1. Panera Bread Company By: Dan McLindon Kyle McDaniel Jeremy Smiley
Tom Anderson
Ray Moorman

2. Contents The Key Question Panera Bread Company History/Overview
External Environment (PEST)
Market Overview (Demand)
Industry Overview (Supply)
Competitive Landscape
Internal Analysis
SWOT Analysis
Recommendations

3. Key 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?

4. Contents The Key Question Panera Bread Company History/Overview
External Environment (PEST)
Market Overview (Demand)
Industry Overview (Supply)
Competitive Landscape
Internal Analysis
SWOT Analysis
Recommendations

5. Panera Bread Company Overview
Origin
1981 Au Bon Pain Company founded by Louis Kane and Ron Shaich.
Growth on US East Coast & Internationally
1980’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 Companies
Sold Au Bon Pain bakery-café division
1999 – sold for $73m to ABP Corp. Renamed to Panera Bread Company

6. Panera Bread Company Overview
Strategic Intent
“Make great bread broadly available to consumers across the United States”
TNS Intersearch Study
Scored the highest level of customer loyalty among QSR’s
J.D. Power & Associates Restaurant Satisfaction Study of 55,000 Customers
Ranked Panera highest among QSR’s in Midwest & NE in all categories
Included environment, meal, service, and cost
2005 – Sandleman & Associates National Customer Satisfaction Survey of 62,000 customers
For 4th straight year, Panera was the best among 121 competitors
Also won “Best of” awards in nearly every market across 36 states

7. Contents The Key Question Panera Bread Company History/Overview
External Environment (PEST)
Market Overview (Demand)
Industry Overview (Supply)
Competitive Landscape
Internal Analysis
SWOT Analysis
Recommendations

8. Internal Analysis – Core Competencies
Core Competency
Description
Diverse Menu
Lots of variety, constantly experimenting
Options for all meals and times of day
High quality food at reasonable price
Strong Brand/Customer Loyalty
JD Power and Associates satisfaction award for QSR in Midwest and Northeast
“Best Of” awards in nearly all mkts in 36 states
Strong Relationship with Existing Franchise Partners
Employee training and certifications
Assistance with site selection and marketing
High satisfaction with concept and support received
Identifying Where to Locate New Stores
Proprietary software built to analyze data on attractiveness of new locations
Find attractive places to serve urban and suburban populations
Core Competencies
Strong Brand/Customer Loyalty
Diverse Menu
Identifying Where to Locate new Stores
Strong Relationships with Existing Franchise Partners
Red – Easy for competitors to develop
Yellow – Possible for competitors to develop
Green – Very difficult for competitors to develop

9. Internal Analysis – Growth Initiative
Expanding number of locations at a rapid pace
Heavy reliance on franchise partners
Targeting 17% increase per year in number of locations by 2010
No international locations but considering expansion into Canada
Is this aggressive growth strategy prudent in the highly competitive and mature QSR industry?
Year
Number of new locations
Total Locations
Percent Increase
1993 20
N/A
1999
160
180
2006
155
1027
2010
973
2000

10. Internal Analysis - Franchises
Strong franchise network with strict requirements to entry
New partners to commit to 15 cafes over 6 years
Average 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 restaurants
Bad partner can damage strong customer loyalty Panera has built
Panera does have out as it can elect to buy out any franchisee for a predetermined price
2006
42 franchise groups in 54 markets
34 states
Agreed to open additional 423 locations
Still leaves 550 locations to meet 2000 by 2010
Either by new franchise partners or corporate
Biggest issue existing partners have is desire for more locations

11. Contents The Key Question Panera Bread Company History/Overview
External Environment (PEST)
Market Overview (Demand)
Industry Overview (Supply)
Competitive Landscape
Internal Analysis
SWOT Analysis
Recommendations

12. SWOT Analysis for Panera Bread
Strengths
Strong/Loyal Customer Base in NE & Midwest
Menu Options/ Variety
Able to provide healthy options to customers
Analysis of market
Weaknesses
No presence in large markets (south & west)
Want customers to “discover” Panera
Decentralized Distribution – each café placed orders
Rely on franchise partners as key to growth – very tough standards
Opportunities
130m consumers daily
Threats
Multiple types of competition – fast food, sit down restaurant, eat at home, QSR, fast casual
Differentiation?? What makes Panera’s different than competitors
76% of meals eaten at home