Panera Bread

Topics: Fast casual restaurant, Panera Bread, Fast food restaurant Pages: 12 (4900 words) Published: June 5, 2013
Making the Dough at Panera Bread Company
Terri Wilson
John Totherow
Rebecca Hall
March 3, 2013

Executive Summary

Repetti and Vincelette (2005) found that Panera Bread Company “Panera” opened 419 new bakery-café stores from the initial unit expansion beginning in 1999 through 2003 as system-wide revenues increased (p. 29-1). Annualized unit volumes and system-wide comparable sales percentages declined each year since 2003 indicating a decrease in company growth and narrowing profit-margin (Repetti & Vincelette, 2005, p. 29-1). A failure to develop effective strategies and initiatives will negatively impact the company.

Panera sells baked goods, sandwiches, soups, and coffee at their bakery-cafes. The separate bakery counter, areas for small gatherings, booths for privacy, free Wi-Fi, and casual atmosphere attract consumers who desire more from the standard fast food chains. Panera’s artisan bread, flavorful menu, customer service, and prices also appeal to consumers. In order to sustain a business, several strategies must be considered and countless more are needed to increase business. Panera must continue to invest in researching and developing strategies in order to increase their competitive advantage over other bakery-cafes. A review of current strategies and alternative recommendations are included in this case analysis.

Making the Dough at Panera Bread Company
I. Current Situation
In the recent past, fast-food chains have been worried about how declining consumer confidence has been hurting sales in the recent past, but restaurants like Panera are drumming up constant results even without dollar menus. Panera has “devoted diners” that are more than happy to feast at their bakery-cafés and plunk down two times as much compared to quick food restaurants such as McDonalds or Taco Bell. With a more than delectable menu including: made-to-order sandwiches on artisan bread, homemade soups and salads, freshly baked breads and pastries, along with café beverages, Panera has seen triumph with all the menu items that permit patrons to trade-up to those that are more pricey (“No dollar menus,” 2013, para. 1). Panera had its beginnings through the Au Bon Pain “where good bread is” casual restaurant concept in 1976. The owner, Louis Kane purchased the business in 1978. According to Keegan, bankruptcy was on the up-and-coming horizon for Kane until he met his new business partner, Ronald Shaich, owner of the Cookie Jar bakery in Cambridge, Massachusetts (as cited in Wheelen & Hunger, 2010, p. 29-2). In February 1981, Au Bon Pain Co., Inc was formed with the merger of the two separate businesses, Au Bon Pain bakeries and the Cookie Jar bakery, to form one business. Ronald Shaich and Louis Kane both functioned as Co-CEO’s until Kane’s retired in 1994. Between 1981 and 1984, the team expanded the business, worked to decrease the company’s debt, and centralized facilities for dough production (Allen, 2000, pp. 6-7).

According to Wheelen and Hunger (2010), a “eureka” moment happened in 1985 when it was realized that the clientele were all coming in to order a freshly baked baguette cut in half. Upon receipt of this baguette, the loyal patrons would then start making their own sandwich with cold-cuts they would bring with them. Shaich saw this as an opportunity to increase business through horizontal growth by incorporating lunchtime sandwiches into their product line. According to Shaich, Au Bon Pain was the first place that gave white collar folks a selection between fine dining and fast food. From that point forward, urban dwellers who were weary of fast food chains and burgers could consider Au Bon Pain a new lunchtime alternative (Wheelen & Hunger, 2010, p. 29-2). Consistent with Wheelen and Hunger (2010), in 1993, Au Bon Pain purchased the St. Louis Bread Company, consisting of 19-store bakery-café chain, for $24 million. Shaich considered this the gateway into the suburban...
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