Panera Bread Strategy

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Title: Panera Bread Strategy
Ron Johnson
March 1, 2009
Southwestern College Professional Studies

This case study is about Panera Bread Company and its strategy it wishes to employ to become the best brand name of fresh bread in the United States. Panera Bread’s use of a broad differentiation strategy has helped their profitability and growth and rivals have found it hard to compete with the competitiveness of Panera Bread. A SWOT analysis will reveal the competitive advantage Panera Bread has and why this company is in an attractive situation and what Panera Bread must do to strengthen its competitive advantage against rival chains.

Panera Bread Strategy
Neighborhoods and cities all around the country are enjoying a tradition of freshly baked artisan breads from Panera Bread bakery-cafes. A driving force behind Panera Bread was to create “a premium specialty bakery and café experience to urban workers and suburban dwellers” (Thompson, Strickland, & Gamble, 2008, pC-87). Heading into 2007, Panera Bread Company’s market presence was expanding rather swiftly. “Between January 1999 and December 2006, close to 850 additional Panera Bread backery-cafés were opened, some company owned and some franchised. Panera Bread reported sales of $829 million and a net income of $58.8 million in 2006. Sales at franchised-operated Panera Bread bakery cafés totaled $1.2 billion in 2006” (Thompson, Strickland, & Gamble, 2008, pC-87). Panera Bread’s strategy was and still is to make great bread and to make it broadly available. Part of that strategy is to make there cafés a home away from home, where people are comfortable and relaxed. What competitive strategy did Panera Bread use to grow its business?

There are a number of ways that companies employ competitive strategies and that can depend on a number of things. Panera Bread’s competitive strategy approach is geared more to a broad differentiation strategy, where the products and services they offer are somewhat different than their rivals and it appeals to a large spectrum of buyers. In this case Panera Bread has set itself apart from its rivals by offering specialty type foods that are outside the norm. The bakery menu offers pastries and sweets, granola parfait, baked egg soufflés, breakfast sandwiches and of course, freshly baked breads to include bagels. They also have a café menu that offers hand tossed salads, sandwiches, drinks, and soups. To top things off, they even offer a kids menu, so Panera Bread caters to the entire family. Panera Bread Company went as far as starting a catering program to extend its market reach (Thompson, Strickland, & Gamble, 2008, pC-92). “Everyone enjoys choices, especially when they're fresh, fun and spontaneous. Right now at Panera Bread, there are plenty of tempting selections to captivate, tantalize and energize your bread-lover's soul as we celebrate the delicious rewards of the baker's craft” (Panera Bread, 2009). What competitive edge does Panera Bread have if any?

Panera is attempting to achieve a longer lasting, more profitable competitive advantage by their capability to offer unique or specialty type items. Also, their commitment to put there all into everything they offer their customers. For example, Panera offers 4 different flavors of coffee, dark and light roast, hazelnut, and decaf. What is important is the work they put into making the coffee. “We believe that coffee is sacred. And that making it requires the utmost attention —from the bean to the cup. So we roast our coffee beans in small batches — allowing us to make adjustments along the way to bring out the best in every bean. And when we brew it, we keep it at just the right temperature so it’s not too weak or bitter” (Panera Bread). Panera’s ability to offer a more unique product and experience will help them be able to sustain their competitive advantage. What are the strengths, weaknesses, opportunities, and threats...
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