Panera Bread Case Study Synopsis, Essay Example

The case study began with the humble beginnings of Panera Bread started in 1976 with the casual dining concept. The original name of the casual dining was Au Bon Pain. The French pioneer Pavailler opened the first casual dining in Boston with the bakery emphasis. Pavailler is consider the grandfather of the concept casual dining with a bakery presentation. The next stage of Panera Bread began with the purchase of Au Bon Pain by Louis Kane. Louis Kane was a well-informed venture capitalist that understood the potential of the bakery causal concept. The store grew into a new concept because in the mornings in Boston, they had over 50,000 people passing the store. Louis and his new partner Ronald Shaich who promptly merged a cookie store with the bakery casual dining experience to serve the customers in the morning. This smart move became the foundation of Panera Bread restaurant casual dining that provides bakery, bread, croissants, and sandwiches. The concept really caught on because of the addition of sandwiches, which created a certain phenomenon in 1985. The people were tired of burgers and fries but enjoyed ordering their own sandwiches with various choices of bakery 8bread.

Resources

The case study explained how the owners of Panera Bread rose to the challenge every time there was a paradigm shift in the restaurant market strategic management decisions. In the case study, the owners Louis Kane and Ronald Saich utilize a new strategic management plans to redefine the success of the company. The owners clearly showed the benefits of strategic management by understanding the addition of 200 profitable stores in 1994 would help the company grow. This is an example of the owners making the right strategic management plan that prove to be the right move. However, at that point they did not plan for obtaining downtown property for growth. The primary problem was the clients were located in the downtown areas where the property prices were expensive. The new strategic management was to purchase an establish chain of bakeries allowing Panera Bread to brand their stores and not pay for expensive downtown property. According to Wheelen, Hunger, Hoffman,  & Bamford (2015), the organization that make a set of managerial decisions for the improvement of the company while considering the long term implications is called “Strategic Management”. The owners had achieved massive resources in 1994 with 200 stores and 183 million in sales.

Competition-Paradigm Shift

The case study provided an overall look at the profitability, operations, and strategic management of Panera Bread. However, there are some potential problems for Panera Bread. The economy has taken a negative turn, which people are looking for places to save their money in eating and dining out. The Panera Bread price margin has creeped up each year only by a few cents but enough that the customers will be searching for a new place to eat. Panera Bread may price itself out of the market. In 2014, Panera Bread stock has dropped by 5% and consumer buying has slowed down because of a bad economy (Seeking Alpha 1). The Whole Food store prices are lower with competition with evening and morning customers that are patrons of Panera Bread. The lines in Panera Bread have been getting longer with people walking out because of the slow service at lunchtime. The customers are flocking to Chipotle and Wholefoods as an alternative. The secondary problem is keeping up with the demand that Panera Bread has created which one solutions is taking a page out of McDonald’s fast food service when the drive through is busy. McDonald’s will have an order taker at each car and by the time they get to the window, their food is ready. In addition, they can pay for the food immediately. However, Panera Bread has risen to the challenge with strategic management decisions at the right time.

Core Competencies- Panera Business Model

The case study presented core competencies, which are embedded in the Panera Bread from day one of orientation, which adds to the success of the business model for Panera Bread. (Panera Bread 2). These core competences have led to these three competencies culinary, casual dining and reputation as the best restaurant: Here are three facts about Panera: 2013 Award Culinary Operations Winner, 2012 Casual Dining Brand of the Year, and Panera Bread Ranked Number 2 Excellent Large Food Chain. (Panera Bread 1). The Award Culinary Operations is a testament to the early decisions made by the owners to incorporate a new way of dining. The timing was perfect because the trend of fast food that was unhealthy was changing the eating habits of Americas. The culinary expertise was not an accident because acquired the St. Louis Bread Company areas, which they hone their culinary skills in the café setting. The culinary experience is important to the experience and core competencies of Panera Bread. This was a brilliant move on the owner’s part to provide the culinary experience from a high-end restaurant along with the setting of a café. The ambiance of the Panera Bread gives the customers a feeling of a classy café with quality food whiles the experience of making your own meals. The owners knew that the patrons would pay a high-price for that culinary experience while dining in a café. These decisions are justified because the previous success of the café in San Francisco found that both average and higher end customers enjoyed the cuisine and culinary experience while choosing their favorite types of breads. The San Francisco market was a perfect test ground for Panera Bread. The area was near the downtown crowd, the pricing and cost of living was higher in San Francisco, and the different breads and café settings appealed to the masses. Panera Bread quickly found out that people would pay extra for quality, healthy and café food. The culinary experience with choice of breads was a success in the California market.

Findings of Fact

Every organization has its weaknesses. Even though Panera Bread may have seemingly strong points, it could be understood that somehow, there are still different issues that the company has to deal with. One of which is its capacity of becoming more extensive in considering its most implicative points of improvement especially in relation to its function in the community. Some of these issues may include the following:

1. Improved creation of additional bread choices for the public

The products offered by the organization in the market are relatively extensive especially in making a definite sense of mark on how the name of the business is established accordingly as it involves the mandate on how the managers find a more definite insistence on how to bring their products to the larger scope of the market.

These bread choices are to be less complicated in production process; they ought to be mass-produced and priced at a much lower rate compared to the regular bread selections that they offer to their much-higher grade of clients in the market. This ought to widen out the market sector served by the business. This sense of widening out ought to give a particular aspect of development that intends to play a great role on the expansion of the function of the organization in the market. Most likely, it is with such consideration of possibilities that the creation of improvement on the part of the business’ overall value for function that the stronghold of the business in its competitive stand could be established accordingly. This will allow the organization to stay within its strong point even with the threat of new entrants coming into the market scene that might put their operation at a rather jeopardized condition especially when these new entrants are to challenge the bread products they offer at a much lower price-rate.

2. Refurbishing the nature of the reputation that the café has to cater to the lower-end of economic division in the community

Why is there a need to adjust the reputation of the business? Although the organization has already established is name in serving the elite members of the community with their demands for pastry, coffee and fine dining, there should always be a room for adjustment. As the industry becomes highly competitive in nature, it should be expected that aspects of development ought to be given attention to especially in making a greater mark on how the business is able to serve the needs of the market. Accordingly, the preparation for the increase of rate of competition is necessary. No organization should be too confident with its performance in the industry. It should be clear that when it comes to making a definite turn of decisions in the state of managing the operations of the business, Panera Bread administrators need to make sure that they are prepared for particular changes in the nature of the market they are serving including the behavior of the people they are aiming to please. What makes such consideration of development more extensive for attention is the fact that Panera is currently serving only a specific sector in the market. While this is good, it is also strongly suggested for the business to open its doors towards possibly increasing its market influence through creating a specific branch that would serve the other members of the market who would want to have a taste of the goodness that the business is willing to offer them with.

Capabilities

The casual dinner award is contributed to the concept and strategy implored by the Panera Bread owners. The primary strategy was to develop a reputation as the best brand name fresh bread café in the United States. The causal dinner concept was a primary competency that has remains for Panera Bread. In addition to the casual dining experience with fresh baked bread, made to order sandwiches, soups, and café beverages is relatively measured and accepted as determinably satisfactory. The casual dinner format has brought in heft revenues for Panera specializing in three business segments: the bakery operations, fresh sandwiches, and fresh dough. The company’s bakery-café operations add to the casual dining experience, which is the signature that brings new and returning customers back. The franchise operations signatures the casual dining as the family place to eat and runs the operations activities of the business units.

The franchise segments get revenue from its owners to be qualified license operators under the Panera Bread names. The fresh dough section supplies the location with the fresh dough bread daily and supplies The Panera’s vision is to create a unique café experience anchored by authentic and fresh-dough in an upscale fast service. It is a fact that the goals and objectives of Panera Bread has become the staple of the franchises that are dominating the restaurant business nationwide. Panera Bread has used the broad differentiation strategy, which has supported their growth and profitability which creating distance between all competitors. The broad differentiation strategy is a company gaining a competitive advantage over its competitors by providing a different and quality product with value. Panera Bread’s has successful created a niche that has differentiated their brand from any other brand in the market. The primary difference in Panera from competitors is the ability to adapt to the changing needs to the market. In the case study, Panera Bread has started catering to the delivery for its customers to add another way to reach their customers. In addition, Panera Bread has made it known that customers that make suggestions for the better, Panera Bread is not afraid to make that change to satisfy the customers. They continue to create distance from all their competitors and the product differentiation is making a difference.

Panera Ranking

Panera Bread was named the number 2# café restaurant with Wholefoods and Chipotle chasing the leader. In the case, study under the Case and Concept section Panera’s success was contributed to the acknowledgement of its customer’s feedback and surveys. The Panera Bread listens to its customers for suggestions and changes that make the experience better at Panera Bread. The case study documented this phenomenon with 1000 customer’s survey results that all favorably viewed Panera Bread as high quality. This is one the reason that Panera Bread is ranked number #2 because not a lot of companies listen to their customers. The press has contributed to the success of Panera Bread with sterling articles about their experiences at the café and how the food is healthy. The press was the first to document that Top Twenty Largest Fast Casual Franchises which was listed in the case study. The case study showed that Panera as Number #1 franchise in the United States in this category and Chipotle was not listed because they do not franchise.

The case study provides the input from the owners who decided that the raising of prices for the value they provide would not change. Shaich indicated that even with the changed in the economy and competition-lowering prices, the Panera Bread strategy will not change because they will continue to invest in the employees to ensure there are no long lines, the quality remains better each year and they continue to give the value the patrons expect. The thinking of Shaich says that people expect quality and when that quality standard is lowered, they find new places to eat. Our promise is to continue raising the bar to justify our prices with ambiance, quality of food and the best casual dining experience in the United States.

Works Cited

Wheelen, Hunger, Hoffman, & Bamford (2015). Strategic management and business policy: Globalization, Innovation, and Sustainability. (14^th Edition). Pearson Education.

Panera Bread.(2015). Overview: Panera Bread: Introduction. Retrieved April 7, 2015 from www. Panerabread.com

Seeking Alpha. (2013).Pricing is the problem with Panera. Retrieved April 7, 2015 from http://seekingalpha.com/article/1769172-pricing-is-the-problem-at-panera