Panera Bread Company: Resources and Capabilities

Synopsis

Panera Bread Company derived from a business that is known as the predecessor of fast casual restaurants and a pioneer of the industry called Au Bon Pain. This business began by a French oven manufacturer in 1976 as a bakery business. Soon, this business was purchased by Louis Kane who attempted to expand it by opening 13 stores most of which he had to close down due to lack of success and growth. This is when Ronald Snaich joined the business and started an era of success for Panera Bread.

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Between 1981 and 1984 the business managers mainly focused on the company’s debt reduction. To increase the sales and revenues in 1985 Snaich added sandwiches to the stores, and then noticed that the customers tended to purchase the bread from the stores and made their own sandwiches. This observation started the fast casual specification of the business as the partners added freshly made sandwiches and coffee to their production which differentiated the business from its fast food competitors.

By 1991 the revenues grew and the company became the leader in quick service bakery segment. By 1994 the number of stores owned by the business reached 200, the company had revenue of 183 million dollars in sales.

Eventually Au Bon Pain acquired other businesses and the partners decided to pursue suburban growth since the main target customer base consisted of white-collar business workers of the urban areas of cities such as Boston. Yet, Snaich identified one more potential business opportunity transforming the quick service bakery stores business into a chain of cafes. In 2000s Panera expanded through new company-owned bakery cafes, business acquisitions and franchises.

The menus offered at Panera Bread restaurants now include a variety of items based on freshly made bread, they target sustainable and fresh ingredients and are called fast-casual restaurants. The menus of Panera Bread are very diverse and include breakfast and lunch items, sandwiches, salads, coffee and soft drinks, pastries and desserts.

The company stays at the top of its industry in spite of active and powerful competition from the side of other growing fast-casual franchises. In May of 2010 Ronald Snaich resigned and the new CEO William Moreton was assigned, he is planning to pursue innovations and keep developing the business and maintaining its uniqueness in the fast growing industry with a lot of copycats attempting to recreate what it done by Panera Bread.

Resources

  • Financial capital. The company has rather large revenues in sales to be able to invest into innovations and adjustments that make the business more competitive and flexible which is necessary in the fast growing industry such as fast casual food industry.
  • Suppliers. The company has a large supply chain from which is acquires the ingredients for it is foods and ready products. Cooperation with the suppliers and long-tern trusting relationships allows the company to increase the quality of received items and to minimize the cost due to profitable agreements and deals.
  • Brand name – Panera Bread. Panera Bread or Panera is a well-known brand name that secures positive brand image and is associated with fresh and sustainable food, pleasant decor of the restaurants, and quick service.
  • Manufacturing equipment. Since Panera Bread specializes on baking its own bread as the basis for a variety of menu items, the business requires advance equipment that would allow to make high-quality bread fast to be able to serve as many customers as possible.
  • Management team. Management team of Panera bread is large and includes people responsible for various aspects of the business such as marketing, innovation, the IT, finances. The managers of Panera Bread are focused on constant improvement of service and product quality in order to attract and retain the customers.
  • Human capital. Panera bread requires excellent and well-trained workers knowledgeable and experiences in relation to work in customer service and loyal to the corporate values.
  • Trade secrets. As a business that competes in an industry full of companies providing similar services, Panera Bread is to keep trade secrets in order to remain on top. Obviously, the company is rather successful at keeping its trade secrets because according to Snaich Panera Bread style is “not so easy to know off” (Wheelen, Hunger, Hoffman and Bamford16-9).
  • Innovative ideas. Innovation and the search for new market opportunities has always been one of the main focuses of Snaich. He and his partners have been determined to pursue the growth in the areas no one else saw and this is how they managed to develop a strong business with competitive advantage so significant that it is very hard to copy.

Capabilities

  • Manufacturing of fresh bread. Panera Bread is a chain of fast-casual restaurants specialized on baking their own bread and serving it within a variety of menu items such as sandwiches, pastries and cookies, salads and soups. This aspect is one of the features that make the business stand out from the mass of other competitors in the fast-casual food industry.
  • Marketing. Brand name is one of the factors that help to promote and market Panera Bread products. Besides, the company uses a complex of advertising tools to attract new customers.
  • Internal network called Harvest. The personal network ensures special atmospheres within the company and provides fast and easy communication between the managers and employees, contains information about sales, market success and company development.
  • Supply chain management. The supply chain of Panera Bread has been adjusted for decades selecting the best suppliers and most convenient distribution strategies to ensure the quality of products (Wheelen et al. 16-15). For example, Snaich personally took care of the supply chain of lettuce to make this ingredient reach the consumers as fresh as possible minimizing its way from the supplier to the restaurants.
  • Strategic management. The managers of Panera Bread often face situations where they need to make sophisticated decisions and quickly react to various complex situations. For example, during the recession of 2008 Panera bread chose to target the consumers who had income while all the others focused on the unemployed sector of clients.
  • Diverse menu and services. Panera Bread stands out in its industry because it manages to grasp a very wide range of services and experience provided to the consumers. For example, the restaurants offer coffee and pastries as well as lunch and breakfast menus that include soups, pastas, and sandwiches along with hot and cold drinks. Besides, it is different from Chipotle Mexican Grill as the latter is specialized on ethnic cuisine. Moreover, Panera Bread maintains comfortable design of the restaurants creating a home-like experience and offers free Wi Fi.

Core Competencies

Finding of fact #1

As a business competing within a fast growing industry (fast-casual restaurants are becoming much more popular to fast food chains) is challenging due to the fact that the growing popularity of a business of this kind attracts more competitors to the field and makes it harder for a business to stand out.

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According to Snaich, who worried about preserving the uniqueness of the company, “if it is not special, there is no reason the business needs to exist” (Wheelen et al. 16-7). This way, what do the company’s managers have to do in order to keep Panera Bread special?

First of all, to preserve its uniqueness, Panera Bread has to stick to its authenticity that has been already established in the fast casual industry. The company intentionally stays away from copying strategies pursued by the majority of other competitors.

Secondly, the reputation of a business and its brand image is built upon its relationship with the customers. This way, to stay popular, a company does not need to invent anything outstanding but to treat the clients in a special way, this will ensure the demand for its products even when there are plenty of other competitors. Nurturing the relationship with the clients is the way for Panera Bread to be preferred to other restaurants.

Finally, in order to establish even better relationships with the clients Panera may start customer loyalty programs to retain the regular visitors and make the new ones come back to the restaurants. This is a strategy to improve customer experiences and evoke the clients’ interest towards participating in two-sided relationships with Panera Bread. The chain could start offering customized menu items, start a discount program, assign bonuses for especially active clients, or develop a mobile application.

Finding of fact #2

The company is a rather popular chain of fast casual food restaurants, yet surprisingly its advertising strategy is rather careful and not very active. Obviously, to attract a larger number of clients, Panera Bread is to start a more active promotion of its own services and products. What would be a way to facilitate better advertising for Panera Bread and engage more potential customers?

The current advertising practices of Panera Bread include billboards and radio as the main modes with addition of TV commercials and some social networking. Since the main target customers of Panera Bread are younger people living in urban areas and involved in business work, the primary means for advertising should become the internet. Panera may use its banners with attractive pictures of their menu items on popular social networks, involve celebrities and start mobile campaigns.

Besides, the billboards in the streets should be used as before, but it is better to redirect the investments into radio and television advertisements to social networking and mobile advertising campaigns as these modes are gaining more popularity over the other mass media.

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Moreover, another profitable way of advertising is giveaway samples and food tasting sessions which would win the interest of new customers and prove the high quality of the items sold by Panera Bread

Finding of fact #3

Panera Bread Company is proud of its pricing strategy which turned out to be an extremely successful way for the business to deal with recession and stay popular and profitable. As Snaich mentioned, the recession has been “the best of times” for Panera Bread because the company chose to stay true to its quality and did not pursue series of discounts while everyone else did (Wheelen et al. 16-23).

Panera bread added premium items to their menu targeting the kinds of clients for whom they would be affordable. Yet, is this strategy a way to go in the market where the number of competitors grows every year?

First of all, the popularity of Panera Bread and Chipotle Mexican Grill along with other fast casual chains gained their popularity due to the massive change of preferences among the clients who got tired of fatty and processed fast food meals and started to search for more sustainable products. The contemporary society have extremely changeable tastes, so if a shift of preferences happens again and the clients will start to buy less, Panera Bread is likely to lose greater income than its competitors.

Besides, the competitors of Panera Bread are aware of the advantages of the company and may start to pursue the same growth opportunities. For example, Starbucks may launch a line of new menu items similar to those of Panera Bread and distract some of the clients.

This way, higher prices of Panera are only valid while the company continues to offer the meals no one else serves. The company is recommended to pursue more exotic and gourmet additions to the menu to continue justifying their higher prices and the reputation of a unique place offering the most diverse and special experiences to its clients.

Works Cited

Wheelen, Thomas N., J. David Hunger, Alan N. Hoffman and Charles E. Bamford. Strategic Management and Business Policy Globalization, Innovation and Sustainability. 14th ed. New York, New York: Pearson, 2014. Print.

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