Panera Bread Company: Still Rising Fortunes?

Topics: Fast casual restaurant, Au Bon Pain, Franchising Pages: 7 (2063 words) Published: April 27, 2014
Panera Bread is a renowned restaurant that has come about from the merging of great companies and people. However, the beginning was actually with Au Bon Pain which was started in Boston’s Feneuil Hall as a demonstration bakery. Louis Kane was struck by this store’s growth potential and purchased the business in 1978. Between 1978 and 1981 the company opened 13 stores, but subsequently closed 10 of these stores, in the Boston area and had major debt. Ronald Shaich, a recent graduate from Harvard, opened the Cookie Jar in 1980 and befriended Louis Kane. In 1981, the friends merged the Au Bon Pain and the Cookie Jar to form one business known as Au Bon Pain Co. Inc. The co-CEO’s were able to lower debt, expand the business, and centralized facilities for dough production. In 1985, the company added fresh made sandwiches to their production when they noticed customer behavior of purchasing a baguette cut in half and using cold cuts brought from home to make sandwiches. This allowed for a new way to reach customers with fast service, all the while staying nutritious. Panera opened in three business segments: company owned bakery-café operations, franchise operations, and fresh dough operations. The key initiatives of Panera’s growth was focused on growing store profit, increasing transaction and gross profit per transaction, use its capital smartly, and put in place drivers for concept differentiation and competitive advantage. During the recession, while other companies were lowering pricing and quality of goods, Panera was doing the opposite. The company instead targeted customer who could afford to spend an average of $8.50 on lunch. So during 2009, the company raised prices twice, on bagels and soups, which enabled the company to provide more for less. This attitude also allowed the company to maintain employees and customer satisfaction. By keeping labor consistent with sales and continuing to invest in its employees as a way to better serve its customers. In 2009, Panera had sales of nearly $2.8 billion and was ranked as the largest fast casual chain. Panera learned from its competitors, none of those competitors had yet to figure out the formula for Panera’s success. Panera has continued to add new and exciting products to its menu and strive to meet the expectations of its customers, and this included the new breakfast sandwiches introduced in 2008. The menu was redesigned and its menu boards with the hope of drawing the customer eye to the highest margin items. These new menus also included the calorie information for items in 2010, well before any other company did so. The company has been able to anticipate and react to changes in food and supply costs, included fuel, proteins, dairy, wheat, tuna, and cream cheese in effort to drive gross profit per transaction. Resources:

When dealing with resources there a few that jump out such as: Panera’s intellectual capital, its financial position, and the executives. Each of these resources enable the company to grow and provide service to customers while maintaining their current standards. Panera has been able to see their company continue to generate profits, keep employees working, and grow the company. Since the company is so good to their employees and franchisees, these employees are eager to maintain quality, which in turn leads to more loyal customers. Panera realized that the key ingredient was the kind of people behind the counter who provides the customer service. Because the company is maintaining quality, which includes freshness and nutrition this allows the customers to choose this casual fast food location for a much better meal. Since the company is doing well financially, they are able to continue expanding, which leads to more jobs and potential for the areas surrounding the store. This in turn enables the company to maintain their financial position and continue to invest in new ventures. Capabilities:

Panera offers a great value on their...

Cited: Wheelen, Thomas L. and J. David Hunger. Strategic Management & Business Policy. 12th Edition. Boston: Pearson. 2012. Print
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