Panera Bread

Topics: Price, Pricing, Chief executive officer Pages: 5 (1660 words) Published: March 16, 2011
Executive Summary
Problem Statement: While Panera bread has incorporated a great strategy by provided their customers with an upscale, high-quality dining experience in the specialty Café category, they have fallen slightly behind in their pricing strategy in order to remain competitive when so many competitors are offering a similar experience with lower prices.

Panera’s Strategic intent and vision has been:
Make great bread broadly available to customers across the US •Have an attractive Menu
Upscale dining Ambience
Specialty café anchored by authentic fresh dough artisan bakery •To be one of the leading fast casual restaurant chains in the nation •Incorporate a “name your own price” pricing strategy. Alternatives: A few alternatives Panera could implement are: 1.Do nothing. Many times a company does not have to change a certain aspect of their business if they intend it to be that way. So, perhaps Panera does not want to change their pricing and they want to remain in the niche market they are in with their same prices and their same demographic. They might be lowering their quality standard if they lower their pricing. 2.Panera could implement some sort of additional menu that is similar to what McDonald’s, Burger King and Wendy’s have. Even though they are not their direct competitors, these companies have maintained and increased the prices on their regular menu, but have added a “Dollar Menu” in order to be competitive and reach an entirely different audience. If Panera did this they could keep their up-scale high quality menu with their current prices as is, but they would be introducing a whole new mini-menu in order to compete on price. They could make new foods which will probably create a new marketing campaign that would fuel more buzz about the brand. Recommendations: Option # 2

The course of action Panera Bread should take in order to also be competitive in the pricing landscape, is to incorporate a lower priced menu with aggressively competitive pricing and quick choices. Implementation:

Given the company’s financial health, Panera could add an additional menu with more economical and faster choices for a competitive pricing strategy. This new menu could be rolled out in a few test markets where competition is fierce and where customer loyalty is lower. If customer loyalty increases this could be the competitive edge Panera needed without sacrificing their standard menu. Another test would be to see if their regular menu sales remain the same, grow or drop. They would have to give this a time frame in order to accurately measure the success or failure rate. It is very likely that in the first few months’ consumers might go crazy with the cheaper prices and new items and just order from the economical menu and they might see a drop in sales. Panera should wait to see if all sales level out and the feeling of newness has passed on the new menu. Only then can they truly see if the more economical menu is an asset or if it takes away from their goals and most importantly financial prosperity.

Strategic Approach: Panera is providing consumer with a premium specialty bakery and café experience. They are trying to beat the “guy across the street’s” dining experience offering. Panera hopes that the upscale dining experience will surpass the aggressive competitive pricing. In 2010 they planned to offer an even more diverse menu by giving the customers a choice in pairing their sand-which with a salad or some other combination. Perhaps one of Panera’s strongest strategies is that of Panera having the artisanal, specialty bread. They can in fact own that strategy as a very strong point of differentiation. Not many of their competitors can take ownership of that piece. Another strategic approach Panera implemented was to have Panera pick up another meal time slot called the “evening meal option”. They have other categories such as breakfast, morning snack, lunch,...
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