of Starbucks and Panera Bread are as follows:

Particulars	Starbucks	%	Panera	%
Sales	4500000	100	2745230	100
CGS	(1455009)	32	(7100435)	28
Gross Profit	3044991	68	4355205	72
Sales and Marketing	525365	5	14253645	6
Operating Costs	14523685	5	14522364	60
Net Income	45236842	12	1523654	6

Porter’s Five Forces Analysis of Panera Bread Company

With the help of the value chain analysis, the sales of the respective company Panera Bread Company is less than Starbucks and this helps in implying that the customer value proposition are not getting in return anything and this is required that the company needs to be more attractive in nature in managing the different tasks in an effective manner.

There are different issues in the development of growth strategy of the company in which it has been seen and analysed that Panera Bread company is operating extremely in a high competitive environment which forces the organization to improve and grow steadily for staying more profitable in nature.

Furthermore, the growth strategy matrix has been followed by the company which has helped the company in managing the different kinds of weaknesses in an effective manner. Furthermore, the company is in good financial condition in the present scenario wherein the growth rate has hiked to 20% and this is the great potential growth and this will be the grow by 500% in the sales to a total of more than 300 billion dollars (Meyer et al. 2017).

In the future, this is essential for Panera Bread Company to keep up with the strategy of the steady growth model and the entire production of high quality products will help the company in developing themselves in an appropriate manner which will be beneficial for the company in the near future as well. There are different competitors of the company in which there can be decline in the sales which is required to be managed effectively.

Profitability Ratios

Profitability Ratios:-
Particulars	Details	Panera Bread	Dunkin Brands
2016	2017	2016	2017
Gross margin	B/A	68.16%	68.92%	39.72%	40.13%
Net margin	C/A	95.76%	86.38%	3.92%	3.93%
Return on capital employed	D/(E-F)	227.37%	214.96%	0.11%	0.10%

Gross margin ratio of Panera Bread and Dunkin Brands are observed to increase in the year 2017 in comparison to 2016. This is for the reason that these companies are attaining enough profit after paying off its cost of goods sold. Net margin ratios of Panera Bread  is observed to decrease in 2017 in contrast to 2016 because it is effective enough in converting its sales to actual profit and Dunkin Brands has increased from 2017 to 2016 as it is unable to attain enough sales for high profits (Fafatas and Fischer 2016). Return on capital employed is observed to decrease for both Panera Bread and Dunkin Brands from the year 2017 to year 2016. This is because they are not effective enough in attaining more earnings from every dollar invested in business.

Liquidity Ratios

Liquidity Ratios: –
Particulars	Details	Panera Bread	Dunkin Brands
2016	2017	2016	2017
Current ratio	A/C	0.69	0.79	1.43	2.79
Quick ratio	(A-B)/C	0.69	0.78	1.42	2.79

Marketing of Panera Bread Company and Strategic Group Map

Current ratio is observed to increase for both Panera Bread and Dunkin Brands from the year 2017 to year 2016. This indicates these companies are able to address all its liabilities in a timely manner by maintaining liquidity of the company (Helbling 2016). Quick ratio is observed to increase for both Panera Bread and Dunkin Brands from the year 2017 to year 2016. This signifies that these companies are not heavily relied on its assets for addressing all its short-term liabilities.

Asset Efficiency Ratios

Asset Efficiency Ratios: –
Particulars	Details	Panera Bread	Dunkin Brands
2016	2017	2016	2017
Average total assets	E=(C+D)/2	40,693.50	42,816.50	44,315.50	44,482.00

Average total assets are observed to increase for both Panera Bread and Dunkin Brands from the year 2017 to year 2016. This is because both the companies are observed to acquire enough assets that can generate high sales.

Gearing Ratios

Gearing Ratios: –
Particulars	Details	Panera Bread	Dunkin Brands
2016	2017	2016	2017
Debt-to-equity ratio	A/B	1.42	1.62	288.28	-18.84
Interest cover ratio	C/D	377.30	201.64	5.9929889	5.67

Debt to equity ratio is observed to increase for Panera Bread Company and decrease for Dunkin Brands from the year 2017 to year 2016. Interest cover ratio is observed to decrease for both Panera Bread and Dunkin Brands from the year 2017 to year 2016.

Equity loans financial instrument is observed to be used by Panera Bread Company based on which the company has issued debt of $100 million as a term loan. Such loan will fund all its operations and will expire in the year 2019 (Wahlen, Stephen and Mark 2014). Equity loans offers Panera Bread the ability to obtain capital when needed through long the process of standard loan that results in acquiring cash in hand. This loan further supports the company in purchasing required raw materials and assets for business development.

A total weighted score of around 1.7 helps in indicating that the condition of Panera Bread is weak in nature and this will require proper analysis of the different internal factors that is required to be analysed in an appropriate manner.

Strengths

Panera Bread is working in an effective manner which will include the different strategies to overcome the different obstacles as the fastest causal restaurant. In the year 2016, it has been seen and noticed that Panera Bread have more than locations that helps in enabling the different customers in ordering through the digital kiosks at the tables. Panera Bread has tried to increase the accessibility by creating a phone application and this helps the customers in viewing the menu by ordering online and this helps them in managing the different issues effectively as well.

Furthermore, Panera Bread tried to come up with the new growth plan which is known as Panera Bread Growth Strategy 2.0. In this respective strategy, the goals of the business are to eliminate the different wait times and this helped in providing high quality service. The plan will be fully implemented by the year 2016 and this will help in consisting of the technology advancements by providing better food options.

Position of the Industry Rivals in the Market

Panera Bread Company has been known to have economies of scale. The organization has large output of production as this is decreasing the costs in the products and this will have central fresh dough locations for producing the goods in an effective manner. The stock price of the Panera Breads Company has consistently grown since the year 2013 and this helped in showing in making it a good investment.

Weaknesses

There are different challenges which was faced by Panera Bread Company which negatively affected the customer loyalty in the entire market. The insufficient layouts are the main factor which helps in contributing to the long lines and this has been originally designed in such a manner that there are different other competitors of Panera Bread such as Starbucks Corporation. The long queues in the Panera Bread Company has faced major challenges as the customers were not satisfied and this created huge issues in the services provided by them.

On the other hand, Starbucks provide friendly atmosphere for the different customers in the market and there is customer loyalty which is being maintained in the organization as well. Panera Bread tries to hire the part time employees in the entire organization and this is the main reason wherein it has been seen and noticed that these employees are not investing much on investing in the company in an effective manner. Lastly, the other and main weakness of Panera Bread Company is that there is no such presence of the company in the overseas and this has reduced the customer base and this is not potential for the growth strategies and the majority of the potential profit is lost by the company as well.

Opportunities

There are different opportunities of Panera Company wherein it has been seen and noticed that the company can expand globally in the entire competitive market and this is one of the major competitive advantage gained by the company in a positive manner. The customers in the present scenario is seen that the company needs to expand the choices of the food among the other competitors which will improve their presence in an effective manner.  

Threats

There is tough competition as there are different rivals of the company and there is negative publicity of the company as well. Furthermore, this has been seen and noticed that the tastes and preferences of the customers are changing and this is affecting the entire image of the company as well. Furthermore, the changes in the tastes and preferences of the customers is the main reason wherein this will affect the brand image of the company in an ineffective manner.

There are different tests such as strategic fit test, performance test and competitive advantage test in analysing whether the company strategy is winner or not. With the help of the strategic fit test, this can be analysed that the external and internal environment is fit in nature in a dynamic manner. The PESTEL analysis helps in showing that the organization is comfortable in nature with changes in the external environment. The strategy of the company is strong in nature and this helps in managing the different issues in a stable manner.

The financial health of the organization is strong and in good condition and there are different liquidity issues as well. The competitive strength of the organization helps in showing that the company is in good position and they are better than the rivals as well. Lastly, the competitive strength of the company and the resources helps in positive analysis of the company

References

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