Case solving 1 Case Study of Panera Bread

1. Assignment on
Case Study of Panera Bread
Submitted to:
Fatema-Tuz-Zohra
Lecturer,
Dept. of Accounting & Information Systems
University of Dhaka
Submitted by:
Sazzad Hossain
Roll- 16128 Sec.: B
Dept. of Accounting & Information Systems
University of Dhaka
Date of Submission: August 2, 2012

2. A Brief of the Case:
The Panera Bread is the organization of whom the discussion of problem has been worked out. It is a
leading brand in its industry. The restaurant industry is a dynamic industry at all. Tastes of people
changes over the time and businesses try to cope with these up.
The St. Louis-based Panera Bread, a chain of specialty bakery-cafés, has expaned itself from 602
company-owned and franchised units in 2003 to a scale of 1,270 today. The key elements of its
successes are attributed to its positioning and execution of different strategies taken in different times
as the analysts mention.
At the time of beginning the business in 1981, Panera was founded as Au Bon Pain Co. and had three
bakery-café and one cookie store. In the 90s, they acquired Saint Louis Bread Company in the St. Louis
area. The combined effort and analysis of the consumers revealed of the “spacial” food with quality and
speed in serving them. This is termed as “Fast Casual”.
Panera's unique strategies and positioning made it in acquiring a distinct place in the mind of the
customers. And also an extra edge in their choice, preferences by serving well in a cozy environment.
They also added a meal time called “chill-out” that attracts many consumers. Thus the company
expended in many regions by franchising and positioning. Customers have positive impressions for
Panera Bread as evidences in an interview of one of the fans and franchisee owners. As a result, it
wants to establish itself as a leading national brand using its strengths.

3. Analysis of the Problem:
The Panera Bread wants itself to establish as a leading national brand. But the market has already some
other strong competitors. The focus on the fast casual has been the emerging opportunity for the
industry as a whole. The other prominent competitors are: Bruegger's, Chipotle and Cosi. All these hold
a good command of the market share.
The unique marketing strategies and signature food is its main resources to compete in the competition.
The possibilities of new entry of competitors are high as the industry seems lucrative with the recent
fast casual menu. In establishing it as a national brand we can find several barriers that it has to
overcome: potential new entries of competitors, price of the food, customer impressions, timely
strategies, and overall market conditions and economic conditions as a whole.
The Panera Bread serves both the casual dining and fast served foods and also the fast casuals. These
ensures the great share of the market and large volume of profits. So the goal of attaining as a national
brand is a bit harder but possible by hard efforts. Greater quality, better service, variation in the food
menu, promptness and so many are its strengths that holds Panera Bread upright in the crowd of
competitions. In recent years, the whole industry has been experiencing a downward trend, but Panera
Bread has a growth rate of 23%. That's the result of its unique positioning and proper management.
In a brief, we can say that, Panera Bread is suffering from the expansion of their business, and lots of
elements are deterring them. However, their positioning, strategies, efficiency, efforts and devotions
have made a positive outcomes that indicates the growth rate even in the bad days of the whole
industry.

4. Solution of Discussion Questions:
Q 1 Ans:
The Panera Bread has obtained a unique position in the restaurant industry by its products, services and
positioning strategies.
The “Fast Casual” foods has enabled Panera Bread to capture both the fast food and casual dining.
People want a change from their boring and all the time same food menu. They want both the benefits
of healthy dining foods and the speed of fast foods. But until the introduction of the fast casuals, this
was absent in the market. Panera Bread took a research on the customers needs and wants. That
basically, revealed this pattern of food demanded by the consumers. Panera Bread worked on it and
developed the fast casual embedding both the facility of the fast food and casual dining. As a
consequence, Panera Bread can attract a huge number of customers with its quality food and services in
a cozy environment. This basically have had a great impact on the customer satisfaction level. One of
the customer & Chain shop of Panera Bread holder said supporting this view:
“My wife, Monca, and I fell in love with the fresh-baked breads and the beautiful bakery-cafés.
We think the Panera Bread concept of outstanding bread coupled with a warm, inviting
environment is a natural fit with the sophistication that the Houston market represents.”
The unique positioning strategies has created a distinct brand value for the Panera Bread which has
showed a unique position in its success story. It provides Panera Bread a distinct point of differentiation
between itself and many of its competitors, and allows the company to sell a fairly large volume of
high margin food products.
With Panera's unique positioning, it will become successful in attaining the leading national brand in
the restaurant industry. The competitive edge it has crated, is far away advanced from its other
competitors. So, this will lead to its desired success level.

5. Q 2 Ans:
Analysis of the restaurant industry using Porter's 5 forces model is:
The Restaurant Industry
Competitive forces Threats to profitability
Low Medium High
Threat of Substitutes
X
Threat of New Entrants
X
Rivalry Among
Existing Firms
X
Bargaining Power of
Suppliers
X
Bargaining Power of
Buyers
X
Threat of Substitutes – Panera Bread has lessened the threats of substitutes by creating a pleasing
atmosphere in its restaurants and making its bakery second to none with the cozy environment and
excellent services.
Threat of New Entrants – Panera Bread has lessened the threat of new entrants by establishing a first-
mover advantage (or near first-mover) in the fast-casual portion of the restaurant industry and many
new franchised restaurants.
Rivalry Among Existing Firms – Panera Bread has lessened the threat of rivalry among existing firms
by creating a position that appeals to both fast-food consumers and casual dining consumer. The
strength of its brand creates a barrier to entry.
Bargaining Power of Suppliers – This is not a major threat to Panera Bread as its a giant organization.
Bargaining Power of Buyers – This is not a major threat to Panera Bread since buyers consider the
service and tastes they get as well.
Thus Panera Bread has been able to position itself against the suppressing profitability forces.

6. Q 3 Ans:
Panera Bread has created barriers to entry in the following areas:
Product Differentiation – Panera’s brand is growing in strength. In addition, its Artisan breads and
other bakery products are distinctive in terms of their taste and quality. The unique Fast-casual has also
added an extra advantages.
Cost Advantages Independent of Size: As a first-mover, Panera Bread has snapped up many of the
locations that are ideal for a fast-casual restaurant in many leading highly profitable markets.
These barriers are very much significant for any new comers to the industry. Gaining a good market
share needs cost competitiveness which Panera Bread has occupied very well than others. They have
stared and are the pioneer in the industry. So, they know each and every aspects very well than others.
As a result, this acts as a huge disadvantages for others. Panera Bread has many product lines and their
services has served many customers for many a years. Thats why its advantages are a very good
barriers for the new competitors.

7. Q 4 Ans:
Panera Bread’s primary sources of competitive advantage are:
1. Its position in the restaurant industry (ie., fast-casual vs. fast-food or casual dining)
2. Its brand strength (its in the market for many years).
3. The atmosphere of its restaurants (which has created a new time of day for people to eat specialty
foods, which Panera calls “chill-out” time (which is between lunch and dinner).
4. The distinctive nature of its bakery products.
These sources of advantages are sustainable as they are embedded in the bakery's system. They are
practising these for many years and have been successful by using these. Moreover, these have enabled
the organization to increase from the zero state to 1,270 units. So, they are pretty sustainable.