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Panera Bread’s strategy

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1. What is Panera Bread’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Panera Bread is taking? What type of competitive advantage is Panera Bread trying to achieve?

The two core elements of Panera’s strategy were to aggressively expand its market presence across North America and to improve the quality of the dining experience it provided to customers. To accomplish their plan Panera needed to focus on strengthening their brand name and continuing to be a dominant factor in the upscale, quick dining restaurant industry. Panera Bread falls into the broad-differentiation strategy. Panera separates itself from others because it has fresh, homemade breads. Panera also has exceptional customer service and many different options to choose from.

2. What does a SWOT analysis of Panera Bread reveal about the overall attractiveness of its situation? Does the company have any core competencies or distinctive competencies?

Panera is able to identify its strengths through a strategy known as “Concept Essence.” The concepts in Panera’s strategy help them to distinguish themselves in the market place by focusing on specific areas to concentrate on. Panera has high quality meals for lower prices. The atmosphere is also very relaxing. Panera’s biggest weakness is the marketing strategy. Their campaigns have not been successful. They recently tried to restore their dinner offering and market towards breakfast and dinnertime dining. That plan failed. Panera also has very strict rules in regards to franchising. The requirements to open a franchise are very hard to accomplish. One must pay a lot upfront and also open 15 stores in six years. Panera needs to constantly seek expansion if they want to stay a dominant member in their market.

3. What are the primary components of Panera Bread’s value chain?

The primary components of Panera Bread’s value chain are their operations, supply-chain, and service. The operations focus on their bakery segment. All of their managers are given detailed operation manuals and detailed training is given to all employees. The supply-chain allows Panera to deliver fresh baked goods on a daily basis. Panera is also known for its excellent customer service and atmosphere. This is known as “Panera Warmth.” Panera tries very hard to create a great environment for its customers.

4. What does the data in case Exhibit 1 reveal about Panera Bread’s financial performance? How well is the company doing financially? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Panera’s recent financial performance. In addition to the ratios in Table 4.1, there are occasions when you will also need to calculate compound average growth rates (CAGR) for certain financial measures. The formula for calculating CAGR (in percentage terms) is as follows: CAGR % = [ending value ÷ beginning value] 1/n – 1 x 100 (where n = the number of year-to-year or period-to-period changes)

5. What does the data in case Exhibit 2 reveal about Panera Bread’s operating performance?

CAGR% for Current Ratio=(1.48/1.56) 1/1-1X100=-5.13%, Last year’s Current Ratio ($330,685/$211,516=1.56)

6. What does the data in case Exhibit 2 reveal about Panera Bread’s operating performance?

Exhibit 2 shows that franchised stores are performing better except for average annualized revenues per company-operated bakery café portion. Panera has higher revenues, sales, and total number of bakery-cafés open. The franchised are on average outperforming company owned locations. All Panera stores have dropped in sales between 2010 and 2011.

7. Based on the information in case Exhibit 3, which fast-casual and full-service restaurant chains appear to be Panera’s closest rivals?

The company bakery-café operation leads in every aspect of business on Exhibit 7. In the revenues segment, the bakery-café operations dominate the three segments as it brings in $1,592,951, as opposed to $275,096 and $92,793. For depreciation and amortization, capital expenditures, and assets segment they produce $68,651, $94,873, and $682,245. The main competitors of Panera are ATL Bread Company, Au Bon Pain, McAllister’s, and Brueggers.

8. What strategic issues and problems does Panera Bread management need to address?

Corporate owned Paneras need to improve the management of money. They also need to figure out how to bring more customers during breakfast and dinner hours.

9. What does Panera Bread need to do to strengthen its competitive position and business prospects vis-à-vis other restaurant chain rivals?

Panera needs to expand and grown in order to strengthen it competitive advantage. They need to add convenience to their stores. . They excel in their menu items and have excelled with the drive-in feature. They should add more stores with drive-ins.

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