Panera Bread Company: Still Rising Fortunes

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The supply chain also limits international growth. Panera only operate in the US and Canada. To make the move globally, Panera would need to open fresh dough facilities and enough stores in a delivery distance that maximizes the facilities production capability.

To ensure the supply chain method used to provide fresh dough to Panera bakeries and cafes does not prevent growth there are several recommendations. If there are some limitations on locations that meet the criteria for distance from fresh dough facilities, then Panera could outsource dough production. They could also equip newly built or renovated buildings with the equipment to prepare dough in-house. This process would be especially useful when considering an international location that is difficult to open a fresh dough facility or delivery of the dough.

Finding of Fact 2: There are more franchises than company owned bakery cafés, which could risk the positives image of Panera.

Panera used franchising as a strategy to expand, as a result there are 795 franchises compared to 585 company owned bakery cafes in the US and in Canada and has plans to open 240 more franchises. Panera franchise strategy for growth is to not allow individual franchises to open, but through Area Development Agreement (ADA) agree to open in groups of 15 within a certain 4- 6-year time frame. To even be considered potential franchise developers need to have experience and a net worth of more than 7 million with a liquid of 3 million or more. Panera also has brand standards whereas all franchises must stick to the mission by providing the same standards as company owned bakery café (860).

Having so many franchises may dilute the vision which poses a problem because the mission may get loss. Part of the Panera’s blueprint is “Concept Essence”, where one of the mission is to have a warm friendly environment, yes that can be accomplished through décor but having the employees to enhance the desired environment goes hand in hand. Company owned bakery café HR practices strategically select employees that enhance the atmosphere Panera seeks, whereas franchised may not always follow the same strategy. Company owned bakery implemented a Joint Venture Program among managers at 50% of its bakery café in 2009 (863). If cash flows increased at the bakery they managed, then they were given a bonus. The idea behind this was to motivate mangers to build effective associate for greater customer experience resulting in increased sales.

It is recommended franchises owned bakery café implement a Joint Venture Program or other motivational programs to increase the customer experience. Due to increased transactions and increased check growth company owned sales increased 10% from 2009 to 2010, while franchised owned only increased 9.2% during the same time frame (864). Having warm and knowledgeable associates is key to the strategy is to have a welcoming environment that keeps loyal customers and free word of mouth marketing.

Finding of Fact 3: Providing quality ingredients may cause prices to exceed what targeted demographics are willing to pay per meal.

Panera strategically targets a demographic group that has disposable income. The demographics that is targeted is 25 to 40-year-old with an income of 40,000 to 100,000 annually (861). This consumer base can afford and are willing to pay an average $8.50 per meal at Panera. Panera thrives itself on providing fresh ingredients and high quality food that attracts people who are willing to pay extra for quality. Even during economic downturn this demographic group was not willing to compromise quality food and Panera was able to grow through its consumer base.

Providing fresh quality ingredients can cause the prices of certain menu items to reach a limit that consumers are not willing to pay. If Panera were to not provide items that does not reach customers expectations due to cost, then they may lose customers or if the price exceeds their price range then it may deter customers and give them a bad reputation. They have done an effective job of staying ahead of price inflation by increasing the menu price of items affected, but as their price increases the check and transactions may decrease.

It is recommended Panera do periodic environmental scans to forecast and better prepare for price changes on food, supplies, and fuel prices. Having strong strategic alliance with suppliers and farms is an advantage. Entering in a value chain partnership with key supplier will help Panera foresee and prepare for changes and will have greater purchasing power (179).

Work Cited

Wheelen, Thomas L., J. David Hunger, Alan N. Hoffman, and Charles E. Bamford. Concepts in Strategic Management and Business Policy: Globalization, Innovation, and Sustainability. 14th ed. Upper Saddle, NJ: Pearson Prentice Hall, 2015. Print.