How well is the company’s present strategy working?
Panera Bread is growing through expansion of new locations as well as new acquisitions. The Panera Bread umbrella includes Panera Bread, Saint Louis Bread Co., and Paradise Bakery and Café. Paradise is the latest addition to the Panera family which purchased the majority stake in the company in 2007 and then purchased the remaining portion of Paradise in 2009. (Panera Bread, 2014)
The timing of this purchase is interesting because the final purchase was made in the midst of a recession. Many businesses were seeing weakened profit margins or losses throughout this tough economic crisis. However, Panera Bread, as well as others in the fast-casual food industry, continued to experience double-digit growth.
The purchase of Paradise Bakery & Café added an additional 70 locations in 10 states throughout the west and southwest to Panera Bread. Recent numbers in 2013 show a total of 1,736 bakery-cafes in 45 states and also in Ontario Canada. (Panera Bread, 2014)
Sales growth relative to industry
Panera is a strong performer in the fast-casual industry continuing to report double-digit increases in earnings at the end of 2Q in 2013. Although the earnings fell slightly short of the company’s projections, the results still placed Panera as a strong performer industry-wide. (Dostal, 2013)
2013 2Q Report
Gaining new customers
A recent strategy implemented by Panera is the Panera Bread Rewards Card. A customer loyalty rewards program that allows a customer to earn points toward a free item with each purchase. The program offers other rewards including “exclusive invitations, experimental opportunities like baking with Panera bakers, preview tastings of new menu items, as well as recipes, cooking tips and other surprises (Heath, 2011)”
The MyPanera rewards card adds value to the Panera branding and helping them to remain distinctive from the competition. The MyPanera website offers recipes that include the use of Panera items with also encourages additional sales. In 2013, the program had 14.5 million users which increased from 11 million users the previous year. The MyPanera card user account for approximately half of the purchases made.
Panera Catering is a strategy that not only adds to the revenues but also presents an opportunity to gain a new customer. Panera Catering offers solutions for feeding large groups of people with a large variety of sandwiches, salads, soups, along with many other items are offered. Delivery is offered at most locations. The professional presentation and healthier choices can create many new customers after a business luncheon or board meeting.
Focusing on a lighter menu, Panera is now offering half sandwiches on their menu. The half sandwich fulfils a fast-growing market niche where the consumer is looking for smaller portions and healthier options. (Dostal, 2013)
Margins compared to rivals
The gross profit margin is the difference between sales and the...