Presentation on theme: "Panera Bread Company Dan McLindon Kyle McDaniel Jeremy Smiley"— Presentation transcript:
1Panera Bread Company Dan McLindon Kyle McDaniel Jeremy Smiley Tom AndersonRay Moorman
2Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
3Key Question for Panera Bread Is the plan of expansion and reliance on franchise partners the right strategy for Panera Bread to grow at the rate they want to?
4Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
5Panera Bread Company Overview Origin1981 Au Bon Pain Company founded by Louis Kane and Ron Shaich.Growth on US East Coast & Internationally1980’s and 90’s – stores opened in malls, airports, shopping centers.Acquisition of Saint Louis Bread Co.1993 – mgt team studied fast food restaurants which led to overhaul of Saint Louis Bread CompaniesSold Au Bon Pain bakery-café division1999 – sold for $73m to ABP Corp. Renamed to Panera Bread Company
6Panera Bread Company Overview Strategic Intent“Make great bread broadly available to consumers across the United States”TNS Intersearch StudyScored the highest level of customer loyalty among QSR’sJ.D. Power & Associates Restaurant Satisfaction Study of 55,000 CustomersRanked Panera highest among QSR’s in Midwest & NE in all categoriesIncluded environment, meal, service, and cost2005 – Sandleman & Associates National Customer Satisfaction Survey of 62,000 customersFor 4th straight year, Panera was the best among 121 competitorsAlso won “Best of” awards in nearly every market across 36 states
7Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
8PEST Analysis for Panera CategoryIssueThreats/OpportunitiesRanking(1-5)PoliticalNoneEconomicRestaurant business extremely competitiveThreat4Sales at food service locations in US trend upwardOpportunity3SocialIncreasing level of health consciousness (ex. Good carbohydrates)Neither -- most restaurants react quickly to changing consumer tastes. Level playing field.-Consumers prone to try new establishmentsThreat – existing marketsOpportunity – untapped markets1Consumers loyal when satisfied with experience5Technological
9Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
10Overview of the Industry - Demand Growth Rate925,000 food service locations in the U.S.Are customers hungry for more?Indicators of demand:Over 925,000 food service locations in the US.Sales increase of 65% in the food service category. Could just be more expendable income etc..But: Food dollars spent shows consumers are willing to spend twice as much in this category as they were 50 years ago.More customers spending more means more demand.
11Overview of the Industry - Demand US restaurant industry growing at 5% annuallyWhere is the growth coming from?$974 per person in 1994 spent on food away from homeGrowth potential in suburban markets?Panera is a representative in the “fast-casual” food category85% of individuals aware a Panera Bread was nearby dined there at least once (trial)57% of those did so in the last 30 days (repeat)81% willing to try Panera other times of the day5% growth does not sound exciting but:Panera’s marketing study, which looks mainly at Panera but I think can be expanded to include all fast-casual operations, shows the demand is there. The point is the Panera study represents consumer demand for the effective “fast-casual” experience.If 57% of the 85% trial customers are repeat and 81% are willing to expand there experience to other meal times in this segment, the demand is there.It is there strategy going forward that will determine how much of that they are willing to capture and translate into sales, especially repeat sales.
12Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
14Porter’s Five Forces Factor Analysis Impact Threat of substitute productsSubstitute products are easily accessible (eat at home, convenient stores)Economic downturn limits disposable income – substitute products become more appealing.HIGHBargaining power of suppliersPanera has multiple options to source each ingredient they use.LOWBargaining power of buyersEconomic downturn’s affect on consumer eating behaviors – cheaper meal at home.Over 21 direct competitors/alternative eating establishments of Panera.Competitive rivalryDifferentiation and constant menu changes to appeal to consumer preferences.Many competitors in industry.INTENSEThreat of new entrantsHigh investment threshold to enter market
15Industry Overview (Supply) FactorRanking (1-5)Threat of substitute productsFull range of alternatives; eat at home, fast-food, formal dining outSubstitute products offer lower prices and convenience.The majority of meals are eaten at home – 76%5Bargaining power of suppliersPanera is not limited by sourcing from a single supplierSeveral suppliers are available for each ingredient1Bargaining power of buyersSwitching costs are non-existent for consumers with varied options4
16Industry Overview (Supply) FactorRanking (1-5)Rivalry among existing competitorsConsumer preferences are constantly being targeted and adapted to by competitorsCompetition is competing for $1 bn in daily sales5Threat of new entrantsSubstitute products offer lower prices and convenience.The majority of meals are eaten at home – 76%1
17Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
18Typical Competitors within the Fast-Casual Arena # of LocationsSelect FinancialsKey Menu ItemsAtlanta Bread Company160 bakery cafes in 27 statesPrivately heldFresh-baked breads, salads, sandwiches, soups, pastas, dessertsAu Bon Pain190 bakery-cafes in 23 states and 222 locations internationally$245M in sales in 2005Baked goods, soups, salads, sandwiches, wrapsBruegger’s260 bakery-cafes in 17 states$155M in revenues in 2005Bagels, muffins, sandwiches, soups, saladsCalifornia Pizza Kitchen190+ locations in 27 states and 5 other countries2005 revenues of $480MHearth-baked pizzas, salads, pastas, soups, sandwiches, desserts, appetizers, beveragesJason’s Deli150 locations in 20 statesSandwiches, salad bar, soups, potatoes, desserts, catering, box lunches
19What is the competition doing? Most Fast-food and full-service restaurants are also responding to consumer preference.New offeringsSeasonal menusNew themes and differentiation strategiesCompetitors are going after Panera’s potential first time customersStrategic attempts to capture the offerings that entice customers to try the “fast-casual” offerings
20Competition beyond commercial eateries Bars that offer food, hotels with restaurants, vending, etc. are all forms of competition.Only 67% of total food service sales spent at commercial eating placesHome cooked meals are competition. 76% of meals are eaten at home.
21Competitors and strategy High Food QualityFull ServiceApplebee’sChili’sFast CasualPaneraChipotleBrugger’sSlower diningexperienceQuick diningexperienceQSRWendy’sMcDonaldsLower Food QualityAnalysis: Panera is in a highly competitive area. QSR and full service aren’t competitors with each other. Fast Casual is positioned between the two and competes with both.
22Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
23Internal Analysis – Markets Served Competing in 5 submarketsBreakfastLunch“Chill out”Light eveningTake home breadDifferentiate with wide variety of menu options and café ambienceManagement goal to make Panera a nationally recognized name brandHigh penetration in St. Louis, Columbus, Jacksonville, Omaha, Cincinnati, Pittsburgh, Washington DCLow/Untapped MarketsNew York City, Philadelphia, Green Bay, Atlantic City, TorontoSalt Lake City, LA, Northern California, Seattle, Phoenix, Tucson, Vancouver, Albuquerque, SpokaneMiami, Dallas, Houston, San Antonio, Memphis, New Orleans, Shreveport, Baton Rouge, Little Rock
24Internal Analysis – Core Competencies Core CompetencyDescriptionDiverse MenuLots of variety, constantly experimentingOptions for all meals and times of dayHigh quality food at reasonable priceStrong Brand/Customer LoyaltyJD Power and Associates satisfaction award for QSR in Midwest and Northeast“Best Of” awards in nearly all mkts in 36 statesStrong Relationship with Existing Franchise PartnersEmployee training and certificationsAssistance with site selection and marketingHigh satisfaction with concept and support receivedIdentifying Where to Locate New StoresProprietary software built to analyze data on attractiveness of new locationsFind attractive places to serve urban and suburban populationsCore CompetenciesStrong Brand/Customer LoyaltyDiverse MenuIdentifying Where to Locate new StoresStrong Relationships with Existing Franchise PartnersRed – Easy for competitors to developYellow – Possible for competitors to developGreen – Very difficult for competitors to develop
25Internal Analysis – Growth Initiative Expanding number of locations at a rapid paceHeavy reliance on franchise partnersTargeting 17% increase per year in number of locations by 2010No international locations but considering expansion into CanadaIs this aggressive growth strategy prudent in the highly competitive and mature QSR industry?YearNumber of new locationsTotal LocationsPercent Increase199320N/A1999160180800%2006155102715%2010973 (forecasted)2000 (forecasted)49%
26Internal Analysis - Franchises Strong franchise network with strict requirements to entryNew partners to commit to 15 cafes over 6 yearsAverage startup cost $1 million to $2.25 million per location ($15 million to $33.75 million for 15)Majority of franchise partner financed by debt (highly leveraged)Can Panera find enough new franchise partners to meet growth targets?Strong franchise partners are critical to preserve consistent quality and atmosphere at Panera restaurantsBad partner can damage strong customer loyalty Panera has builtPanera does have out as it can elect to buy out any franchisee for a predetermined price200642 franchise groups in 54 markets34 statesAgreed to open additional 423 locationsStill leaves 550 locations to meet 2000 by 2010Either by new franchise partners or corporateBiggest issue existing partners have is desire for more locations
27Internal Analysis – Supply Chain 17 regional fresh dough facilities (16 corporate, 1 franchise)Service both company and franchise cafesManufactures over 50 different productsDough distributed via 140 trucks, each truck delivering to 6 cafes on averagePanera corporate recognizes profit on dough sold to franchise locationsFresh dough making considered competitive advantage by management as it helped with consistency and efficiencyWith rapid plans for expansion is this advantage in jeopardy as trips are already exceeding optimal 300 mile trip?Sweet goods provided by Dawn Food Products in a cost-plus agreementFinished onsite by bakers, but single source for sweet goods improves ability to deliver consistent products
28Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
29SWOT Analysis for Panera Bread StrengthsStrong/Loyal Customer Base in NE & MidwestMenu Options/ VarietyAble to provide healthy options to customersAnalysis of marketWeaknessesNo presence in large markets (south & west)Want customers to “discover” PaneraDecentralized Distribution – each café placed ordersRely on franchise partners as key to growth – very tough standardsOpportunities130m consumers dailyGrow number of customers that consider Panera as a dinner optionGet existing customers to come at different times of the day (ex – breakfast crowd to come for dinner)ThreatsMultiple types of competition – fast food, sit down restaurant, eat at home, QSR, fast casualDifferentiation?? What makes Panera’s different than competitors76% of meals eaten at home
30Contents The Key Question Panera Bread Company History/Overview External Environment (PEST)Market Overview (Demand)Industry Overview (Supply)Competitive LandscapeInternal AnalysisSWOT AnalysisRecommendations
31RecommendationsWork with franchisees to acquire Corner Bakery Café??? (Franchisee locations are more profitable and provide higher ROI)Expedite expansion in Canada or International (Europe)??Vertically integrate and acquire Dawn Food Products Inc.Limit growth in existing markets and begin to focus on expansion into South and WestOffer existing franchisees opportunity to enter markets firstIf limited interest open corporate stores to see if concept works before opening up new markets to new franchise partners