Over the next 8 years a combination of company owned and franchised bakery-cafes opened, for a total of 850 additional locations. Exhibit 1 shows their success between 2002 and 2006. Their financial stats remained strong, with a continuous increase in revenue and net income. Panera's strategic intent was to make great bread broadly available to consumers across the United States. They have plans to open 170-180 cafe locations in 2007 and to have nearly 2,000 Panera Bread bakery-cafes open by the end of 2010. Management was confident that their attractive menu and the dining ambience provided significant growth opportunity, despite the fiercely competitive nature of the restaurant industry.
1. What is Panera Bread's Strategy and what type of competitive advantage are they trying to achieve?
Panera Bread's distinctive menu, signature cafe design, inviting ambience, operating systems, and unit location strategy has allowed it to compete successfully in five submarkets in the food-away-from home industry. Those submarkets are breakfast, lunch, daytime "chill out," light evening fare for eat-in or take-out and take-home bread. Panera's competitive advantage comes in part from their well balanced approach. They count on their Product, Environment, and Great Service (PEGS) to deliver their success. This synergy has worked well for them. The have taken a broad approach to their customer's experience. They don't focus on just the quality of the food, or just the warm and inviting atmosphere of the cafe or just the friendly customer service. They are truly committed to constantly providing all three in harmony, taking the full experience into account. In regards to increasing their evening sales, they tried to succeed by "being better than the guys across the street" and making the experience of dining at Panera so attractive that customers would be willing to pass up their typical fast-casual restaurant and go to a nearby by Panera Bread bakery-cafe instead.
Panera used a three pronged business approach. Franchising had been a key component of the company's efforts to broaden its market penetration, but not its only approach. Panera Bread had organized its business around company-owned bakery-cafe operations, the franchise operations, and fresh dough operations.
Another competitive advantage Panera Bread has is it's ingredients. Their signature product, artisan bread, is made from four ingredients - water, natural yeast, flour and salt. Preservatives and chemicals are not added to the mixture. They use the...