Additional Case 2

Topics: Bread, Fast casual restaurant, Fast casual restaurants Pages: 15 (7774 words) Published: April 8, 2015
Additional Case


Panera Bread Company
Arthur A. Thompson
The University of Alabama


s Panera Bread Company headed into 2007,
it was continuing to expand its market presence swiftly. The company’s strategic intent was to make great bread broadly available to consumers across the United States. It had opened
155 new company-owned and franchised bakerycafés in 2006, bringing its total to 1,027 units in 36 states. Plans were in place to open another 170 to
180 café locations in 2007 and to have nearly 2,000
Panera Bread bakery-cafés open by the end of 2010.
Management was confident that Panera Bread’s
attractive menu and the dining ambience of its
bakery-cafés provided significant growth opportunity, despite the fiercely competitive nature of the restaurant industry.
Already Panera Bread was widely recognized
as the nationwide leader in the specialty bread segment. In 2003, Panera Bread scored the highest level of customer loyalty among quick-casual restaurants,
according to a study conducted by TNS Intersearch.1
J. D. Power and Associates’ 2004 restaurant satisfaction study of 55,000 customers ranked Panera Bread highest among quick-service restaurants in the
Midwest and Northeast regions of the United States
in all categories, which included environment, meal,
service, and cost. In 2005, for the fourth consecutive
year, Panera Bread was rated among the best of 121
competitors in the Sandleman & Associates national
customer satisfaction survey of more than 62,000
consumers. Panera Bread had also won “best of ”
awards in nearly every market across 36 states.

Copyright © 2007 by Arthur A. Thompson. All rights reserved.

In 1981, Louis Kane and Ron Shaich founded a
bakery-café enterprise named Au Bon Pain Company
Inc. Units were opened in malls, shopping centers, and airports along the East Coast of the United States and internationally throughout the 1980s and
1990s; the company prospered and became the dominant operator within the bakery-café category. In 1993, Au Bon Pain Company purchased Saint Louis
Bread Company, a chain of 20 bakery-cafés located
in the St. Louis, Missouri, area. Ron Shaich and a
team of Au Bon Pain managers then spent considerable time in 1994 and 1995 traveling the country and studying the market for fast-food and quick-service
meals. They concluded that many patrons of fastfood chains like McDonald’s, Wendy’s, Burger King, Subway, Taco Bell, Pizza Hut, and KFC could be attracted to a higher-quality, quick-dining experience. Top management at Au Bon Pain then instituted a

comprehensive overhaul of the newly-acquired Saint
Louis Bread locations, altering the menu and the dining atmosphere. The vision was to create a specialty café anchored by an authentic, fresh-dough artisan
bakery and upscale quick-service menu selections.
Between 1993 and 1997, average unit volumes at the
revamped Saint Louis Bread units increased by 75
percent, and over 100 additional Saint Louis Bread
units were opened. In 1997, the Saint Louis Bread
bakery-cafés were renamed Panera Bread in all markets outside St. Louis. By 1998, it was clear that the reconceived Panera
Bread units had connected with consumers. Au Bon
Pain management concluded the Panera Bread format


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had broad market appeal and could be rolled out nationwide. Ron Shaich believed that Panera Bread had the potential to become one of the leading fast-casual
restaurant chains in the nation. Shaich also believed
that growing Panera Bread into a national chain required significantly more management attention and financial resources than the company could marshal
if it continued to pursue expansion of both the Au
Bon Pain and Panera Bread chains. He convinced Au
Bon Pain’s board of directors that the best course of
action was for the company to go exclusively with
the Panera Bread concept and divest the Au Bon Pain...
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