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Case Study: Panera Bread Company

1230 words - 5 pages

According to the Panera Bread website (2011), the company mission is simply “A loaf of bread in every arm.” (para 7).
Panera Bread Company is a bakery-café that serves specialty sandwiches, gourmet soups, and sweet treats. The founders of Panera, Shaich and Kane, have consistently developed the company around a strategy of growth. The Shaich and Kane initially operated Au Bon Pain; a bakery served large urban areas. Seeking to extend into other markets, the pair obtained St. Louis Bread Company, seeing the benefits of acquiring an already established enterprise. The niche market that Au Bon Pain had enjoyed previously, had become a strategic weakness as it became limiting. The bakery-café culture developed in the St. Louis Bread Company was too costly to implement at the Au Bon Pain locations. Shaich, the remaining founder, sold Au Bon Pain which left no debt and cash reserves to expand the St. Louis Bread Company, known as Panera Bread Company outside the St. Louis area.
Strategy
Growth
According to Wheelen & Hunger (2010), Panera management believed that its specialty bakery-café concept had significant growth potential, which it hoped to realize through a combination of owned, franchised, and joint venture-operated stores. Franchising was a key component of the company’s growth strategy. (p. 29-10).
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside risks.
Seeing the opportunities to provide high quality products and services but at a pace competitive with the fast food industry, Panera made the most of consumer’s negative reaction to the food industry. Many consumers were looking to get away from the burgers and fries, but did not have time to spend on classic dining. Panera also focused on the business and student consumers by becoming known as a wi-fi hotspot. Some of their competition was charging for wi-fi access or requiring possession of a company registered user card. Panera provides free access to the internet with any wi-fi capable computer.
Panera provided the dough to the all stores to be baked fresh daily. The dough was processed and delivered from their fresh dough processing facility. Panera management would need to closely plan and evaluate locations. If they allowed locations to open in an area where a convenient fresh dough facility was not nearby, product quality could be harmed. If they opened new fresh dough facilities to service future locations but the new stores did not open timely, cost efficiency could be lost. In order to continue providing the quality products customers expected, Panera continued with the reverse supply chain strategy,...

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