Panera Bread Company Analysis
Panera Bread Company Analysis
Case # 5 Panera Bread Company
1. What is Panera Breads strategy? Which of the four generic competitive strategies discussed
in Chapter 3 most closely fit the competitive approach that Panera Bread is taking? What
specific kind of competitive advantage is Panera Bread trying to achieve?
Driving concept: to provide a premium specialty bakery and café experience to urban workers and suburban dwellers.
Generic: Broad differentiation strategy.
Competitive advantage: striving to build a competitive advantage based on the triple combination of Product, Environment, and Great Service (PEGS).
2. What does a SWOT analysis of Panera Bread reveal about the overall attractiveness of its situation?
Strengths:
Attractive & appealing menu
Bread-baking expertise (a core competence) – artisan breads are Paneras signature product.
Nationwide leader in the bakery-café segment
High ratings in customer satisfaction studies
Good brand name
Fresh dough operations & sales to franchised stores
Initial success in catering
Good franchisees – higher sales in franchised stores compared to company-owned
Financial strength of the company – able to grow without taking on too much debt
Weaknesses:
A less well-known brand name than some rivals (Applebees, Starbucks)
Sales at franchised stores higher than company-owned stores – Why?
External Threats
Rivals begin to imitate menu offerings/or dining ambience – easy to copy?
Competition from other chains
Saturate the market – will it become harder to find attractive locations for new stores and slow companys growth
Opportunities
Open more outlets – untapped growth potential in a number of suburban markets (see Exhibit 3)
International expansion
3. What is your appraisal of Panera Breads financial performance based on the data in case
Exhibits 1, 2 and 8? How well is the company doing financially? Use the financial ratios in
Table 5.1 of Chapter 5 as a guide in doing the calculations needed to arrive at an analysis based
answer to your assessment of Paneras recent financial performance.
Strong CAGR in a number of important areas – total revenues, royalties, fresh dough sales, net income and EPS.
Declines in G & A expense a desirable trend – some erosion in operating profit margins bears watching (not a desirable trend). Declines in liquidity (as measured by current ratio and working capital numbers) and a fluctuating but still acceptable ROE also warrant attention.
Overall, the data indicate that Panera is growing quite rapidly and is performing well, although not spectacularly. While there are some areas of concern, the areas of weakness as of 2006 are from alarming.
CAGR 2006 2005
Total Revenues
828,971
640,422
362,121
265,933
212,645
Franchise royalties & fees
61,531
54,309
44,449