Panera Bread Co.
RUNNING HEAD: Panera Bread’s Prospective Opportunity in Norway
Panera Bread’s Prospective Opportunity in Norway
Nicholas Dyer
Business Communication
11/20/2008
Prepared For
Tonya Riney
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Panera Bread Co.
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Table of Contents
Abstract ..................................................................................................................................... 3
Figure 1 ................................................................................................................................... 3
Target Demographics Within the Current Market ................................................................... 4
Target Store Locations in the U.S. .......................................................................................... 4
Target Store Locations in Norway ........................................................................................... 4
Population in the U.S. ............................................................................................................. 4
Population in Norway .............................................................................................................. 4
Income Levels in the U.S. ....................................................................................................... 5
Income Levels in Norway ........................................................................................................ 5
Target Market Education and Age Range in the U.S. .............................................................. 5
Target Market Education and Age Range in Norway ............................................................... 5
Evaluating Psychographics Within the Current Market ......................................................... 5
Presence of Fast Food Within Consumer Lifestyles in the U.S. ............................................... 6
Figure 2 ............................................................................................................................... 6
Presence of Fast Food Within Consumer Lifestyles in Norway................................................ 6
Healthy Conscious American Consumers ............................................................................... 7
Healthy Conscious Norwegian Consumers ............................................................................. 7
Baked Goods Market in the U.S .............................................................................................. 7
Baked Goods Market in Norway .............................................................................................. 7
Figure 3 ............................................................................................................................... 8
Consumer Casual Dining Trends ............................................................................................ 8
Consumer Casual Dining Trends in Norway ............................................................................ 8
Comparing Economies Between the U.S. and Norway .......................................................... 8
Strong U.S. Economy Enhances Purchases ........................................................................... 8
Strong Norwegian Economy Enhances Purchases ................................................................. 8
Conclusions and Recommendations....................................................................................... 9
Conclusions ............................................................................................................................ 9
Bread Recommendations ........................................................................................................ 9
Cuisine Recommendations ..................................................................................................... 9
References .............................................................................................................................. 10
Panera Bread Co.
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Abstract
Norwegians are among the world’s wealthiest consumers and enjoy one of the highest
standards of living in the world ranking among the world's richest countries (Country ProfileNorway, 2007). Panera Bread targets, “areas where real estate is less expensive and the
competition is less intense,” (Hoovers Inc, 2008) including regional malls, free standing street
locations, downtown business districts, and office buildings. The primary customers for Panera
Bread are those with changing lifestyles, late marriages, single-parent households, homes with
two working parents and increased working hours (Panera Bread Co. on Form 10-K, 2007). In
Norway, “domestic economic activity is, and will continue to be, the main driver of growth,
supported by high consumer confidence and strong investment spending,” (World FactbookNorway, 2008).
Figure 1
Oslo, Norway http://www.umsl.edu/services/govdocs/wofact2003/maps/no-map.gif Retrieved via
Google.com, 2008
Panera Bread Co.
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Panera Bread Company specializes in providing fresh baked goods, artisanal breads, made-toorder sandwiches, salads, soups, custom roasted coffees and other cafe beverages (Datamonitor
2007). Panera Bread usually targets locations in strip mall and regional mall locations (Reuters, 2008).
The Norwegian city of Oslo is an ideal place for the next location of Panera Bread because of the
matching demographics and psychographics of Panera’s target market.
Target Demographics Within the Current Market
Panera’s target market was found by researching the demographics and population characteristics
of certain zip codes in which Panera Bread is located. Four major states, which contained over 360
locations were selected and analyzed based off of the major cities within them containing the most
restaurants.
Target Store Locations in the U.S.
Panera Bread targets, “areas where real estate is less expensive and the competition is less
intense,” (Hoovers Inc, 2008) including regional malls, free standing street locations, downtown
business districts, and office buildings. (Panera Bread Co. on Form 10-K, 2007). Panera Bread holds a
total of 1,230 locations across the U.S. as of 2007; of those locations, Florida, Illinois, Ohio and
California have over 75 restaurants. Within these states, Panera Bread has a dominant presence in the
cities of Orlando, Cincinnati, Chicago and Sacramento (Panera Bread Co. on Form 10-K, 2007).
Panera’s target market can be found within these cities because they contain the most restaurants.
Target Store Locations in Norway
The city of Oslo is an epicenter for shopping centers and malls in Norway. The shopping malls in
the area include Oslo City, Byporten, Glassmagasinet, Steen & Strøm, Paleet and Aker Brygge and are
all within twenty minutes driving distance of one another. Of these centres, Oslo City is Norway's most
visited and contains over 100 different shops and cafés over 5 floors. Another site for shopping and
restaurants is Aker Brygge. Aker Brygge, “has become a popular area with shopping malls, apartment
buildings, offices, restaurants, a cinema, a theatre and a health-and-fitness centre.” Aker Brygge also
has a population of over 5,000 people who live and work in the area (Visit Oslo, 2008). The target area
for Panera’s market as mentioned above matches almost synonymously with Oslo’s bustling shopping
and housing scene.
Population in the U.S.
The U.S. Census Bureau (2007) estimates the population of Chicago at 2,836,658, the population
of Sacramento at 1,386,667, the population of Cincinnati at 332,480 and the population of Orlando at
227,907 people.
Population in Norway
The population density of Norway is an estimated 14.5 people/km2 (Euromonitor on Norway
Factfile, 2007) and has a total population of 4,737,171 people (Europa World Online, 2008). While
Norway has the lowest population density in Western Europe, 50% of Norway’s population resides in
and around the city of Oslo (Country Profile, 2006), which has a population of 458,364 (Brinkhoff, 2007)
comparable to the populations of Cincinnati and Orlando; two of the top four cities for Panera Bread.
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Income Levels in the U.S.
Research conducted by MyBestSegments (2007) analyzed the top three segments for Panera’s
target market in the U.S. Of these segments, the members’ range from upscale to midscale income.
According to Brown and Washton (2007), affluent households are defined as those with an income of
US $75,000 or more. The top reoccurring segment, “Fast-Track Families” are defined as affluent with
an average income of $75,814 (MyBestSegments, 2007). A report within the U.S. Census Bureau
found that 20.9 million households are affluent accounting for approximately 18% of all U.S. households
(Brown and Washton, 2007). Of the other top two segments acquired from MyBestSegments (2007),
“Home Sweet Homes” and “Young Influential’s” together make an average income of $57,050.
Income Levels in Norway
In Norway, households with disposable incomes of over US$65,000 accounted for 22% of the total
households (Brown and Washton, 2007). The average mean projected for households in Norway for
2015 is $56,854 (Euromonitor on Consumer Lifestyles-Norway, 2006), which is very similar to the
“Home Sweet Homes” and “Young Influential’s” average income. For most household groups, the
income level is higher in Oslo than it is in the rest of the country (Statistics Norway, 2008). Consumer
Lifestyles- Norway (2006) reports that 14.89% of all households in Norway are considered affluent
households with a disposable income of over $75,000 and 32.81% of all households have a disposable
income of over $55,000.
Target Market Education and Age Range in the U.S.
Although education levels within Panera’s target market is somewhat broad, information from
(MyBestSegments, 2007) found that most individuals are college graduates ranging from age groups of
25-55.
Target Market Education and Age Range in Norway
The standard of education in Norway is increasingly high with Oslo holding the highest proportion of
private pupils in 2006 (Euromonitor on Norway-Country Factfile, 2007). The Norwegian population is
highly educated compared to other countries. According to data by the Organization for Economic
Cooperation and Development, “95% of the population aged 25-34 years had completed at least upper
secondary education, and 40% had completed tertiary education in 2003” (Euromonitor on Cosumer
Lifestyles-Norway, 2006).
Evaluating Psychographics Within the Current Market
The primary customers for Panera Bread are those with changing lifestyles, late marriages, singleparent households, homes with two working parents and increased working hours (Panera Bread Co.
on Form 10-K, 2007).
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Presence of Fast Food Within Consumer Lifestyles in the U.S.
“Panera Bread Co is positioned somewhere between fast food and casual dining, and, as a result,
the company competes for customers within both” (Euromonitor on Panera Bread-Consumer Food
Service, 2008). According to a report on On-The-Go Eating in the U.S. (2007), the fresh food at Panera
Bread costs more and is aimed at higher income brackets. “People will pay a premium for this food,”
said Sam Rovit, the leader of Bain & Co.’s foodservice group, “They [Panera Bread] are trading up from
the fast food experience. That’s the sweet spot in the market that Panera is absolutely taking
advantage of.” (St. Louis Dispatch, 2003) Furthemore, data from MyBestSegments (2007) reports that
“Home Sweet Homes” and “Young Influential’s” eat at either casual dining restaurants or fast food
restaurants such as Quiznos; one of Panera’s top competitors in sales increases between 2006-2007
(LaFave, 2008).
Keeping up with busy lifestyles, the report on the Affluent Market in the U.S. states that although it
seems unusual for the affluent to eat fast food, they are more likely to say that fast food fits their busy
lifestyle and are just as likely as any other consumer to frequently visit fast food restaurants as shown
in the graph below. The graph below is extremely pertinent because although Panera has a wide target
market for customers of different income, as noted earlier, affluent customers make up 18% of U.S.
households (Brown and Washton, 2007) and 15% of Norwegian households (Consumer LifestylesNorway, 2006).
Figure 2
Brown, R., & Washton, R. (2007) The Affluent Market in the U.S. Nov. 14, 2008, from MR.com
Presence of Fast Food Within Consumer Lifestyles in Norway
Due to rising disposable incomes, consumers were able to eat out more often. In Norway, fast food
accounted for the largest share of expenditure on eating out at 38% in 2005 and, “in big cities such as
Oslo or Bergen, where there is more of a concentration of people, there was an increase in the number
restaurants, cafés and bars.” Norwegian lifestyles are becoming more hectic and it is becoming more
common for people to go to cafés or restaurants at lunchtime and order take out from them for dinner
(Euromonitor on Consumer Lifestyles-Norway, 2006). To continue, a survey on Norway Profit
Foodservice Sector Segmentation found that restaurants, cafes and takeaways accounted for 61.7% of
all foodservice industries (Datamonitor on Profit Foodservice in Norway, 2008).
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Healthy Conscious American Consumers
Panera Bread is unlike most fast food restaurants as it provides, “premium ingredients, high quality
service and a pleasant dining environment” (Euromonitor on Panera Bread- Consumer Food Service,
2008). As a result of changing consumer eating habits, Panera Bread Co. has significantly reduced
trans fat in its products and incorporated its new children’s menu, Panera Kids, which offers organic
food products including fruits and vegetables (Datamonitor on Panera Bread Company Profile, 2007).
Results from QSR’s Consumer Survey (2007) reported that there is a growing market for healthier fast
food and that Panera Bread is ranked second in offering the healthiest menu choices.
Healthy Conscious Norwegian Consumers
According to an ACNielsen 2006 survey, 60% of Norwegians consumers reported that they needed
to eat more fruit and vegetables on a daily basis (Euromonitor on Consumer Lifestyles- Norway, 2006).
“Healthier eating habits and the growing consumer desire for convenience were the major market
trends for 2008.” To continue, foodservice operators updated their menus to include healthier food
items that in turn benefited the take out and fast food sectors drastically. (Euromonitor on Consumer
Foodservice in Norway, 2008)
Baked Goods Market in the U.S
Panera Bread Co. specializes in artisanal breads made with fresh natural ingredients
(Euromonitor on Panera Bread Co.-Consumer Foodservice, 2008). An industry report on Bread
Production in the U.S. (2008) found that the quality of bread products relates directly to its taste. In
relation to the freshness of the foods, retail bakeries and stores usually out-compete supermarket and
convenience stores. According to Simmons Market Research Bureau (2003), 99% of the population
consumed some type of bread in 2003 and 17% of the population consumed three or more loaves of
bread in a week. Based on data gleaned from the Information Resources, Inc., Packaged Facts
estimated the retail market for fresh bread, rolls and bagels at $12 billion in 2003 (Netscribes, 2004).
Baked Goods Market in Norway
Norwegian’s are among Europe’s most passionate consumers of bread and rolls with per capita
consumption well above average (Datamonitor, 2003). According to Euromonitor’s Country Sector
Briefing on Baked Goods- Norway (2008), “As more specialty bakeries are established in Norway, the
popularity of unpackaged/artisanal baked goods is growing.” In 2008, current value of baked goods in
Norway grew by 6% from 2007 to reach $1.17 billion. Figure 2 shows the sales of unpackaged/artisanal
bread in Norway from 2003 to 2008. Since 2003, the sales of artisanal bread have steadily increased
approximately 23.5% going from a value of $124.73 million to a value of $154.03 million (Euromonitor
on Baked Goods-Norway, 2008).
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Figure 3
Euromonitor. (2008). Baked Goods- Norway. Retrieved Oct. 27, 2008, from GMID.
Consumer Casual Dining Trends
Panera Bread’s appeal is within the ambience. The company positions itself as a gathering place
rather than “just another place where customers can eat and go” (Datamonitor on Panera Bread
Company, 2007). In addition, coffee consumption is popular among consumers who visit Panera for
more than just food. The U.S. Market for Coffee (2006) ranks Panera Bread in fourth place for system
wide sales in coffee in 2004 with sales of $1,241.2 million. Panera Bread offers a variety of gourmet
coffees and other cafe beverages on their menu (Hoovers Inc., 2008).
Consumer Casual Dining Trends in Norway
According to Consumer Lifestyles-Norway (2006), people are going out more often to restaurants
and cafés during the day and weekends. Getting together with friends in a café to hang out and chat is
becoming more popular. Moreover, coffee is the most consumed hot drink in Norway. Trends show that
consumers are switching from low-end coffee to gourmet coffee. Panera Bread provides gourmet
coffee beverages and a place to sit and hang out which is exactly what Norwegian consumers like to
do.
Comparing Economies Between the U.S. and Norway
Strong U.S. Economy Enhances Purchases
The United States’ GDP per capita is US$ 45,800 (World Factbook- United States, 2008) and has
an unemployment rate of 4.6%. The U.S. is a market-based economy with the world’s largest GDP
(purchasing power parity) of approximately US $12.98 trillion. According to the United States Country
Profile, consumer expenditure has been increasing and is projected to have an increasing trend in the
future (World Factbook- United States, 2008).
Strong Norwegian Economy Enhances Purchases
Norwegians are among the world’s wealthiest consumers (Country Profile-Norway, 2007), and
enjoy one of the highest standards of living in the world ranking among the world's richest countries in
terms of GDP per capita (Country Watch Inc., 2007) at US$ 55,600 (Bureau of European and Eurasian
Affairs, 2008). Unemployment rate in Norway fell substantially in 2006 (Country Watch Inc., 2007)
leading to an all time low of 2.5%. “Domestic economic activity is, and will continue to be, the main
driver of growth, supported by high consumer confidence and strong investment spending,” (World
Factbook- Norway, 2008).
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Conclusions and Recommendations
Conclusions
Norway’s target market demographics and psychographics correspond to Panera’s ideal target
market making it a viable business opportunity. Healthy conscious consumers will feel comfortable with
Panera’s premium ingredients and healthy menu choices. Norway’s growing economy and abundance
of wealthy consumers ascertains to Panera’s success as it already holds a dominant presence in the
U.S. With Panera ‘s target market being present in Norway, and Norway having an established market
for baked goods and fast food, expansion to Oslo will be a key to Panera’s future success.
Bread Recommendations
In order to efficiently tap into Norway’s food market, cultural recommendations must be considered.
A survey on Norwegian Bread and Rolls Market Segmentation found that Artisanal products accounted
for only 28% of the market where as industrial producers accounted for nearly 40% of the entire bread
market. (Datamonitor, 2003). Industry sources report that bread in Norway is based on the percentage
of whole grain that it contains. Wholegrain bread is the most popular bread among Norwegians, making
up 31% of the total value of packaged/industrial bread in 2008. Other popular breads include wholewheat bread with a 28% share and multi grain bread with a 12% share. Additionally, many breads are
also made from rye flour (Euromonitor on Baked Goods-Norway, 2008).
While Panera Bread has whole grain and honey wheat bread, they mainly focus on specialty breads
such as focaccia, three cheese, asiago cheese and ciabatta. Moreover, Panera’s whole grain and
honey wheat breads contain enriched flour, which is a genetically modified preservative that adds
nutrients to the bread (Panera Bread Co., 2008). Norwegians in general perceive wholegrain bread to
be a healthy choice and define wholegrain bread as bread with a minimum of 50% of wholegrain and
wholegrain flour (Euromonitor on Baked Goods-Norway, 2008). In order for Panera Bread to be
successful in Norway, Panera Bread needs to add healthier bread options and wholegrain products to
their menu.
Cuisine Recommendations
Traditional Norwegian dishes consist of meat, fish, potatoes and vegetables. During lunch,
Norwegians usually eat ‘matpakke,’ which is an open sandwich containing ham, fish or vegetables.
Also, potatoes have the highest level of consumption among fresh foods at nearly 56kg per capita
(Euromonitor on Consumer Lifestyles-Norway, 2006). Panera Bread does not have fish or potato
products on their menu. To increase revenue and popularity, Panera Bread should incorporate potatoes
as a side dish option with sandwiches and should also make a fish sandwich to correlate with Norway’s
traditional cuisine.
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References
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