Week 2 Assignment
1. SWOT Analysis
a. Minimal Long-Term Debt. Most expansion is financed by cash flow from operations. b. Quality control is maintained by making fresh dough daily at one of several fresh dough facilities. The dough is then transported daily from the facility to stores and baked fresh in the store. The average length of each trip is 300 miles. c. Strong brand recognition.
d. Free Wi-Fi at most locations. However, to encourage frequent customer turnover, many locations limit Wi-Fi to 30-60 minutes or turn it off completely during peak business hours. e. Growth through successful franchise operations.
f. Growth through acquisition; Paradise Bakery & Café acquired 2009.
a. Lack of a dinner menu with "substantial" entrees.
b. Still lack a presence in Manhattan (but do have locations in Brooklyn, Bronx, & Jersey). Competitor Au Bon Pain has several Manhattan locations.
a. Improving economy equates to more people eating out.
b. Panera Cares Community Café. A new concept in corporate giving. Ensures that everyone who needs a meal gets one. People are encouraged to take what they need and donate their fair share. There are no prices or cash registers, only suggested donation levels and donation bins. The cafes also offer the option of volunteering an hour of time for a meal. Third location just opened in January 2011. Leads to positive brand image (panerabread.com, 2011). c. The company has very devoted customers and huge brand recognition. Might consider marketing their bread and bread products at retail grocery chains. They already have the regional dough centers established. They could expand these to baking facilities and still deliver their fresh bread daily using their existing transportation network. d. Consider test marketing a full service casual dining restaurant to capture their same customer base for the evening meal with expanded menu choices.
a. Operate in a fiercely competitive business environment. b. As commercial real estate market improves, stores may experience difficulty negotiating favorable long-term leases. c. Their most vulnerable area is their transportation network. If they experience a disruption of service at one dough facility, it could mean that several stores do not get their fresh dough for one to several days. Because the stores are not equipped to make the dough, this could be devastating to their bottom line. d. Additionally, because of the current outlook for oil prices, the company may have to absorb increased fuel expense without being able to pass that cost on to the consumer.
2. Application of 7 questions in chapter 4 to Panera Bread
A. What are the industry's dominant economic features?
Panera Bread is a part of the Fast Casual Restaurant Industry. Fast casual restaurants are defined as hybrids of quick service and casual dining that offers the consumer more freshly prepared and customized product than a fast food restaurant. The fast casual restaurant sector is both the newest and fastest growing sector of the food industry (franchisedirect.com, 2011).
Defining features of a fast casual restaurant are debatable. One opinion states that a restaurant in this sector lacks drive-thru service… and full table service. Another opinion states this is a conceded view. Some things agreed upon include, the typical cost of a meal ranges from $8-$12, has a five-to-eight minute order time, and made-to-order preparation. The restaurants have nice ambience and décor, and a food delivery system where customers make menu selections at a counter and the food is brought to customers' tables (fastcasual.com, 2011).
In 2009, the industry experienced a 10.8% growth in sales year over year with close to $20 billion in total sales, up from $11 billion in 2006. Continued...