Panera Bread

Panera Bread Company (hereinafter referred to as "PNRA" or "the Company")'s strategy is "to provide a premium specialty bakery and café experience to urban workers and suburban dwellers." The strategy employed by PNRA is closely aligned with a broad differentiation strategy. PNRA strives to differentiate its products from those of its rivals in ways that the Company believes will appeal to a broad cross-section of customers.

Before the Top Management decided to launch this strategy throughout the United States, extensive cross-country market research was carried out. The Management found that consumers would be attracted to "a higher-quality, quick-dining experience." For this reason, the Management decided to categorize PNRA as a fast-casual restaurant chain - a mix between fast food and casual dining with an attempt to achieve competitive advantage in unique "offerings that rivals don't have and can't afford to match."

From the case study, PNRA' core competencies, which are critical to a business achieving competitive advantage, include (i) bread baking expertise (i.e. signature artisan bread); and (ii) excellent human resources (i.e. specialty chefs that facilitate every aspect of the production on the fresh-dough bread process and the progressive management team that stated the exclusive marketing research which started the direction that resulted in Panera Bread today).

PNRA's distinctive menu and signature product (i.e. artisan bread made from four ingredients), signature café design and inviting ambience (i.e. "Panera Warmth" and "G2 Design"), and operation systems (i.e. PNRA's fresh dough-making operation systems) are competitive advantage that PNRA is trying to achieve.

SWOT ANALYSIS

Strengths

1. Intangible assets - Trademarks and Trade name (i.e. Panera Bread brand) and Trade Secrets (i.e. bread-baking expertise)

2. Distinctive menu offerings (e.g. health/weight-conscious menu, whole grain breads, etc.) with high quality (i.e. "food you crave; food you can trust" theme - using natural products and ingredients and made fresh every day without preservations) at reasonable prices and the dining ambience - "PANERA WARMTH" and the new "G2 café design" with free Wi-Fi internet.

3. Efficient fresh dough-making operation - ensuring consistent quality and dough-making efficiency and more economical to concentrate the dough-making operations in a few facilities

4. Strong financial conditions (i.e. debt-free balance sheet) to fund the Company's growth and expansion

5. Strong customer loyalty and brand awareness in Mid-west and Northeast regions of the United States

6. Efficient franchisee operations for market growth (i.e. total sales of franchise-operated cafes run slightly higher than that of company-owned stores as shown in case Exhibit 2.)

7. Strong relationships with suppliers, distributors and franchisees

8. Raw materials can be procured from many authorized suppliers, not limited to only one single supplier.

9. Customer involvement in initiatives (i.e. product development)

* Test kitchens introduce new products to a limited number of the bakery cafes to determine customer response and verify that preparation and operating procedures resulted in product consistency and high quality standards.

Weaknesses

1. Location

* Low customer loyalty and brand awareness in several large US markets (i.e. South and West regions)

2. Less well-known brand name than some competitors (e.g. McDonalds, Applebee's and Starbucks)

3. Product costs are higher than other fast food chains (i.e. fast food competitors)

4. Off-site dough preparation and delivery result in high logistic costs - up to 27% of the cost of each unit of sale

5. Sales of PNRA seem to rely more on franchise-operated stores than company-owned stores

* Problems of control and standards could arise

6. Dinner menu

* Limited product lines

* Difficult to sell its products and experience for dinner time - this needs more attention

7. The idea, which lets customers "discover" Panera bread and then converts them into loyal customers, may not work since it is very easy for consumers in this industry to switch from one brand to another once they find better alternatives.

Opportunities

1. Location

* Increase brand loyalty and awareness in larger US markets by opening more stores (i.e. both company-owned and franchised) in both low penetration markets and untapped markets as shown in case Exhibit 3

* Go international (e.g. Vancouver and Toronto) since the market in the US seems to start saturating

2. Expand the product lines to meet current trends (i.e. increasing health conscientious among consumers)

3. Expand the catering business operation due to a success in the initial catering business

4. Boost trial of dining at Panera Bread at multiple meal times, starting with existing customers with dual-income families

5. Boost trial of dining at Panera Bread for dinner

6. Website marketing and ordering to help consumers expedite