Strategic Audit of
Panera Bread Company
Case 29
Strategic Management MGMT 436
Group 5
Current Situation (John L.)
A. Current Performance
Revenues between 2000 and 2003 rose sharply due to new unit
expansion but masked a slowing year-to-year growth rate. New
strategies and initiatives must be taken in order to continue growth.
• Revenues rose from $350.8 million in 2000 to $977.1 million in 2003,
fueled by new unit expansion
• In 2000, comparable sales and annualized unit volumes (AUVs)
increased 9.1% and 12.0% respectively. In 2003, those same figures
increased only 0.2% and 0.5% reflecting slowed growth.
Current Situation (John L.)
B. Strategic Posture
Mission
• Mission Statement "A Loaf of Bread in Every Arm"
(www.panerabread.com/about/company).
Objectives
Provide the following fast casual food service qualities
• The casual atmosphere of coffee shops
• The quality food of sandwich shops
• The quick service of fast food chains
Strategies
Specialize in the following five consumer dining needs
•
•
•
•
•
Breakfast
Lunch
Daytime "chill-out"
Lunch in the evening
Take-home bread
Strategic Managers (Travis)
A. Board of Directors
•
•
•
•
•
•
•
•
Ronald M. Shaich (only internal member)
Larry J. Franklin
Fred K. Foulkes
Domenic Colasacco
Thomas E. Lynch
George E. Kane
All 6 own class A stocks
4 of 6 directors were brought on between 2000-2003
Strategic Managers (Travis)
B. Top Management
•
•
•
•
Brought outside key positions in other companies like real
estate, financial investments, other food chains, and even
customer experience.
Ages 38 to 51 helps with different generations of views.
Several combined years of experience.
Top management seems to be well rounded.
External Environment (J.W.)
A. Natural Environment
•
•
Climate, crops such as wheat, grain, sugar cane, fruits and
vegetables are affected by adverse weather conditions such
as droughts, hurricanes, tornadoes, and excessive rain
resulting in increased ingredient costs driving up product
costs negatively affecting company profits
Energy costs, rising gas prices will affect transportation and
shipping costs while increasing electrical charges will also
negatively affect company profits.
External Environment (J.W.)
• Societal Environment
•
Economic
•
•
•
Technological
•
•
•
Emerging technology Free Wi-Fi (o)
Real time inventory tracking thru robust data network (o)
Political-Legal
•
•
•
Double digit growth with fast casual restaurants matches
company objective (o)
Competition with other specialty restaurants as consumers
move to eat out more (t)
Adhere to local government regulations, and taxes (t)
Monitor all products for health and safety issues (t)
Sociocultural
•
Consumers are eating healthier (o)
External Environment (J.W.)
B. Societal Environment
STEEP
Category
ISSUE
Threat/Opportunity
Ranking
Economic
Real Estate costs
Threat
6
Competition with other specialty foods
and casual dining restaurants
Threat
1
Double digit growth with fast casual
Opportunity
2
Expansion into foreign markets
Opportunity
5
Franchises
Opportunity
4
Joint Venture Stores
Opportunity
4
Expansion into other US locations
Opportunity
3
WIFI
Opportunity
1
In-store info system
Opportunity
2
Political-Legal
None
None
Sociocultural
Move to Healthy foods
Opportunity
Technological
1
EFAS Table (J.W.)
External Factors
WEIGHT
RATING
WEIGHTED SCORE
COMMENTS
Double digit growth with fast casual
0.2
5
1
opened average 23 new stores
each year
Expansion into foreign markets
0.01
0
0
Franchises
Joint Venture Stores
0.2
0.1
4
2
0.8
0.2
Free WIFI
In-store info system
Consumer move to Healthy foods
0.03
0.01
0.02
4
5
4
0.12
0.05
0.08
No expansion in foreign markets
opened average 83 new stores
each year
no data
Rated best in tech mags for free
offering
accurate inventory tracker
main product offering
Real Estate costs
Competition with other specialty foods and casual
dining restaurants
0.02
4
0.08
long term leases selective
locations
0.1
4
0.4
hitting the mark with consumers
litigation for product defects
0.01
3
0.03
Quality product no negative
outcomes at this time
Opportunities
Threats
Franchise failures
0.1
3
0.3
concern could have negative
inpact on image and financial
burden on buyback
Food costs rise
0.1
4
0.4
questionable variable factor
Distribution costs rise
0.1
4
0.4
questionable variable factor
Total Scores
1
3.86
External Environment (Nick)
C. Task Environment
•
•
•
•
•
•
•
•
•
1. North American market mature and global market maturing - consumers demand alternative
to the typical fast food agenda as well as different type of dining.
2. Industry is expanding globally as North American firms continue to expand
internationally
3. Restaurant continues to grow in pleasing the customer with more of an experience than
typical fast food and consumer desire a different style food and dining
4. Rivalry High. Chipotle, Einstein Brothers , Starbucks are all major companies in competition
as well as fast food chains and other fast casual chains.
5. Buyers Power Low. The menu and processes of creating the food is ever changing
6. Power of Other Stakeholders Medium. Only on member of the board was internal the rest
were outside the company they received a onetime grant for stock options.
7. Distrubtors Power Low. Owned their own facilities for making all there fresh goods and has
only three main suppliers
8. Threat of Substitutes Low. Due to fast casual dining experience.
9. Entry Barriers Low. New entrants unexpected due to dining experience.
Internal Environment (John T.)
A. Corporate Structure
•
•
•
•
Realized the quality of employees is critical to a successful
and unique company. (S)
Invested in training programs to ensure quality of its
operations. (S)
Provides employees with stock ownership opportunities. (S)
Rewards well managed and successfully operated locations
with bonuses for managers as well as ownership of minority
interest in a bakery-cafe. (S)
Internal Environment (Shavera)
B. Corporate Culture
•
•
•
•
•
The essential ingredient: Panera Care. Warmth and caring are
the fundamentals of Panera Bread culture. (S)
Corporate culture is based on founder Ronald Shaichs’
commitment to doing the best bread in America; quality,
tradition, specialization, leadership, caring for employees &
family, customers, and the community. (S)
Good employee relations with high retention rates. (S)
One of the top ten fast food chains rated “excellent” for Quick
Track studies according to Sandleman & Associates. (S)
All 1,453 Company owned and franchise-operated bakery
cafes in 40 states and Ontario, Canada adhere to Panera Bread
Culture. (S)
IFAS Table
Internal Factors
Weight
Rating
0.2
5
Weighted
Score
Comments
Strengths
Great Corporate Culture
1
Internal Integration and Team cohesiveness.
High Quality Food & Performance
0.25
4.5
1.13
Food prepared with only fresh ingredients. Friendly Sales
Associates.
Experienced Managers/Leadership
0.15
3.5
0.53
Employee & customer driven. Participative & Achievement
oriented Leadership.
Good Employee Relations
0.2
4
0.8
Value Added Services for Customers
0.2
5
1
Total Scores
1
4.46
High rentention rates & employee satisfaction. Great benefits and
career advancement opportunities.
Warm comfortable atmosphere, free WiFi & Newspapers.
Backup Slides for Natural
Environment
• WASHINGTON, D.C.—September 29, 2003
• Falling crop production resulting from extreme weather events, diseases and pest
• infestations will increasingly be fueled by global warming and create an uncertain
future
• for U.S. agricultural production and the nation's food supplies, according to leading
• experts gathered here today at a Harvard Medical School Center for Health and the
• Global Environment briefing, made possible by the Civil Society Institute, the Energy
• Foundation and the National Environmental Trust. A news media event was followed
by
• a congressional staff briefing sponsored by Sen. Harkin (D-IA), Sen. Brownback (R-KS),
• Sen. Bill Nelson (D-NE) and Sen. Lugar (R-IN).
http://www.ers.usda.gov/Publications/
WRS0801/WRS0801.pdf