Panera Bread is a company of small beginnings, starting out as a chain of small scale bakery-cafes along the east coast to having over 1,200 locations in over 40 states. Panera is a company that strives to project an inviting atmosphere in all of its establishments. Panera’s stores are mostly located in suburban areas with heir target customers being urban workers and suburban dwellers.
“A loaf of bread in every arm” is the mission statement of Panera Bread. Panera Bread bakes more bread each day than any bakery-cafe in the country. Panera’s menu spans from muffins and bagels to soups and salads to a variety of sandwiches. Panera Bread prides itself on providing the highest quality of food that customer enjoy.
Panera’s competitors include restaurants in the fast-casual restaurant market such as Applebee’s, Baja Fresh and Fuddruckers. Panera Bread also has to compete with common fast food restaurants such as McDonald’s and Wendy’s. Although, competition is fierce in these markets, Panera has been able to differentiate itself from other competitors.
One of the main problems that Panera Bread is facing is their pricing strategy. With the state of the economy today, it definitely affects the consumer’s ability to eat at places like Panera Bread, especially when there are less expensive options available. These competitors, most of which are in the fast food industry, offer less expensive food items, although they may be of a lesser quality, they still pose a major threat.
Fast food restaurants such as McDonalds may operate differently, however they have a strong presence in suburban areas, which is where Panera is primarily located. There is approximately one Panera location for every ten McDonald’s. Also, full service restaurants such as Applebee‘s, are beginning to offer lower priced menu options. For example, Applebee’s recently began offering 2 for $20 deals where customers can get an appetizer and two entrees for $20. Deals like these may start to lure Panera’s customers to other establishments.
Customers at Panera are expected to stand in line, place their order, wait for the food and take it to their table. They are also expected to clean their table when they are done, all for the price of a sit down dinner. On average a customer at Panera can expect to pay around $10 for a sandwich and a beverage. For the same price or just a few dollars more, consumers can get a full service experience at a restaurant like Applebee’s. Although, the food may be great, will customers continue to pay these types of prices for limited services?
Described in Newsweek as “the Applebee’s of fast food”, Panera Bread has not altered there pricing to stay competitive in this industry. Instead, Panera uses market segmentation and focuses on the customers who can afford their prices. As the CEO, Ron Shaich, stated when asked about the 8.1% unemployment rate, “We prefer to focus on the 92% of the country who still have jobs”. Even though the majority of their target market segment may be still employed, people are scaling back due to the fear of possibly losing their job in the near future. This can pose a major threat to their future success.
One of the main causes of Panera‘s higher menu prices is the cost of the quality ingredients that they use in their food. The quality of Panera’s food is part of their marketing strategy. The company attempts to grow sales through providing an enjoyable dining experience rather than attracting customers on price. Their marketing objective is to grow their customer base with menu development strategies.
As indicated in the case, Panera manufactures its own fresh dough, which is produced and delivered daily in facilities all over the country. Although this is a very costly process, management at Panera sees this as a competitive advantage. Also, Panera obtains ingredients for their dough and other products from multiple...
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