The document analyzes Panera Bread Company's strategy for growth. It provides an overview of the company's history and external environment. An analysis of the competitive industry landscape shows high rivalry and threat of substitutes. Panera's internal strengths include its brand loyalty and menu options. However, its aggressive growth reliance on new franchise partners poses risks. The SWOT analysis identifies opportunities in new markets but threats from multiple competitors. Recommendations include acquiring other brands or expanding internationally to support Panera's growth targets.

1. Panera Bread Company By: Dan McLindon Kyle McDaniel Jeremy Smiley Tom Anderson Ray Moorman

2. Contents The Key Question Panera Bread Company History/Overview External Environment (PEST) Market Overview (Demand) Industry Overview (Supply) Competitive Landscape Internal Analysis SWOT Analysis Recommendations

3. Key Question for Panera Bread Is the plan of expansion and reliance on franchise partners the right strategy for Panera Bread to grow at the rate they want to?

4. Contents The Key Question Panera Bread Company History/Overview External Environment (PEST) Market Overview (Demand) Industry Overview (Supply) Competitive Landscape Internal Analysis SWOT Analysis Recommendations

5. Panera Bread Company Overview Origin 1981 Au Bon Pain Company founded by Louis Kane and Ron Shaich. Growth on US East Coast & Internationally 1980’s and 90’s – stores opened in malls, airports, shopping centers. Acquisition of Saint Louis Bread Co. 1993 – mgt team studied fast food restaurants which led to overhaul of Saint Louis Bread Companies Sold Au Bon Pain bakery-café division 1999 – sold for $73m to ABP Corp. Renamed to Panera Bread Company

6. Panera Bread Company Overview Strategic Intent “ Make great bread broadly available to consumers across the United States” 2003 - TNS Intersearch Study Scored the highest level of customer loyalty among QSR’s 2004 - J.D. Power & Associates Restaurant Satisfaction Study of 55,000 Customers Ranked Panera highest among QSR’s in Midwest & NE in all categories Included environment, meal, service, and cost 2005 – Sandleman & Associates National Customer Satisfaction Survey of 62,000 customers For 4 th straight year, Panera was the best among 121 competitors Also won “Best of” awards in nearly every market across 36 states

7. Contents The Key Question Panera Bread Company History/Overview External Environment (PEST) Market Overview (Demand) Industry Overview (Supply) Competitive Landscape Internal Analysis SWOT Analysis Recommendations

8. Industry Overview (Supply) Porter’s five forces: Rivalry among existing competitors Threat of substitute products HIGH Bargaining power of buyers HIGH Threat of new entrants LOW Bargaining power of suppliers LOW

9. Porter’s Five Forces Factor Analysis Impact Threat of substitute products Substitute products are easily accessible (eat at home, convenient stores) Economic downturn limits disposable income – substitute products become more appealing. HIGH Bargaining power of suppliers Panera has multiple options to source each ingredient they use. LOW Bargaining power of buyers Economic downturn’s affect on consumer eating behaviors – cheaper meal at home. Over 21 direct competitors/alternative eating establishments of Panera. HIGH Competitive rivalry Differentiation and constant menu changes to appeal to consumer preferences. Many competitors in industry. INTENSE Threat of new entrants High investment threshold to enter market LOW

10. Industry Overview (Supply) Factor Ranking (1-5) Threat of substitute products Full range of alternatives; eat at home, fast-food, formal dining out Substitute products offer lower prices and convenience. The majority of meals are eaten at home – 76% 5 Bargaining power of suppliers Panera is not limited by sourcing from a single supplier Several suppliers are available for each ingredient 1 Bargaining power of buyers Switching costs are non-existent for consumers with varied options 4

11. Industry Overview (Supply) Factor Ranking (1-5) Rivalry among existing competitors Consumer preferences are constantly being targeted and adapted to by competitors Competition is competing for $1 bn in daily sales 5 Threat of new entrants Substitute products offer lower prices and convenience. The majority of meals are eaten at home – 76% 1

12. Contents The Key Question Panera Bread Company History/Overview External Environment (PEST) Market Overview (Demand) Industry Overview (Supply) Competitive Landscape Internal Analysis SWOT Analysis Recommendations

13. Internal Analysis – Core Competencies Red – Easy for competitors to develop Yellow – Possible for competitors to develop Green – Very difficult for competitors to develop Core Competency Description Diverse Menu Lots of variety, constantly experimenting Options for all meals and times of day High quality food at reasonable price Strong Brand/Customer Loyalty JD Power and Associates satisfaction award for QSR in Midwest and Northeast “ Best Of” awards in nearly all mkts in 36 states Strong Relationship with Existing Franchise Partners Employee training and certifications Assistance with site selection and marketing High satisfaction with concept and support received Identifying Where to Locate New Stores Proprietary software built to analyze data on attractiveness of new locations Find attractive places to serve urban and suburban populations

14. Internal Analysis – Growth Initiative Expanding number of locations at a rapid pace Heavy reliance on franchise partners Targeting 17% increase per year in number of locations by 2010 No international locations but considering expansion into Canada Is this aggressive growth strategy prudent in the highly competitive and mature QSR industry? Year Number of new locations Total Locations Percent Increase 1993 0 20 N/A 1999 160 180 2006 155 1027 2010 973 2000

15. Internal Analysis - Franchises Strong franchise network with strict requirements to entry New partners to commit to 15 cafes over 6 years Average startup cost $1 million to $2.25 million per location ($15 million to $33.75 million for 15) Majority of franchise partner financed by debt (highly leveraged) Can Panera find enough new franchise partners to meet growth targets? Strong franchise partners are critical to preserve consistent quality and atmosphere at Panera restaurants Bad partner can damage strong customer loyalty Panera has built Panera does have out as it can elect to buy out any franchisee for a predetermined price

16. Contents The Key Question Panera Bread Company History/Overview External Environment (PEST) Market Overview (Demand) Industry Overview (Supply) Competitive Landscape Internal Analysis SWOT Analysis Recommendations

17. SWOT Analysis for Panera Bread Strengths Strong/Loyal Customer Base in NE & Midwest Menu Options/ Variety Able to provide healthy options to customers Analysis of market Weaknesses No presence in large markets (south & west) Want customers to “discover” Panera Decentralized Distribution – each café placed orders Rely on franchise partners as key to growth – very tough standards Opportunities 130m consumers daily Threats Multiple types of competition – fast food, sit down restaurant, eat at home, QSR, fast casual Differentiation?? What makes Panera’s different than competitors 76% of meals eaten at home

18. Contents The Key Question Panera Bread Company History/Overview External Environment (PEST) Market Overview (Demand) Industry Overview (Supply) Competitive Landscape Internal Analysis SWOT Analysis Recommendations

19. Recommendations Work with franchisees to acquire Corner Bakery Café??? (Franchisee locations are more profitable and provide higher ROI) Expedite expansion in Canada or International (Europe)??