COMM 447: Entrepreneurship & Small Business Management
Business Plan: Panera Bread
A Loaf of Bread in Every Arm
Prepared for: Professor Marv Painter
Prepared by: Kyla Schaan & Kate Simpson
Date Submitted: Thursday, December 6, 2012
Panera Bread Business Plan
Executive Summary
Panera Bread is a limited service Bakery-Deli Café franchise. The company was founded in 1981 and since then,
has become the industry leader in the bakery-deli segment, throughout the United States. Currently, Panera Bread
has 1,625 operational Bakery-Deli Café’s located throughout forty four U.S. states (Panera Bread, 2012). Having
built a strong franchise model, Panera Bread has successfully secured a recognizable brand image across the
world. Panera Bread offers a wide variety of products which include freshly baked artisan breads, hand-crafted
panini’s and sandwiches, hearty soups, hand-tossed salads, pastries, baked goods (muffins, scones, bagels, and
rolls), as well as specialty beverages. In addition to providing high quality products at a relatively low price point,
Panera Bread is also recognized for providing exceptional customer service and a warm, inviting atmosphere.
Operations Plan
The Panera Bread franchise model will be incorporated. Kyla Schaan and Kate Simpson will be the key
shareholders and will share an equal stake in the company. A Board of Directors which includes an Accountant,
Lawyer, and a Professional in the food service industry will assist the two in high level decision making, to ensure
the success of the franchise operation. Panera Bread will be located in Saskatoon, Saskatchewan on 1840 Eighth
Street East. The building, which is approximately 3,888 square feet, will be leased from Colliers International.
The location will serve as a strong competitive advantage for Panera Bread, as it is located along the main retail
and restaurant artery within Saskatoon. This location is near key shopping malls, the University of Saskatchewan,
and is in close proximity to the downtown core. Unlike many of its competitors, Panera Bread will be open seven
days a week to serve several consumer segments. A capital budget of $829,250, which includes substantial
leasehold improvements as well as furniture and fixtures, will be required to fund the start-up of this operation.
Human Resources Plan
Together, Kyla Schaan and Kate Simpson will own the Panera Bread franchise. Additional employees will be
hired to fill the positions of Bakery Manager, Baker, Sandwich Artist, and Cashier Associate.
Marketing Plan
Panera Bread will compete with a variety of direct and indirect competitors, as the restaurant industry remains
fierce. The direct competitors, classified as Bakery-Deli Café dining restaurants, include Earth Bound Bakery and
Delicatessen, Jakes on 21st, Souleio Foods, Mulberry’s Bakery Café & Pub, Calories, Christie’s Il Secondo,
Grandma Lee’s, and Caffee Sola. In addition, Panera Bread will also compete with a variety of indirect
competitors. These include Specialty Bakeries, Grocery Stores with Bakery and Deli departments, as well as FastFood Restaurants. Panera Bread will be able to effectively differentiate itself from its competitors by providing
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Panera Bread Business Plan
high quality products at a relatively low price point. Three viable consumer markets have been identified for
Panera Bread to pursue; these include Baby Boomers, the Business Crowd, as well as University Students. Panera
Bread will appeal to these consumer segments by providing an atmosphere which supports business meetings,
group study sessions and general visiting with friends and family.
Panera Bread will divert from traditional forms advertising and as such, will focus heavily on creating positive
word of mouth communications within the identified target segments. To create initial awareness, Panera Bread
will host a Grand Opening event that will feature live-on location radio coverage. Flyers and Brochures will be
sent out to the target markets prior to the Grand Opening, to ensure awareness of the event. The Grand Opening
will feature in-store sampling, ribbon cutting, and other activities. To create a loyal customer base, Panera Bread
will also implement the MyPanera membership card, which will provide product discounts as well as free product
to customers, based on tracked purchases. Throughout the remainder of the first year, a local Social Media
strategy will be implemented. Panera Bread will create a Facebook and Twitter page which will be utilized to
communicate special promotions, new product, and seasonal events. To create a positive image in the community,
Panera Bread will also sponsor local charity events within the community of Saskatoon.
Financial Plan
The base case financial model for Panera Bread has been developed based on the critical variables of three
hundred customers per day, and an average purchase price of $8.50. The franchise will realize a net loss of
$92,257 and will have positive cash balance of $31,183 in year one. In the second year, Panera Bread will break
even with a net income of $21,491, followed by substantial net income growth in subsequent years.
A return on investment of 15% has been established for Panera Bread. Because of the prime location on Eighth
Street as well as the strong brand name, Panera Bread has been classified as a relatively low risk franchise. As
such, the financial model has provided a Net Present Value (NPV) of $248,248 and an Internal Rate of Return
(IRR) of 26.3%. Since the NPV is a positive value and the IRR exceeds the expected ROI, Panera Bread is proven
economically feasible. Kyla Schaan and Kate Simpson will be moving forward with this venture, provided they
are able to receive the capital required.
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Panera Bread Business Plan
Table of Contents
1.0 Introduction ..........................................................................................................................................................5
1.1 Panera Bread.....................................................................................................................................................5
1.2 Restaurant Industry Overview ..........................................................................................................................6
1.3 Saskatoon Industry Overview...........................................................................................................................6
2.0 Operations Plan ....................................................................................................................................................7
2.1 Legal Structure .................................................................................................................................................7
2.2 Organizational Structure ...................................................................................................................................7
2.3 Board of Directors ............................................................................................................................................7
2.4 Site & Building Plan.........................................................................................................................................8
2.5 Floor Plan .........................................................................................................................................................9
2.6 Work Plan & Flow of Work .......................................................................................................................... 10
2.7 Quality Control .............................................................................................................................................. 11
2.8 Hours of Operation ........................................................................................................................................ 11
2.9 Average Business Day, Week, Month, Year ................................................................................................. 12
2.10 Supply Analysis ........................................................................................................................................... 14
2.11 Service Providers ......................................................................................................................................... 14
2.12 Capacity Limits ........................................................................................................................................... 14
2.13 Capital Budget ............................................................................................................................................. 15
2.14 Working Capital .......................................................................................................................................... 15
2.15 Cost of Goods Sold...................................................................................................................................... 15
3.0 Human Resources Plan ...................................................................................................................................... 16
3.1 Job Descriptions ............................................................................................................................................ 16
3.2 Human Resources Strategy............................................................................................................................ 19
3.3 Employee Recruitment .................................................................................................................................. 19
3.4 Human Resources Training ........................................................................................................................... 20
3.5 Human Resources Costs ................................................................................................................................ 21
4.0 Marketing Plan .................................................................................................................................................. 23
4.1 Market Analysis............................................................................................................................................. 23
4.2 The Marketing Mix........................................................................................................................................ 25
Product Offering .............................................................................................................................................. 25
Pricing Strategy ............................................................................................................................................... 25
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Panera Bread Business Plan
Placement ........................................................................................................................................................ 27
Promotion ........................................................................................................................................................ 30
5.0 Financial Plan .................................................................................................................................................... 34
5.1 Financing Structure ....................................................................................................................................... 34
5.2 Debt Amortization ......................................................................................................................................... 34
5.3 Corporate Income Taxes................................................................................................................................ 34
5.4 Dividend Policy ............................................................................................................................................. 34
5.5 Economic Forecast ........................................................................................................................................ 35
5.6 Financial Analysis ......................................................................................................................................... 35
Projected Profits .............................................................................................................................................. 35
Projected Cash Flow ........................................................................................................................................ 35
Net Present Value ............................................................................................................................................ 35
Internal Rate of Return .................................................................................................................................... 35
Leveraged IRR................................................................................................................................................. 35
5.7 Risk Analysis ................................................................................................................................................. 36
5.8 Contingency Plans ......................................................................................................................................... 38
6.0 Summary............................................................................................................................................................ 38
References ............................................................................................................................................................... 39
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Panera Bread Business Plan
1.0 Introduction
1.1 Panera Bread
Panera bread is a limited service Bakery-Deli Café franchise. The company was founded in 1981 and since then,
has become the industry leader in the bakery-deli segment, throughout the United States. With over 1,625
operational bakery-deli cafés in forty-four states across the U.S., Panera Bread continues to expand and succeed
(Panera Bread, 2012). Having developed strong brand recognition across the world, Panera Bread has become
well-known for providing freshly baked bread, a welcoming atmosphere and excellent customer service. Panera
Bread provides high quality products at a relatively inexpensive price. Through consistency and excellent
customer service, along with the MyPanera membership, Panera Bread has developed a loyal consumer base and a
positive reputation for itself among other bakery-deli café restaurants. In addition to its focus on the customer,
Panera Bread also supports the local communities of which they operate in.
The strong franchise model of Panera Bread has allowed the company to successfully survive during previous
recessions in the United States (Bruno, 2010). Recently, Panera Bread has recently begun to expand
operations into the Canadian market. As of late September in 2012, Panera Bread has opened few
franchises in Ontario, Canada.
Derived from the success in the United States as well as in eastern Canada, Kyla Schaan and Kate
Simpson have identified a strong market opportunity for Panera Bread in Western Canada. As such, the
two have decided to open a franchise operation in Saskatoon, Sasaktchewan.
Mission Statement
The Panera Bread mission statement is “A Loaf of Bread in Every Arm” (Panera Bread, 2012).
Organizational Goals & Values
Panera Bread has established an organizational goal of providing fresh, high quality artisan bread. As such, the
commitments to this goal, taken from the Panera Bread Press Kit, are outlined below (Panera Bread, 2012):
1. “Specialization – Focusing simply on creating the highest quality breads as a platform for our bakery-café
menu”
2. “Tradition – Training our bakers in the time-honoured techniques of artisan masters”
3. “Quality – Using only the freshest ingredients and never adding chemicals or preservatives”
4. “Leadership – Consistently finding ways to enjoy handcrafted bread by combining traditional techniques
with innovative thinking”
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Panera Bread Business Plan
Short-Term & Long-Term Objectives
The following short-term goals have been established for Panera Bread:
1. Establish a strong market presence in the Bakery-Deli Café segment in Saskatoon, Saskatchewan
2. Break-even in the second year of operations
3. Hire exceptional employees that are well-suited to provide exceptional customer service
4. Establish a positive image in the community of Saskatoon, while ensuring the franchise operates in a
socially responsible manner
In addition, the following long-term goals have been established for Panera Bread:
1. Adequately control inventory as well as decrease spoilage by year two, to ensure a 65% gross profit
margin on each revenue stream: meals, drinks, and take-away
2. Incur a net profit in the second year of operations, by establishing a loyal consumer base through a
tailored and targeted marketing strategy
1.2 Restaurant Industry Overview
The restaurant industry continues to thrive as consumer trends evolve. Canadians make approximately 17 million
restaurant visits in a typical day (Canadian Restaurant and Foodservices Association, 2010). Restaurant
consumption is an appropriate alternative for consumers seeking convenience. According to a recent survey, the
top three reasons Canadian’s eat out rank as “indulgence/treat” (43.3%), “on the go” (39.7%), and “saves me time
from having to cook” (34.4%) (Canadian Restaurant and Foodservices Association, 2010). In addition, consumers
also visit restaurants as a means to visit or socialize with their friends and family. Approximately 35% of
Canadians ranked “going out to a restaurant” as their preferred activity (Canadian Restaurant and Foodservices
Association, 2010). Although consumption incentives range between consumer bases, the restaurant industry
remains vast and competitive. In 2010 alone, the restaurant industry generated $60 billion in annual sales and
employed more than one million Canadians (Canadian Restaurant and Foodservices Association, 2010).
1.3 Saskatoon Industry Overview
Saskatoon is the largest city in Saskatchewan, with a population of approximately 236,600 citizens (City of
Saskatoon, 2012). As such, there is an ever-growing need for the development of new restaurants to service the
citizens of this growing city. The present trend of consumer convenience presents an appropriate opportunity for
the unique “fast casual” bakery-deli café concept, of Panera Bread.
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Panera Bread Business Plan
2.0 Operations Plan
2.1 Legal Structure
Panera Bread will be incorporated for the purposes of business legal structure. The limited company will have two
shareholders, Kyla Schaan and Kate Simpson, which will hold equal stake in the company. In addition, these
shareholders will also act as owners of the company. Incorporation of the business will allow Panera Bread to be a
legal entity unto itself, therefore limiting the liability of the owners. In addition, incorporating will also assist the
owners in accessing additional capital funding and will allow for the deferral of income taxes (Painter, 2012).
2.2 Organizational Structure
Kyla Schaan and Kate Simpson will be the primary owners of the Panera Bread franchise and together, will
manage the operations of the business. Kyla and Kate are currently studying as undergraduate students at the
Edwards School of Business with specialization in Human Resources and Marketing, respectively. Together with
their extensive knowledge acquired through business school and their vast background experience in the food
service industry, both Kyla and Kate are well suited for this venture. In addition to the owners, Panera Bread will
also employ a Bakery Manager, Bakers, Sandwich Artists, as well as a variety of Cashier Associates.
Figure 1: Organizational Structure
2.3 Board of Directors
The owners will receive support from a Board of Directors. The board will be comprised of an Accountant, a
Lawyer, and a Professional in the food service industry. The Board of Directors will provide guidance to the
owners, and will ultimately assist in high-level decision making for Panera Bread. The Accountant will help the
owners with the interpretation of financial results. In addition, the Accountant will further assist in minimizing
expenses, ensure inventory is properly managed, and will assist in determining if wage expenses are reflective of
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Panera Bread Business Plan
the organizational requirements. The Lawyer will ensure Panera Bread becomes incorporated and will address any
legalities issues as they arise. The food service Professional will further assist the owners by providing insight to
properly manage the restaurant and bakery.
2.4 Site & Building Plan
Panera Bread will be located at 1840 Eighth Street East, in Saskatoon Saskatchewan. The building is
approximately 3,888 square feet. This location will serve as a competitive advantage for Panera Bread, as it is
located along the main retail and restaurant artery within the city. It is nearby the University of Saskatchewan,
several shopping malls and neighborhoods, and in addition, it is close in proximity to the downtown core.
Currently, Eighth Street realizes a daily traffic count of approximately 31,000 vehicles (Colliers Canada, 2012).
The building site is a corner lot and is approximately 0.348 acres. The lot which was formerly known as a Midas
car repair shop, is currently for lease by Colliers International. To prepare the building for the restaurant, Colliers
will provide a complete “retrofit” of the interior and exterior of the building. In addition, substantial leasehold
improvements will be made to ensure appropriate and consistent branding of the Panera Bread image is present.
The building directly faces Eighth Street and as such, has high exposure to traffic flow. The site features twentyfour on-site parking stalls, with additional parking available on side streets, near-by. The site is easily accessible
to supplier trucks and the building has been designed such that receipt of supplies will take place at the back of
the building. This will ensure that customer flow in the parking lot and near the entrance will not be disrupted.
Figure 2: Panera Bread Site Plan Layout
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Panera Bread Business Plan
Figure 3: Building before Retrofit
Figure 4: Building after Retrofit
2.5 Floor Plan
The floor plan designed for Panera Bread is relatively simple to ensure the free flow of customers and employees.
The building interior has been designed to provide an atmosphere that is warm, inviting, and comforting for
customers. As such, the building has been divided into the restaurant area and the preparation area. The floor plan
is depicted in Figure 5 below.
Restaurant Area
The entrance of the restaurant faces north on Eighth Street. Based on availability of space, a seating capacity of
hundred seats has been established for the restaurant. To break this figure down further, Panera Bread will have
twenty one – 4 seated tables, one – 6 seated table, two couches, and four loveseats. The restaurant will have two
public washrooms at the exterior of the building for both males and females. At the front ordering counter, there
will be two cashier register machines. Directly beside each cashier will be displays of breads, pastries, and other
baked goods. Glass will be placed in front of each display to ensure the sanitation of these products. Menu boards
will be hung directly behind each cash register and will outline product and pricing information. To the far left of
ordering counter, is the deli area where the food will be prepared for the customer. Nearby the deli is the drink
station, where customers will be provided the opportunity to retrieve their own beverage, before proceeding to a
table in the restaurant.
Preparation Area
The preparation area is in the far end of the restaurant and is the area of which the bread and other inputs are
prepared. In addition, there are also staff washrooms and an office. Directly to the left of the entrance is the
preparation table, and to the right are two bread racks. Along the back wall are a walk-in cooler, dry storage area,
microwaves, ovens, a dish pit area, and sinks. Ample space has been provided to ensure employees have adequate
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Panera Bread Business Plan
room to carry out daily baking activities. There is also a door at the exterior of the preparation area, where
inventory deliveries will be received, and employees will enter and exit the building.
Figure 5: Floor Plan for Panera Bread
62'
5'
47'
MICROWAVES
OVENS
DISH PIT
10'
OFFICE
12'
RECEIVING
DOOR
SINK
PREP TABLE
BREAD DISPLAY
SINKS
BREAD RACK
MENU BOARD
MENU BOARD
CASHIER
CASHIER
PASTRY DISPLAY
DRINK
STATION
62'
5'
DELI
BREAD RACK
12'
20'
WALK-IN
COOLER
DRY STORAGE
AREA
FRONT DOOR
EIGHTH STREET ENTRANCE
3,888 Sq. Ft.
Capacity =100
2.6 Work Plan & Flow of Work
The flow of work and movement of customers within the restaurant will be effectively managed due to the
strategic development of the floor plan. Customers will have one of two options when they place their order with
the Cashier Associate. They may choose to “take-out” the order or eat it in the restaurant. The procedure for
ordering is similar, however the area of which they proceed to once they’ve placed the order, will slightly differ.
Ordering Stay-In
The customer will arrive at Panera Bread and will proceed to the ordering line. The Cashier Associate will take
the order from the customer and will input the order into the computerized POS cash register machine. Once
they’ve determined the price total for the meal, they will receive payment from the customer. At this point, they
will ask the customer if the order is to “stay in” or “take out”. In this case, the customer will receive an order
number because they’ve indicated that they will stay-in the restaurant to eat. If this customer has ordered a
beverage, the Cashier Associate will also give the customer a cup at this time. Once the customer has received
both the order number and the cup, they will proceed to the drink station. After filling their cup at the drink
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Panera Bread Business Plan
station, they will proceed to choose a table of their choice in the restaurant. Once seated, they will put their
number on their table and wait for their meal to be delivered.
Ordering Take-Out
The customer will arrive at Panera Bread and will proceed to the ordering line. The Cashier Associate will take
the order from the customer and will input the order into the computerized POS cash register machine. Once
they’ve determined the price total for the meal, they will receive payment from the customer. At this point, they
will ask the customer if the order is to “stay in” or “take out”. In this case, the customer will be advised to wait at
the deli for their order. Once the order has been prepared, the Sandwich Artist will hand the customer their meal
directly.
Internal Processes
Once the order has been inputted into the POS machine by the Cashier Associate, the Sandwich Artist in the deli
will receive the customer order via a computerized print-out. At this point, they will begin to prepare the food on
the deli line. Once the order is complete, they will place the food on dinnerware or a “take-out” container. If the
order is “take-out”, the Sandwich artist will directly give the order to the customer, however, if the order is to
“stay-in”, the Sandwich Artist will place the food on the top counter, and an available Cashier Associate (acting
as a food runner), will deliver the order to the customer in the restaurant.
2.7 Quality Control
Panera Bread headquarters will provide an outline of strict guidelines to the owners, which are to be maintained in
regards to the quality and safe handling of various products. In addition, the manufacture of bread and other
baked goods will adhere to the proper HACCP regulations.
2.8 Hours of Operation
Panera Bread will be open seven days per week with extended hours of operation. Panera Bread is open early in
the morning to serve breakfast as well as fresh bread and other baked goods. The restaurant is open during each
meal of the day and is also open during off peak periods to provide consumers with coffee and other refreshments,
as well as pastries. Although the hours vary on Monday thru Saturday, and on Sunday, Panera Bread will be open
for a period of thirteen hours on each of these days. The hours of operations, which are outlined in Table 1, have
been designed to allow Panera Bread to differentiate itself from its competitors, many of which are not open on
Sunday. The extended hours of operations will allow Panera Bread to attract many consumer segments, in
addition to those specifically identified as the key target markets.
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Table 1: Hours of Operations
Monday – Saturday
Sunday
8:00 am – 9:00 pm
7:00 am – 8:00 pm
2.9 Average Business Day, Week, Month, Year
Average Business Day
The average business day for Panera Bread is thirteen hours. As such, there is an opening shift, a day shift, and a
closing shift. The activities within these shifts are outlined below.
Opening Day shift
One of the owners will be responsible for opening the store each morning. The Sandwich Artists and Cashier
Associates will be the first to arrive for their shift to begin at seven thirty. Once they’ve arrived, the Sandwich
Artists will be in charge of preparing the deli. This will include replenishing ingredients and placing sandwich
inputs into the deli line (the preparation of deli inputs would have been completed upon close, on the previous
evening). These Sandwich Artists will also be in charge of brewing the morning coffee, as well as will receive and
put any orders away that may be delivered early in the morning. The opening Cashier Associates will be in charge
of turning on the computerized POS cash register machines for the day. At this time, they must also ensure that
the machines are working properly. It is their responsibility to also ensure there is a $150 float in each of the cash
registers. In addition, the Cashier Associates must also ensure that the front end of the store adheres to cleanliness
standards before they turn on the “open” sign for the day.
Day Shift
Throughout the day, the Cashier Associates will be processing customer orders; meanwhile the Sandwich Artists
prepare the meals. The Cashier Associates are responsible for delivering the order to the customers once the
Sandwich Artists have prepared them. The Bakery Manager will arrive at the store to ensure there is substantial
baking inventory for the production that day. Each owner will be present at the store throughout the day to assist
with each area and ensure operations are running smoothly. Dishes must be collected and the store must be clean
and tidy throughout the day. This activity may be performed by any employee, however it is the main priority of
the Sandwich Artists and Cashier Associates to ensure these duties have been performed. The owners will conduct
a count at the end of the day that will be tracked from the cash-out reports. This will allow them to determine
from the transactions, which products are moving quickly during certain periods throughout the day. This will
also assist in determining products and ingredients to be ordered. The owners will also be in charge of the cash
deposits, which will be taken to the bank after lunch each day.
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Panera Bread Business Plan
Closing Shift
During the evening, the Cashier Associates and Sandwich Artists will be in charge of preparing the essential deli
items required for the following days production. They will also be in charge of cleaning and stocking duties
which must be finished before leaving the store for the day. These include cleaning the tables, washrooms, and
floors. Communication and teamwork is essential among each employee during the closing shift, to ensure that all
requirements have been met, and on time. It is important to note that Panera Bread will train each employee to
carry out the duties of their position, so that if the owners or Bakery Manager is not present, operations will still
remain efficient and smooth. At the end of the day, the Cashier Associates will be in charge of printing out the
cash-out reports for the entire day, and must also count the cash in the cash register, as well as place the deposit
into the safety deposit box. One of the owners will analyze the transactions to ensure that the Cashier Associate
has performed this duty properly.
Evening Shift
After the store closes for the evening at 9 o’clock, the night the Baker will come in to prepare the freshly baked
bread and other items. It will be their responsibility to ensure that sufficient bread is produced for following day.
The Baker will wash his/her hands before setting out all of the ingredients needed for bakery production. Input
amounts will be outlined by the Bakery Manager, based on the current day’s customer purchases. Once the first
round of baking has been placed in the over, the Baker will begin the next round of preparation, and as well, will
clean the workstation. After the goods have been baked, they will be set on the drying racks to cool. Once the
Baker has completed production as outlined by the Bakery Manager, the Baker will be finished his/her shift. The
Baker will have a set of keys to the restaurant and must ensure it is properly locked upon leaving the restaurant.
The owners as well as the Bakery Manager will inspect the Baker’s goods the following morning, to ensure they
are sufficient enough to place on display.
Average Business Week
The owners will create the employee schedule each weekend. The schedule will be created two weeks in advance.
Inventory will also be ordered by the owners and Bakery Manager once every three days, to ensure Panera Bread
meets appropriate inventory turns. Inventory will be counted and properly assessed by the owners and the Bakery
Manager, to allow for the proper planning of future orders.
Average Business Month
Each month, Panera Bread will conduct staff meetings to discuss any new products, products lines, and upcoming
promotions. In addition, employees will also be tested on product knowledge. The owners will also provide
employees the opportunity to ask questions or request to receive training or support. In addition, the owners will
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assess the gross profit margin monthly, as well as assess inventory levels, and analyze sales for the month. This
analysis should provide the owners with a concrete understand of how the business is operating and will allow
them to identify improvements to be made for the next month. The owners will also assess employee
performance. In addition, the owners will pay suppliers throughout the month.
Average Business Year
Each year, year-end financial statements will be prepared by the Accountant, and as well annual income taxes will
be filed for the business. As well, T4 Slips will also be developed for employee distribution. The human resources
strategy as well as the marketing strategy will also be assessed and revised for the up-coming year.
2.10 Supply Analysis
Panera Bread will acquire the majority of its dry ingredients and fresh fruits and vegetables from Sysco Canada. A
written contract with term agreements will be established between Sysco Canada and Panera Bread. Since it is
estimated that inventory will turn on an average of five days, Panera Bread will place orders with Sysco
approximately once every three days. In addition to acquiring these products from Sysco, Panera Bread will also
order proprietary ingredients (used in the production of bread), from Panera Bread headquarters. These
ingredients will be ordered approximately once every two weeks.
2.11 Service Providers
A local contract will be secured with a local maintenance and repair technician team, to aid in the repair of Panera
Bread equipment. This equipment includes ovens, interior fixtures, and the POS computerized cash register
machines. The owners will undergo training before operations begin, so that they are able to acquire the skills
necessary to maintain quick repairs in unexpected instances. This will also allow Panera Bread to minimize repair
expenses. In terms of legal advice and accounting services, the owners will rely on the Accountant on the Board
of Directors, to assist in financial management and legal issues that arise.
2.12 Capacity Limits
It is anticipated that Panera Bread will be able to produce approximately six hundred loaves of bread per day,
based on constraints such as oven capacity. In addition, based on the size of the restaurant, a seating capacity of
one hundred seats has been established for Panera Bread, at any given time. As such, although the seating
capacity for Panera Bread is only 100 seats or customers, Panera Bread has the ability to produce beyond this
amount. It is anticipated that approximately 80% of Panera Bread revenue will be derived from meals and drinks,
and approximately 20% will be derived from “take-away” items (such as bread and other baked goods).
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Panera Bread Business Plan
2.13 Capital Budget
Panera Bread will be leasing the building from Colliers International. As such, the Capital Budget will include
leasehold improvements which include interior and exterior building renovations, as well as furniture and fixtures.
The value ($388,800) for leasehold improvements has been calculated by assuming a dollar value of $100 per
square foot improvement. The value ($440,450) for furniture and fixtures includes all necessary equipment
required for the development of the restaurant. This includes cookware equipment, interior fixtures, furniture,
supplies, small wares, and signage. These amounts have been estimated based on information provided by the
Panera Bread franchisor (Panera Bread, 2012). The total capital costs for the start-up of the Panera Bread
franchise equals $829,250.
Table 2: Capital Budget
2013
2014
2015
2016
2017
388,800
-
-
-
-
Furniture and Fixtures
440,450
-
-
-
-
Total
829,250
-
-
-
-
Leasehold Improvements
100
2.14 Working Capital
Inventories
Panera Bread will have an average of five days of inventory. It is projected that Panera Bread will turn its
inventory once every five days and as such, orders will be placed regularly every three days. In one year, Panera
Bread will turn inventory approximately seventy two times.
Accounts Payable
Panera Bread will have an average day’s payables of fourteen days.
2.15 Cost of Goods Sold
A gross profit margin has been identified for each category of Panera Bread revenue, which includes meals and
drinks, as well as take-away products. Each category will have a gross profit margin of 65%.
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Panera Bread Business Plan
3.0 Human Resources Plan
3.1 Job Descriptions
Panera Bread will be owned and managed by Kyla Schaan and Kate Simpson. In addition, Panera Bread will
employ a Bakery Manager, Bakers, Sandwich Artists, and Cashier Associates. The description of each job
category is listed below:
Restaurant Owners
Daily Activities:

Manage daily store operations

Direct supervision of all employee’s

Schedule planning for employees

Responsible for cash deposits

Collection of financial information

Knowledge of each job process - ability to perform each position when required

Assist in the completion of customer orders

High level management of customer complaints

Crisis management intervention
Monthly Activities:

Approve major expenditures

Hiring, training, and termination of employees
Yearly Activities:

Analysis of operations, planning of the budget for the upcoming year
Bakery Manager
Daily Activities

Outline production schedule for each Baker, daily

Monitor quality and consistency of baked goods

Determine products for monthly in-store sampling

Answer customer product inquiries

Supervise Bakers and Sandwich Artists; provide guidance and instruction

Responsible for in-store merchandising of baked goods

Control inventory levels; responsible for ordering inventory; ensure correct orders placed, receive
shipments
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
Manage inventory expenses
Monthly Activities

Inventory management analysis and tracking; forecast projected inventory levels for each day and ensure
spoilage is reduced
Yearly Activities

Involved in the hiring process for Bakers and Sandwich Artists; supervision and training of Bakers and
Sandwich Artists according to established owners standards

Analyze past performance (inventory, employees); establish strategy for upcoming year

Provide assistance and recommendation to owners for upcoming budgeting for the bakery
The Bakery Manager must be a Certified Journeyman Baker and must have also previously completed
certification in Food Safety Training. This will ensure the Bakery Manager will possess adequate skills and
knowledge in baking to ensure Panera Bread is able to provide the high quality baked bread. The Food Safety
Training course will ensure proper hygiene and safety standards are adhered to within Panera Bread. The Bakery
Manager must possess a strong passion and creativity for baking, as well as strong leadership and interpersonal
skills to properly supervise employees and attend to customer inquiries. The Bakery Manager must be able to
work independently and will responsible for tracking inventory levels to ensure Panera Bread has a high profit
margin on products, while ensuring spoilage levels are minimized. It is essential that the Bakery Manager have at
least five years’ experience in the baking industry. In addition, this individual must be respectful of others and
work well in a team environment.
Baker
Daily Activities

Prepare a variety of artisan breads, bagels, pastries, and other baked goods

Use proper tools to measure and mix ingredients

Ensure appropriate baking time is maintained for quality purposes

Comply with quota of outputs set by Bakery Manager

Ensure displays of freshly baked goods are monitored and replenished

Bake large quantities before the store opens in the morning

Ensure cleanliness of kitchen area

Comply with tight production schedule

Knowledge of bakery ovens and other tools

Attention to timelines
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Panera Bread Business Plan

Creativity and attention to detail
Monthly Activities

Learn new recipes

Review time schedule of baking
Yearly Activities

Review policies and procedures
Bakers are not required to hold a journeyman certification in baking and therefore can be trained upon hire. They
must however, obtain certification in Health and Safety Standards to ensure hygiene and safety is maintained
within the Panera Bread kitchen. The Baker must possess creative skills and must be able to work independently
as well as in a team atmosphere. Panera Bread Bakers must be passionate employees and work well late in the
evening.
Sandwich Artist
Daily Activities

Prepare food as outlined by the Bakery Manager for daily production

Prepare customer orders

Deliver orders to customers seated in the restaurant

Ensure cleanliness of the preparation area

Complete daily cleaning list
Monthly Activities

Learn how to prepare new products

Test product knowledge to determine improvements
Past experience working in the food industry will be an asset for Sandwich Artists, however, this is not a
necessary requirement. Successful candidates will demonstrate leadership, respect and trustworthiness. They must
have enthusiasm to be willing to learn, have a sense of community involvement, and have a passion for working
at Panera Bread.
Cashier Associate

Strong customer service skills; must ensure customers are welcomed as they enter the store, provide
assistance to customers

Receive customer orders
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Panera Bread Business Plan

Ensure the front of the restaurant remains tidy

Answer telephone inquiries

Cash management

Maintain cleanliness of customer washrooms

Ensure the front-end of the restaurant is neat
Monthly Activities:

Test product knowledge to indicate improvements
Past experience working as a Cashier is an asset for this position, but it is not a requirement. Cashier Associates
must demonstrate trustworthiness as they will be dealing with cash. They must possess a positive attitude in
addition, as they will be providing customer services.
3.2 Human Resources Strategy
Panera Bread will require a strong base of employees to ensure customer demand is met. Based on the capacity
limits for Panera Bread and the projections of number of customers per day, the human resources requirements are
listed in Table 3 below. Panera Bread will require two full-time owners, one full-time Bakery Manager, one fulltime Baker as well as one part-time Baker. In addition, Panera Bread will also employ two full-time Sandwich
Artists, and two full-time Cashiers. Panera Bread will require approximately two part-time staff to be divided
equally between the Sandwich Artist and Cashier Associate positions.
Table 3: Human Resource Requirements
2013
2014
2015
2016
2017
Owner – Full Time
2
2
2
2
2
Bakery Manager – Full Time
1
1
1
1
1
Baker – Full and part Time
1.5
1.5
1.5
1.5
1.5
Sandwich Artists/Cashier – Full/part
Time
Part Time Staff
3.9
5.2
5.8
5.8
5.8
2.22
3.16
3.79
4.03
4.28
3.3 Employee Recruitment
Panera Bread will attract its employees in much the same way customers will be attracted, through the warmth of
an inviting working atmosphere. Panera Bread will create and support a culture that ensures the utmost respect for
all employees. Panera Bread will seek employees who are passionate to provide excellent customer service, and
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Panera Bread Business Plan
who are loyal and trustworthy in nature. Through recruiting individuals who are driven and dedicated, the owners
hope that Panera Bread will be successful in fostering an employee base that is able and willing to creating strong
working relationships in a positive work environment.
In order to ensure Panera Bread is able to attract employees with the values the owners are seeking, Panera Bread
will offer the following incentives to employees:

Flexible Work Schedule – Panera Bread will be able to provide employees with a flexible work schedule
due to extended hours of operation. This should allow Panera Bread to attract part time employees
specifically those in University or others seeking work, with busy schedules.

Stress free atmosphere – At Panera Bread, the owners will provide employees with a stress free
atmosphere that allows for personal development and learning. Panera Bread will ensure that employees
are provided with training upon hire and are able to seek assistance whenever they may need.

Opportunity for advancement – For those employees of which the owners feel have potential with Panera
Bread, these employee will be provided with adequate opportunities to advance to positions higher up
within franchise.

Day Time and Evening Shifts (with the exception of the Baker) – Panera Bread is closed relatively early
in comparison to other fast, casual restaurants in Saskatoon. As such, the owners will be able to attract
responsible employees that may have family or other commitments to attend to in the evening.

Alcohol Free – It is important that Panera Bread provide a working atmosphere where employees are not
engaging in deviant activities such as the consumption of drugs and alcohol. This feature will attract
employees who are responsible.

A Creative and Fun Environment – Panera Bread will provide a working environment that is fun and
supports employee interaction and creativity. The owners feel that it is important to ensure employees are
given the opportunity to express themselves as unique individuals and as such, individuality is respected
and promoted

Free Uniforms – Panera Bread will provide free uniforms to employees to ensure that a consistent brand
image is represented. In addition, Panera Bread will launder these uniforms for employees at the expense
of the franchise.

Benefits – Panera Bread will provide base benefits to its employees. These benefits include Employment
Insurance, Canadian Pension Plan, Holiday Pay, and Workers Compensation.
3.4 Human Resources Training
A comprehensive training program by Panera Bread headquarters has been developed to ensure that Panera Bread
employees are properly trained to provide excellence in product delivery and customer service.
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Panera Bread Business Plan
Initial Training Requirements
Before opening Panera Bread in Saskatoon, the owners will attend a ten week comprehensive training program
that provides classroom and bakery-café instruction. Both Kyla and Kate will receive a Manager and Baker
Certification, Bakery-Café Certification, and will attend a Cashier Associate Training Program (Panera Bread,
2012). The knowledge acquired through these courses is essential and will provide each owner a strong
foundation of the franchise model. The owners will acquire the knowledge of procedures and protocols of Panera
Bread through the training received by Panera Bread headquarters. This will provide the owners with a strong
foundation to properly train their employees. In addition to the initial training, the owners will also seek assistance
from members of the Board of Directors and will learn new franchise information as it is distributed from Panera
Bread headquarters.
Upon hire, each employee will receive an initial orientation at Panera Bread. This orientation will provide each
employee the opportunity to learn the history of Panera Bread and the values of which the business was built on.
Each employee will be required to sample each of the products Panera Bread offers, to ensure they become
familiar with product flavours. By sampling each product offering, employees will be able to provide product
recommendations, and as well, answer product inquiries or attend to special requests such as allergies, from
customers. As these new employees are hired, the owners and the Bakery Manager will be responsible to train the
new employees based on job processes. In addition, new employees will be introduced to each existing staff
member and shown where the washrooms are, as well as where staff are expected to take their breaks. This will
ensure that employees are able to establish a sense of belonging in the business, from the beginning.
Each employee will hold one position at Panera Bread. It is important to note however, that Cashier Associates
and Sandwich Artists will be trained to perform each position, to ensure proper substitution and coverage.
On-going Training Requirements
Panera Bread often re-vitalizes products offerings throughout different seasons within the year. The owners will
communicate these changes to employees and train accordingly. The Bakers and Sandwich Artists will be
required to learn the new recipes and practice preparing these products, before they are implemented. In addition,
Cashier Associates will be required to sample these new products as well. Within each job category, there will be
on-going training provided by the owners and the Bakery Manager, to ensure franchise requirements are properly
adhered to.
3.5 Human Resources Costs
Panera Bread will have three full-time salaried employees. These include the two owners and the Bakery
Manager. The remaining full-time and part-time employees will be paid on an hourly basis. These include the
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Panera Bread Business Plan
Bakers, Sandwich Artists, and Cashiers. Table 4 below outlines the wage rate and yearly salary for each employee
at Panera Bread, according to job category. The second and subsequent years have been adjusted for inflation.
Table 4: Wage Rates/ Yearly Salary
2013
2014
2015
2016
2017
Owner – Salary
$30,000
$30,750
$31,519
$32,307
$33,114
Bakery Manager - Salary
$25,000
$25,625
$26,266
$26,922
$27,595
Full Time Baker- Wage Rate/hour
$11.75
$12.04
$12.34
$12.65
$12.97
Full Time Sandwich Artist/Cashier Wage Rate/hour
$10.00
$10.25
$10.51
$10.77
$11.04
Part Time Staff – Wage Rate/hour
$10.00
$10.25
$10.51
$10.77
$11.04
The table below lists total costs of wages and salaries for each job category. The total amount of wages and
salaries ($239,497) in year one, accounts for approximately 26.1% of Panera Bread’s total revenues.
Table 5: Wage Rate/Salary Costs
2013
2014
2015
2016
2017
Owner
$60,000
$61,500
$63,038
$64,613
$66,229
Bakery Manager
$25,000
$25,625
$26,266
$26,922
$27,595
Baker
$34,545
$35,409
$36,294
$37,201
$38,131
Sandwich Artist/Cashier
$76,440
$104,442
$120,435
$123,445
$126,532
Part Time Staff
$43,512
$63,549
$78,123
$85,164
$92,638
Total Wages/Salaries
$239,497
$290,524
$324,154
$337,346
$351,125
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Panera Bread Business Plan
4.0 Marketing Plan
As stated previously, Panera Bread has established strong brand recognition throughout the United States. Panera
Bread focuses on delivering warmth and uniqueness to each consumer touch point, striving to be the leader in the
bakery-deli café segment.
4.1 Market Analysis
Competitor Overview
The restaurant industry is incredible fierce, with many restaurants competing for a share in the market. According
to the Canadian Restaurant and Foodservices Association, there are more than 2,100 restaurant, bars, and caterers
in Saskatchewan alone (Canadian Restaurant and Foodservices Association, 2012). As such, being the largest city
in Saskatchewan, Saskatoon contains the majority of these restaurants. Panera Bread will have several direct and
indirect competitors, most of which will be located nearby the franchise location.
Direct Competitors
Panera Bread’s direct competitors have been categorized specifically as Bakery-Deli Café restaurants within the
city of Saskatoon. These restaurants focus on providing high quality bakery-deli products, have limited service,
and provide a more refined dining atmosphere.
Table 6: Competitive Analysis
Bakery-Deli Café Restaurant
Location
Features
Earth Bound Bakery and
Delicatessen
1820 – 8TH Street East
Directly behind Panera, small
dining area, small lunch menu,
provides take-away baked
goods, friendly service,
average purchase price $5-$10
Jakes on 21st
301 – 21ST Street East
Downtown, provide a wide
selection of sandwiches, wraps,
and other meals, full-service
dining experience, average
purchase price $10-$12
Souleio Foods
265 – 3RD Avenue South
Downtown, dining experience,
community-oriented, items to
take away include soups, meat,
cheese, average purchase price
$10-$15
Mulberry’s Bakery Café & Pub
124 – 3RD Avenue North
Calories
721 Broadway Avenue
Kyla Schaan & Kate Simpson
Downtown, dining experience
Small space for dining
experience, ingredients are
Panera Bread Business Plan
sourced locally, average
purchase price $10-$12
Christie’s Il Secondo
802 Broadway Avenue
Authentic Italian food, baked
items to take home, small
dining experience
Grandma Lee’s
Various Locations throughout Saskatoon
Fresh baked sandwiches, dining
experience, made to order
sandwiches
Caffee Sola
38 – 23RD Street East
Vegetarian and gluten-free
options, average purchase price
$10-$12
Indirect Competitors
Panera Bread’s indirect competitors are classified according to three categories. These include specialty bakeries,
grocery stores with operational bakery and deli departments, as well as fast food restaurants serving deli menu
items. Outlined below are the competitors within each category.

Specialty Bakeries – Nutana’s Bakery, Hot Racks Bakery, Three Sister’s Bakery

Grocery Stores – Safeway, Co-op, Sobey’s, Real Canadian Superstore (RCSS), Walmart Supercentre

Fast Food Restaurants – Quizno’s, Subway, Pita Pit, Booster Juice, Badass Jacks, Tim Hortons
Figure 6: Competitor Map
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Panera Bread Business Plan
In addition to the direct and indirect competitors listed above, Panera Bread will also compete with other full
service and limited service (fast food) restaurants along Eighth Street. Although the surrounding restaurants
provide varied product offerings which may not be similar to those offered at Panera Bread, consumers will
choose between Panera Bread and other restaurants when they are seeking to serve their unmet need of hunger
satisfaction.
Differentiation from competitors is a key marketing element for Panera Bread. In order to distinguish itself from
other bakery-deli café restaurants, it is important to effectively communicate the distinct characteristics of Panera
Bread that will set itself apart. The convenient location of Eighth Street is a major competing factor for Panera
Bread, as well as the low price point of items on the menu. In addition, the inviting atmosphere of Panera Bread is
a key selling point to consumers because in addition to offering a cozy and relaxing environment, Panera Bread
provides quick service which means consumers can expect a limited waiting time. Panera Bread consumers are
provided access to free WIFI internet service which means they can conduct business meetings, research for
classes, or entertain their grandchildren with online games. Panera Bread also competes on the basis of product
consistency through high food and beverage quality. In addition to strong product features, Panera Bread also
provides extended hours of operations to suit consumer needs. Panera Bread is open seven days a week from
Monday through Sunday. The length of hours offer consumers various consumption opportunities throughout the
day, which includes meals at breakfast, lunch and supper, and a coffee meeting place early in the morning and late
in the afternoon.
4.2 The Marketing Mix
Product Offering
The Panera Bread platform is built on the value of fresh bread (Panera Bread, 2012). In addition to offering
freshly baked breads, the Panera menu also offers other baked goods (muffins, scones, bagels, and rolls), hearty
soups, made-to-order sandwiches and panini’s, hand tossed salads, roasted coffee, and specialty beverages
(espresso, cappuccino’s, smoothies). Panera Bread focuses on delivering high quality products made from fresh
ingredients. In addition, Panera Bread has recently begun offering unique product line extensions including salad
dressings and dipping sauces for breads. A complete Panera Bread menu with product descriptions and pricing is
provided in Appendix A.
Pricing Strategy
The Panera Bread menu is value-oriented. Panera Bread provides products of the highest quality, at a relatively
inexpensive price point. With respect to the competition in the bakery-deli café segment, Panera Bread is
competitively priced, and in many cases priced slightly below competitors. Currently, the pricing structure for
Panera Bread is similar across all franchises in the United States, with relatively low variation. The slight
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Panera Bread Business Plan
differences in price may be due to the elevated cost of living in certain states. On a general level however, product
pricing is consistent among franchises. As such, the pricing model for the proposed Panera Bread will be derived
from prices of the franchise operation in Moline, Illinois.
The items on the Panera Bread menu have been classified below, according to product category.
Breads & Baked Goods
Breads, pastries, and other baked goods will be sold for $2.50 - $5.00. Although these items are sold for a
relatively low retail price, it is anticipated that these items will be purchased in multiples and in large volumes
throughout peak periods of the day.
Hot Breakfast
Hot Breakfast includes items such as breakfast sandwiches, oatmeal, and soufflé’s. These items range in price
from $3.89 - $4.89.
Panini’s
Panini’s are offered in two product classes. These include the Signature collection as well as the Premium
collection. The distinction between the two product classes is the price point due to the ingredients in each Panini.
The Signature collection ranges in price from $6.99 - $7.89, and the Premium collection is slightly more
expensive ranging in price from $8.59 - $8.79.
Sandwiches
Similar to Panini’s, Sandwiches also are offered in three product classes. These include the Café collection, the
Signature collection, and the Premium Signature collection. The Café sandwiches are the generic type of
sandwiches consumers expect. These range in price from $5.99 - $6.69. The Signature and Premium Signature
collections again, are relatively more expensive than the Café collection due to the uniqueness and artful
creativity of the sandwich. The Signature sandwiches range in price from $6.89 - $7.39, whereas the Premium
Signature sandwich is priced slightly higher at $8.29.
Soup
The Café soup collection features a variety of daily soups. The price point for a bowl of soup is $4.99.
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Panera Bread Business Plan
Salads
Panera Bread offers freshly-tossed salads in three product classes. These include the Café, Signature, and
Premium Signature collections. The Café salads are the classic and generic types of salads. These salads range in
price from $5.29 - $5.89. The Signature and Premium Signature Salads are the artfully created salads which are
unique to Panera Bread, and as such highlight fresh ingredients. The Signature collection ranges in price from
$6.89 - $7.79 and the Premium Signature collection ranges in price from $8.59 - $8.69.
You Pick Two Combo
Classic to Panera Bread is the You Pick Two Combo. This combination has been created to allow consumers to
pair their favorite Sandwich with their favourite Panera Bread Soup or Salad. As a base, the You Pick Two
Combo is provided to consumers at a price point of $6.59. This combination offers consumers the ability to
choose two items of the following: cup of soup, ½ Café Salad, or ½ Café Sandwich. Should consumers decide
that they’d like to substitute one Signature item, the price point is raised to a total of $7.59. Consumers are also
given the opportunity to substitute two Signature items, at the price point of $8.59.
Panera Kids
Panera Bread will have a children’s menu. This menu will include options such as grilled cheese sandwiches,
macaroni and cheese, and peanut butter and jelly sandwiches. These items range in price from $3.99 - $4.99.
Beverages
A variety of beverages are available for purchase at Panera Bread. These include iced drinks, frozen drinks, coffee
and other specialty beverages, smoothies, and fountain drinks. The price point on these items ranges from $1.59 $3.99.
Based on the pricing structure outlined above, it is anticipated that the average revenue per customer in year one
will be $8.50.
Placement
Location Selection
Panera Bread franchises are dispersed throughout larger cities in the United States. Typically, they are located in
stand-alone locations, in strip malls, and other similar development areas. Panera Bread locations are strategically
placed in high traffic areas to capture awareness.
Currently, there are no existing Panera Bread franchises in Western Canada. As such, the opportunity presents
itself to expand into Saskatchewan’s largest city, Saskatoon. The placement of Panera Bread in the Saskatoon
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Panera Bread Business Plan
market is critical to the outcome and success of the business. Therefore, the franchise operation will be located at
1840 Eighth Street East, between Preston Avenue South and Cumberland Avenue South, across from the
Grosvenor Shopping Centre. The placement of Panera Bread among Saskatoon’s largest retail and restaurant
artery makes strategic sense. Because Panera has several differentiating factors, Panera Bread will be able to
successfully stand apart from other competitors in the Saskatoon industry. These differentiating factors include
extended hours of operation, a warm and inviting atmosphere, fresh products of high quality at a relatively low
price point, and the convenient location of Eighth Street. The fact that Panera Bread will directly face Eighth
Street will provide a strong advantage in attracting consumers who have come to the area, unsure of where to eat.
Figure 7: Google Maps View of Panera Bread Location
Market Segmentation
The potential market for Panera Bread has been primarily segmented based on the psychographic consumer
characteristics of those which value both healthy consumption and convenience in the search for satisfying the
need of hunger. Derived from these two variables, three viable target markets have been determined for Panera
Bread to specifically focus on.
Target Market
The three target markets that have been identified include the Business Crowd, Baby Boomers, and University
Students. In developing a marketing strategy for Panera Bread, these segments will be heavily targeted through
strategic communications.
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Panera Bread Business Plan
a.) Business Crowd
The first consumer segment Panera Bread will be targeting is the Business Crowd. These consumers are females
and males ranging in age from twenty five to thirty nine years of age. These individuals are professional, office
workers. In terms of family life cycle, these individuals are single, recently married, or married within the last five
to ten years. These individuals likely have no children, or are beginning to have children. The typical family size
of this consumer segment is zero to three family members. In terms of consumption situations, this segment will
be visiting Panera Bread during the lunch rush. These individuals may be consuming a lunch meal with fellow coworkers, or perhaps are attending Panera Bread to consume lunch with a business supplier or out of town business
associate. In addition, these individuals may also attend Panera Bread in the mid-afternoon to consume coffee and
pastries during a business meeting.
b.) Baby Boomers
The second consumer segment Panera Bread is targeting is females and males ranging in age from fourty eight to
sixty six years of age. These consumers are known as the Baby Boomer segment. Individuals of this segment
typically hold managerial or professional positions in the workforce, often working in an office. In addition, many
of the individuals in this segment are retired or are recently retired. The family life cycle of this segment are
married with children who no longer live at home. Most of these individuals are grandparents, or are becoming
grandparents. The family size of this segment will range. Members of this segment often withhold values of
traditionalists. In terms of consumption situations, this segment will consume meals at Panera Bread during a
variety of occasions, being breakfast, lunch, or supper. In addition, this segment will also visit Panera Bread in the
early morning and early afternoon as a meeting place to consume coffee with friends.
c.) University Students
The third consumer segment Panera Bread is targeting is University Students. This segment is comprised of
individuals aged eighteen to thirty four years of age. These individuals are both females and males who are full
time students at the University of Saskatchewan, SIAST, and other colleges within the city of Saskatoon. In terms
of family life cycle, these individuals are young and single, recently married, or married within the most recent
five to ten years. The family size of these individuals ranges from zero to one member. Individuals of this
segment generally withhold values characteristic of trend setters. In terms of consumption situations, these
individuals are visiting Panera throughout the day to eat meals. These students are often visiting the restaurant in
off-peak hours to work on homework, using the free WIFI, while consuming specialty beverages and pastries.
These students also consume Panera meals throughout the day, predominately when they are “on the go”.
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Panera Bread Business Plan
Customer Value Proposition
In targeting the identified markets above, Panera Bread will ensure that it clearly communicates its strong points
of differentiation. This will be communicated to the target markets through the customer value proposition. The
points listed below are key elements that Panera Bread offers, which the owners feel will create value for the
consumer:

High quality products made from freshly baked bread

Excellent service provided by cheerful employees

A “classy, yet casual and sophisticated” atmosphere

A sense of belonging and community through the MyPanera membership card
Positioning Statement
A positioning statement has been developed for Panera Bread to assist the consumer in identifying exactly what
the Panera Bread brand is and what it stands for. “Panera Bread is a unique alternative among all Bakery-Deli
Café’s for busy, working professionals and students, because your sandwich is created using our fresh, artisan
bread which is prepared by our passionate employees in an atmosphere that is warm and inviting.”
Promotion
The promotional strategy for Panera Bread is directly linked to the positioning statement identified above. The
promotion of Panera Bread includes fostering and supporting a strong and consistent brand image, executing
advertising tactics to reach its key target markets and supporting development in the community.
Branding
Panera Bread has built a strong and reputable brand in the United States. The store layout and design of Panera
Bread will be consistent to those in the U.S.. The overall goal for the proposed Panera Bread is to create a warm
and welcoming atmosphere for the consumer. As such, the interior and exterior of the store will be modern and
colourful to capture consumer awareness and attention. The interior design of Panera will be clean, welcoming,
and cozy.
The focus of the branding strategy is to highlight the value of fresh bread. Interior design will be structurally
designed to ensure a relaxing dining atmosphere. Colouring such as orange, yellow, red, and green will be used to
deliver a “fresh” and “wholesome” or “hand-made” feel. The interior of the store will include bakery cases nearby
the cash register which will display fresh breads and pastries. The interior of the store will give off the feel of a
“casual art gallery” with the display of “artful” and “engaging” interior including artwork of bakers and baking,
dispersed throughout the store (Heckler Associates, 2011). The interior of the store will also have displays of
impact such as point of sale materials and banners, and as well, tower cards which will be placed on table tops.
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Panera Bread Business Plan
The goal of the branding strategy within the store is to merchandise effectively, placing special emphasis on
bread.
The exterior of the building will be modern as well, using earthy tones to decorate. A sign will be placed at the
front of the building which will have high visibility to consumers travelling down Eighth Street. The sign will
involve the logo of Panera Bread, which will artfully represent the Panera Bread mission statement. The logo
contains a woman with long hair holding a loaf of bread; this woman is known as “Mother Bread” and symbolizes
the brand focus (Heckler Associates, 2011). In addition to placing the logo on exterior signage, it will also be
visible throughout the interior of the store, on “take-out” containers and bags, print materials, and many other
consumer touch points.
Marketing Strategy
Due to the nature of the industry and the strong location on Eighth Street, Panera Bread will divert from
traditional forms of advertising. The main goal in the first year is to create awareness among the target market
groups. The majority of this awareness will simply derive from positive word of mouth communications.
Consumers will become aware of Panera Bread as being the “new” bakery-deli café on Eighth Street. Because of
the direct exposure to high traffic, consumers will become aware of Panera Bread through the prevalence of
exterior signage and upgraded building design and features. In the awareness phase, Panera Bread will strive to
deliver high quality menu items and high levels of consistent customer service. By successfully providing these
elements, it is expected that word of mouth communications will grow.
a.) Grand Opening Event
Panera Bread will have a soft opening where the restaurant will officially open to the public and will begin
operations. Within a month of the soft opening, Panera Bread will host a Grand Opening event. The event will
take place for approximately four hours in the early afternoon on a weekend. The goal of this event is to create
awareness and to establish consumer memberships through the MyPanera membership program. The event will
feature live-on-location radio broadcasting. According to the rate card from Saskatoon Media Group, this radio
event is estimated to cost approximately $3,200 (refer to Appendix B). This event will also feature sampling instore, ribbon cutting, and will also provide customers the opportunity to meet with staff and learn about the new
franchise.
b.) Flyers & Brochures
Prior to the grand opening event, Panera Bread will send out flyers and brochures to target consumers in the
community, to create awareness of the event. In addition, flyers and brochures will also be sent out to consumers
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Panera Bread Business Plan
throughout different seasonal promotions in the second year. These brochures and flyers will provide relevant
information about Panera Bread including product description and pricing, location, and other important seasonal
and promotional information. In year one, 1,000 – 8.5’’ x 11’’ brochures will be distributed, and 5,000 – 9’’ x
12’’ flyers will be distributed. This is estimated to cost approximately $835 (Saskatoon Printing Explorer, 2012).
c.) In-Store Sampling
Panera Bread will also implement in-store sampling. This will include product-launch, seasonal, holiday, or
promotional sampling. Since Panera Bread continually re-vitalizes menu items, it is important to provide
consumers with frequent sampling. Sampling has been budgeted into the advertising allowance and will be
expensed to equal approximately 0.5% of revenue total, in year one. In the second and subsequent years, this
amount has been adjusted for to reflect inflation.
d.) My Panera Membership
The MyPanera Membership is a membership program with Panera Bread that will allow customer loyalty,
through the use of membership benefits. Consumers who sign up for the MyPanera Membership will be provided
with a card which will be swiped at the time of purchase. This card will allow Panera Bread to track consumer
preferences based on consumption, and will reward these members with coupons, discounts, and other tokens of
appreciation, periodically throughout the year. The MyPanera Membership will be a large expense in the
advertising allowance but will prove long term benefits for Panera Bread. The membership program has been
budgeted into the advertising allowance expense to reflect approximately 1.75% of year one revenues.
e.) Social Media
Panera Bread currently has an active online presence through the maintenance of a website, Twitter account, and
Facebook page, managed by Panera headquarters. The promotional materials mentioned above will include
verbiage which will include a call to action, where the consumer is encouraged to visit each of these pages for
further details. In addition, Panera Bread will also implement local Facebook and Twitter pages to communicate
local promotions, daily specials, as well as pictures and other information.
f.) Radio
In addition, minimal radio advertising will also be utilized to communicate to the target market. Approximately
seven minutes of advertising for seven days on an FM radio station in Saskatoon is estimated to cost $465 (Equity
Billboards, 2010). In the first year Panera Bread will advertise on the radio for the Grand Opening event and
heavily thereafter, and will also employ reminder advertising throughout the duration of the year. In the second
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Panera Bread Business Plan
and subsequent years, Panera Bread will limit advertising on the radio to four weeks throughout the year. These
advertisements will highlight seasonal, promotional, and other events.
g.) Sponsorship & Community Event Involvement
In addition to the techniques to build awareness, Panera Bread will also support community development and
ultimately build a positive brand image by supporting charity events and providing sponsorship for local events.
These may include events held by the University, the Children’s Hospital Foundation, Canadian Cancer Society,
and Arthritis Society to name a few. These events will help Panera Bread to become known as a socially
conscious business and will allow Panera to give back to the community it operates in. Charity events and
sponsorship will be expensed to equal approximately 1% of revenue total in the first year.
The advertising allowance for each of the above marketing strategies is outline in Table 7 below.
Table 7: Advertising Allowance
2013
2014
2015
2016
2017
$4,500
$1,860
$1,907
$1,954
$2,003
$835
$535
-
-
-
Charity Events & Sponsorship
$9,180
$9,410
$9,645
$9,886
$10,133
Sampling
$4,590
$4,705
$4,822
$4,943
$5,067
MyPanera Membership
$16,065
$16,467
$16,878
$17,300
$17,733
Total Advertising Allowance
$35,170
$32,976
$33,252
$34,083
$34,935
Radio
Brochures/Flyers
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Panera Bread Business Plan
5.0 Financial Plan
A detailed financial model has been developed to determine the feasibility of the proposed Panera Bread
franchise. This base case financial model (which anticipates three hundred customers per day and an average
purchase price of $8.50) includes the projected income statement, balance sheet, and statement of cash flows for
the five year projection period. The financial model is provided in Appendix C.
5.1 Financing Structure
The total capital required to fund the investment of Panera Bread is $829,250. This figure which is derived from
the capital budget consists of leasehold improvements and furniture and fixtures. The financing budget will fund
the capital requirements and will also provide additional funding to cover any unforeseen emergencies/expenses.
The financing budget is comprised of approximately thirty-nine percent (39%) bank debt, and fifty-one percent
(51%) equity financing. Because the building will be leased, the financial institution likely will not grant the full
39% bank debt through the form of a loan. This is due to the fact that Panera Bread has no building to act as
collateral to the financial institution. It is anticipated however, that the financial institution will provide a loan
equivalent to half of the furniture and fixtures dollar value, which equates to an amount of $220,225. The owners
as well as their primary family members will provide personal guarantees for the remaining balance of the bank
debt ($124,775). The equity financing will be raised through various equity investors.
5.2 Debt Amortization
The term length for debt amortization is ten years. Panera Bread requires a principal amount of $345,000. The
debt interest rate is 7% and the payment is $49,120 in each of the first five years. The debt interest amount will be
deducted as an operating expense of $24,150. As such, in year 1, the reduction in principal equals $24,970. The
ending balance decreases in each of the first five years as the loan is paid off.
5.3 Corporate Income Taxes
The federal corporate rate is 15% and the Saskatchewan corporate rate is 12%. These rates have been applied to
the financial model.
5.4 Dividend Policy
Dividends will be distributed to the shareholders of Panera Bread. In year one, no dividends will be paid out.
However, in year two, three, four, and five, the excess between the cash balance of the previous year and the fixed
amount of $20,000 will be paid out in the form of dividends. The below table outlines the dividend payments
made in each of the five year projected period.
Table 8: Dividend Payments
Year 1
Year 2
Year 3
Year 4
Year 5
0
$11,183
$131,245
$193,305
$180,075
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Panera Bread Business Plan
5.5 Economic Forecast
The expected inflation rate is estimated to be 2.5% and the debt interest rate is 7%. Therefore, the inflation factor
used throughout the financial model to determine growth is 1.025.
5.6 Financial Analysis
Projected Profits
Panera Bread will incur a net loss of $92,257 in year one. However, in year two, Panera Bread will break-even,
earning an additional net income of $21,291. In year three, four, and five, net income will continue to increase.
Table 9: Net Income
Year 1
Year 2
Year 3
Year 4
Year 5
$(92,257)
$21,291
$110,734
$120,554
$136,339
Projected Cash Flow
Panera Bread has positive cash flows in each of the five projected years. In year one, the cash balance is $31,183.
In years two, three and four, the cash balance will continue to rise. The cash balance does peak in year four at a
total of $200,075 and slightly decreases in year five to $197,736.
Table 10: Cash Balance End of Year
Year 1
Year 2
Year 3
Year 4
Year 5
$31,183
$151,245
$213,305
$200,075
$197,736
Net Present Value
The net present value for this investment is positive and equals $248,248. This value is attractive as it indicates
that equity investors will incur an economic profit above the amount they will invest in the franchise.
Internal Rate of Return
A required return on investment (ROI) of 15% has been determined for the Panera Bread venture. Due to the
prime retail location on Eighth Street as well as the strong brand name, the investment carries relatively low risk
due to the fact that it is a franchise operation. The internal rate of return on investment is 26.3%. Because this
figure exceeds the required ROI by approximately 11.3%, the business is in fact economically viable.
Leveraged IRR
The base case financial model used 39% bank debt to leverage IRR. To assess the impact on NPV and IRR by
removing the bank debt and increasing the equity financing to 100%, the results provided an NPV of $153,184
and an IRR of 19.8%. Table 11 outlines the impact of leveraged IRR on the Panera Bread franchise model, in
comparison to unleveraged IRR.
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Panera Bread Business Plan
Table 11: Impact of IRR
NPV
$248,248
$153,184
39% Debt Financing
100% Equity Financing
IRR
26.3%
19.8%
5.7 Risk Analysis
Two critical variables have been determined as potential risk factors for Panera Bread. These include:
1. Average number of customers per day, and
2. Average purchase price per customer
A change in any of the variables will significantly impact the performance and therefore the feasibility of the
business. To identify the potential impact, a sensitivity analysis was conducted to identify the effect that these
critical variables have on the feasibility of the business.
Sensitivity Analysis – Manipulation of Critical Variables
Based on the financial projections, it is anticipated that Panera Bread will service three hundred customers per
day. To perform a sensitivity analysis on this variable, the average number of customers per day was increased
and decreased in increments of fifty. The results are evident in Table 12. By decreasing this critical variable by 50
customers, the net payback substantially decreases to $93,016, and the IRR drops to 3.5%. However, by
increasing the average number of customers by 50, the net payback substantially increases to $1,664,211 and the
IRR is 43.7%.
Table 12: Sensitivity – Average Number of Customers/Day
Average # Customers/Day
Average 5 Year Profit
Net Payback
IRR
250
$(26,831)
$93,016
3.5%
300
$59,372
$874,490
26.3%
350
$142,087
$1,664,211
43.7%
400
$224,802
$2,453,931
58.4%
450
$307,517
$3,243,652
71.8%
The financial model created for Panera Bread anticipated that the average purchase price per customer to be
$8.50. To perform a sensitivity analysis on the critical variable of average purchase price per customer, this value
was increased and decreased in increments of $0.50. The financial results are listed in Table 13. It is apparent that
this critical variable has a strong impact on the financial performance of the business. By decreasing purchase
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Panera Bread Business Plan
price by one dollar to $7.50, the IRR decreased to 12% and the average five year profit drops from $59,372 to
$985.
Table 13: Sensitivity – Average Purchase Price/Customer
Avg. Purchase Price/Customer
Average 5 Year Profit
Net Payback
IRR
$7.50
$985
$356,195
12%
$8.00
$30,179
$595,765
19.1%
$8.50
$59,372
$874,490
26.3%
$9.00
$88,566
$1,153,215
32.9%
$9.50
$117,759
$1,431,940
38.9%
Break Even Analysis – Net Income
A Net Income break-even analysis was conducted by altering the critical variable of average customers per day.
Table 14: Break Even Analysis – Net Income
2013
2014
2015
2016
2017
Break Even
Customers/Day
369
384
366
352
340
Break Even
Customers/Day
300
400
450
450
450
Figure 8 below illustrates the break-even results, in comparison to the base case financial projections.
Figure 8: Break Even – Net Income
500
400
300
200
100
0
1
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2
3
4
5
Panera Bread Business Plan
5.8 Contingency Plans
Best case scenario
In the event of a best case scenario, Panera Bread would realize a higher volume of sales than anticipated. This
would cause a concern with respect to capacity limits. Employees would have a difficult time serving customers
efficiently, while ensuring excellent customer service. The capacity constraint would cause an extreme difficulty
during peak hours and may damage the reputation of Panera Bread if customers become unsatisfied with lengthy
waiting times.
In response to this scenario, Panera Bread would implement the following contingencies:

Hire additional employees

Create additional cash registers to process orders more efficiently

Expand by constructing a drive-through

Expand into a new location after fifth year of operations, if net profits continue to increase
Worst case scenario
In the event of a worst case scenario, Panera Bread would realize lower than expected sales volumes. Because
Panera Bread cannot discontinue products due to the fact that it is franchised, alternative contingency plans have
been developed, of which are outlined below:

Elimination of staff – Owners could potentially work additional hours

Examine atmosphere – Ensure customer service is meeting standards and owners are sufficiently
managing operations

Examine spoilage and decrease waste levels

Discontinue operations - If profitability is not evident by year two, Panera Bread will sell the furniture
and fixtures and end the franchise operations
6.0 Summary
Upon assessment of the financial model, it is evident that the return on investment for Panera Bread is much
lower than the expected internal rate of return. As such, Panera Bread is an attractive opportunity for potential
equity investors since the business has proven feasible. In addition to the strong financial results, Panera Bread
has a strong brand image and is strategically located along the main retail and restaurant artery in Saskatoon.
These features will ensure the future operations of Panera Bread are successful. Kyla Schaan and Kate Simpson
will be moving forward with this venture, provided they are able to acquire the capital required.
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Panera Bread Business Plan
References
Canadian Restaurant and Foodservices Association. (2010). Retrieved November 17, 2012, from Canada’s
Restaurant Industry: Putting Jobs and Economic Growth on the Menu:
http://www.crfa.ca/pdf/ipsos_report.pdf
Equity Billboards. (2010). Retrieved October 12, 2012, from http://www.equitybillboards.com/
Heckler Associates. (2011). Retrieved November 26, 2012, from Panera Bread:
http://hecklerassociates.com/brand-stories/panera/
Canadian Restaurant and Foodservices Association. (2012). Retrieved November 17, 2012, from Saskatchewan's
Restaurant Industry: http://www.crfa.ca/pdf/infographic_saskatchewanrestaurantindustry.pdf
City of Saskatoon. (2012). Retrieved November 17, 2012, from Population Estimate and Projection:
http://www.saskatoon.ca/DEPARTMENTS/COMMUNITY%20SERVICES/PLANNINGDEVELOPME
NT/FUTUREGROWTH/DEMOGRAPHICANDHOUSINGDATA/Pages/PopulationEstimateProjection.a
spx
Colliers Canada. (2012). Retrieved November 15, 2012, from High Profile Office:
http://www.collierscanada.com/6169
Colliers International. (2012). Retrieved September 23, 2012, from 1840 - 8th Street East:
http://skcolliers.smartviso.com/property/?id=372
Google Maps. (2012). Retrieved September 23, 2012, from 1840 8th Street East:
http://maps.google.ca/maps?hl=en&q=1840+8th+street+east&bav=on.2,or.r_gc.r_pw.r_qf.&bpcl=394685
05&biw=1680&bih=955&wrapid=tlif135473756503910&um=1&ie=UTF8&sa=X&ei=pqe_ULzbMejoiwLP9oHgCQ&ved=0CAUQ_AUoAA
Panera Bread. (2012). Retrieved September 23, 2012, from Franchisee's Initial Investment:
http://www.panerabread.com/pdf/franchise-info.pdf
Panera Bread. (2012). Retrieved September 23, 2012, from Company Overview:
http://www.panerabread.com/about/company/
Panera Bread. (2012). Retrieved December 2, 2012, from The Panera Bread Press Kit:
http://www.panerabread.com/about/press/kit/?ref=/about/press/index.php#baking
Panera Bread. (2012). Retrieved 9 2012, October, from Our History:
http://www.panerabread.com/about/company/history.php?ref=/about/company/index.php
Panera Bread Iowa. (2012). Retrieved October 11, 2012, from Bakery-Cafe Menu: http://www.paneraiowa.com/fax%20menus/BC/3202.pdf
Saskatoon Printing Explorer. (2012). Retrieved October 12, 2012, from http://saskatoon.printingexplorer.com/
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Panera Bread Business Plan
Bruno, K. (2010, October 19). Fobes. Retrieved October 14, 2012, from Panera Bread: Making Dough Despite
Tough Times: http://www.forbes.com/sites/marketshare/2010/10/19/panera-bread-making-dough-despitetough-times/
Painter, M. (2012). COMM 447 Course Manual. In Building Your Business with a Business Plan (p. 201).
Saskatoon.
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Panera Bread Business Plan
Appendix A – Panera Bread Iowa Menu (Panera Bread Iowa, 2012)
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Panera Bread Business Plan
Appendix B – Rate Card (Saskatoon Media Group, 2012)
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Appendix C
Panera Bread Financial Model (Attached)
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