Panera Bread Company - Pestel and Swot Analysis

Executive Summary

Panera Bread Company is a leader in the fast-casual dining segment with over 1500 locations in the U.S., Canada, and the District of Columbia. Panera offers consumers a bakery-cafe experience that prizes itself on customer service, quality, and comfort. Panera has experienced amazing growth in recent years increasing revenues from 282,225 in 2002 to 1,822,032 in 2011. The challenge the company now faces is keeping a competitive advantage in an extremely competitive market place.

In order for Panera to have continued growth it should take these initiatives in the coming years. Panera should increase their focus on catering to expand the restaurant’s brand. The company should enter into new untapped markets. It should increase its advertising budget and try to make their restaurant become a more viable dinner option.

Panera should continue to expand their catering division. Catering offers a source of income from a different market without changing the brand of the company in any way. Since they have already entered into work places and schools, advertising Panera as a healthy option for sporting events could open up a whole new segment of the catering business.

Panera should continue to open new cafes in untapped markets as well as utilizing franchising options to continue expansion of the company. The food and drink sales in all types of food service are project to reach a record $632 billion in 2012, up 3.5% from 2011 and up from $379 billion in 2000 showing a continual growth pattern. This offers Panera Bread great opportunity. To do this they should use their proprietary software to seek out profitable locations for new restaurants nationally and internationally and start to build. Next Panera needs to utilize its established network of franchisees as well as find new qualified owners to help speed up the expansion process.

Panera needs to heighten its promotional strategy and increase its advertising budget from 1% to 3%-5% in order to keep up with industry standards but keep the advertisements subtle. We know that customers are prone to give newly opened eating establishments a try. So when entering a new market Panera Bread needs to advertise in local groceries such as Publix deli or Target so as to seek out its key demographic. This will get new traffic in the door and once the new store has established a customer base it can count on its excellent service and atmosphere to get customers to advertise using word of mouth.

Panera Bread should promote itself as a dinner choice and implement new menu choices to attract people to try it out. These menu items should be large enough to fill you up but at the same time still be relatively healthy for you so they don’t conflict with their brand image. Adding larger but healthy menu items should dinner time customers and add profit to the balance sheet.

Key success factors that Panera has implemented in the past include being able to adapt to changing demand from consumers, having a breadth of menu items to choose from, and having excellent customer service. Adapting to the customers dinner needs will include broadening the menu to increase traffic during dinner times. Customer service can be used when increasing advertising to not overwhelm new costumers when trying to reach them. Using things Panera is already good will help the continued growing process to move smoothly.

Industry and Competitive Analysis

Dominant Economic Characteristics and Driving Forces

Total food-and-drink sales at all types of foodservice locations in the United States were projected to reach a record $632 billion in 2012, up 3.5 percent over 2011 and up from $379 billion in 2000 and $239 billion in 1990. This expresses a huge rise in the food industry over the last 20 years. While still 76% of consumers ate at home on a typical day about 130 million were foodservice patrons. Restaurants were the nations second largest private employer in 2012 with about 12.9 million employees. With this huge growth industry members pursued differentiation strategies to set themselves apart from other restaurants and gain a competitive advantage. Most restaurants were quick to adapt to the healthier eating preferences that came along in recent years and added low carb items to their menu. From all of this growth and change came a new type of restaurant called fast casual. Panera was one of the first to implement this type of restaurant and has been doing very well it ever since. An important aspect of Panera Bread’s business is its product niche—artisan fast food, also termed “fast casual”. This niche protects the company from direct competition in the fast food industry as well as the casual dine-in industry. It targets consumers who seek meals of higher quality than those offered by traditional fast food chains, yet do not have the time to dine in or have a sit-down meal in a restaurant. Both traditional fast food and dine in restaurants are beginning to respond to the success of fast casual. Fast food chains such as McDonald's and Burger King are beginning to offer premium salads and sandwiches, and have created campaigns that emphasize the nutritional value of their food. Meanwhile, dine in restaurants have instituted carryout programs, fast-lunch guarantees, and lower prices, all measures to counter the concept of fast casual. If these trends continue, Panera Bread can no longer enjoy the safety of the product niche that it has occupied, and will face greater competition in terms of pricing and food quality. Panera bread responds to fast food restaurants by offering healthy, higher quality food.

PESTEL

No political forces

The economic Condition

The Great recession of 2008 made it difficult for Panera Bread to reach its very ambitious expansion rate. Soon after the company got back on track and growth increased.

Sociocultural forces

Due to the growing interest in healthier food items, Panera introduced whole grain breads in 2004 and switched to all natural antibiotic chicken in all of its sandwiches and salads that contained chicken. They also started using unbleached flour in their bread and added yogurt granola- fruit parfaits as well as reduced fat spreads for bagels and fruit smoothies made with fresh ingredients. To further awareness about their foods nutritional value they put up detailed information about individual products and added a nutritional calculator that would show the nutritional content of an entire meal. (maybe say something about higher incomes wanting healthier foods)

Technological forces

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