Panera distinguishes itself from its rivals by offering "Fast everyday" eating experience. The prospective customers of Panera are those who would like high quality food and services but also have to finish the meal fast. In Panera, customers will pay after order but nonetheless have chance to enjoy the food in a cozy, special designed and decorated restaurant. By adopting the competitive benefits of fast food string and everyday eatery, Panera creates its own consumer culture and avoids the direct competition with both these two business styles.
The feature of "fast casual" allows Panera to have more overall flexibility in changing prices, because customers expect the healthy food choices with value, instead of the food that only affordable. Employing this strategy, the performance of Panera continued to be stable during the recession of last 2 yrs and avoided minimizing its transaction count, average check amount and profit margin.
Franchise
Like many junk food chain, Panera has its Bakery-cafe while also uses franchise business style. Till the finish of 2010, Panera has 791 franchise-operated bakery-cafes, which take about 54% of most 1, 453 stores. All Panera franchisees are required to spend 2. 0 percent of these online sales on advertising in their particular local marketplaces. This requirement helps Panera enhancing its brand acknowledgement and earning a greater market talk about.
During the past 3 years, the income from franchise required about 15% of the full total revenue of Panera.
Catering service
In addition to dine-in and remove services, Panera also offers nation-wide catering service that provides breakfast time assortments, sandwiches, salads, or soups using the same top quality, fresh ingredients relished in its bakery-cafes.
The catering service allows Panera customers to take pleasure from high-quality food even without coming to the bakery-cafes. In addition, it gives Panera more chances to market its products and culture to potential customers. The catering service can be considered a meaningful growth opportunity for its business in future.
Supply chain
Panera has a distinctive supply chain procedure in which its local fresh dough facilities supply dough for fresh bakery along with, tuna, cream cheese, and certain produce to all or any of its company-owned and franchise-operated bakery-cafes on a daily basis. Distribution is achieved by way of a leased fleet of temp controlled trucks handled by its associates, which guarantees the grade of food and enough time it could be serviced. The daily basis delivery is an essential competitive benefits, since most of other junk food chain can only just revise their in-store inventory every 2 or 3 days.
Weaknesses:
High Price
The higher prices of Panera switch off some customers who are experiencing difficult experience during recession. Though Panera increases great success by convincing its customer that Panera's food are made with higher-quality ingredient, its business will be inspired when rivals offer more discounts.
Not a global chain
Till the finish of 2010, all 1, 453 Bakery-Cafes of Panera are in THE UNITED STATES area (only 3 in Canada). Its brand has limited acceptance in developing markets, like Asia and SOUTH USA. Without extending the business to developing markets, Panera has to face to less growth rate in the following few years.
Opportunities:
Enhance the advertising of Panera culture
The "fast everyday" eating out experience is the main element to Panera success. The business should contribute more time and money to enrich this idea and set up a unique ding culture that distinguishes Panera from other fast everyday competitors.
International expansion
International enlargement could be an effective way to keep carefully the growth rate, improve the brand reputation and reduce costs. Additionally it is a good chance for Panera to adopt new formulas and promote new products, which would usually bring an increased profit percentage.
Merger and acquisition
Panera should think about merging and acquiring the food chains that are battling to make it through. It's an easy and cheaper way to earn business resources, distribution stations, and customer attention.
Threats:
Changes in food and supply costs
As unveiled above, Panera has a unique supply chain operation where its regional fresh dough facilities source to its bakery-cafes on a regular basis. All the fresh dough facilities should be situated in the area about 300 kilometers away from 5 Panera bakery-cafes. This strategy guarantees the quality of Panera's food, but also boosts the food and offer costs. First of all, it's difficult to find cheap center location, raw materials and labor around big cities, in which many bakery-cafes are. Subsequently, the delivery cost could become more significant because the gas price is going higher nowadays.
Competitors who borrow the business strategy of Panera
The "fast everyday" idea is little or nothing new and has been proved valuable. It's possible that some big nation-wide or global food chains would start their "fast casual" brands and choose Panera's business style. Since they have more older supply chains and distribution channels, Panera will have to face to more brutal competition and potential price warfare.
Adverse economical conditions
Unemployment, bankruptcies, reduced usage of credit, foreclosures and dropping home prices will all lead to a fewer customer purchase, which would effect on Panera's financial results. Since Panera has higher set costs in restaurant beautification, raw materials purchase and supply chain than most of other fast food chains, it has less flexibility to offer savings. Therefore, Panera has to convince customers to simply accept its higher prices even through the tough economy period.
