Organization and Management of Panera Bread
The formation of Panera Bread began in 1978 when Louis Kane bought Au Bon Pain, a retail producer of baked goods. Kane changed it to a wholesale business by opening two cafes and staffing them with bakers and employees, but high production costs made it impossible to cover his overhead. In 1981 Kane decided to remain responsible for site selection and financing, but he chose Robert Shaich to help turn the company around as President of internal operations ("Au Bon Pain History").
First, Shaich assembled a team to simplify the costly bread-making process by developing a method of forming and freezing bread dough for later baking. This process eliminated the need for a professional baker on staff at each cafe while allowing for more precise stock control. Next, specially designed ovens helped reduce labor costs by making the production process fully automated, and in 1983 Au Bon Pain centralized dough production at a Boston facility. By 1985, the company had more than 30 cafes in the northeast US that all received dough from the Boston facility ("Au Bon Pain History").
From a managerial standpoint, Kane selected high traffic urban sites and “clustered” the cafes in order to promote brand recognition and operating efficiencies. Unfortunately, a 1981 decision to fire all the café employees who “didn’t care about the business” resulted in an organizational crisis of high employee turnover, low morale, and unqualified employees with poor customer service. From 1986-1988, Shaich fixed this problem with increased training, premium wages, seniority bonuses, and a “mystery shopper” evaluation program. In order to give each manager a vested interest in his shop’s performance, Shaich gave managers a minority stake in their cafes, as well as increased responsibility for inventory, staffing, and advertising ("Au Bon Pain History"). Shaich and Kane could now focus more on corporate issues, like the company’s IPO in 1991, while...
Please join StudyMode to read the full document