Panera Bread Company (2010) - Still Rising Fortunes?

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There are some negative aspects to this option that have to be explored. The main issue that would have to be examined is the increased cost. Going full service entails hiring additional staff to serve customers. The additional cost would be minimal because the current layout of the restaurant is setup very similar to a full service restaurant. There would have to be some structural changes made at the select locations transforming into this semi-full service environment.

Lastly, another issue that has to be considered with going semi-full service is the additional competition. There are lists of full service restaurants that Panera would have to compete with, which may have a negative impact on sales. Their existing customer base may also not be very accepting of a full service option and this may ultimately result in Panera losing revenue. Hence, testing the idea should be a primary objective to see if the consumer would embrace the change.

Addendum to your question: “Should this recommendation primarily focus on their poor dinner sales?” Depending on a continuous evaluation of sales data and customer feedback this recommendation is primarily intended toward the dinner hours with regard to being waited on and having a printed menu offered at a table for patrons to see those slightly higher priced items generally offered during dinner hours. The restaurant chain Bentos has semi-full service which starts at 5 pm where waiters are deployed to serve seated customers. Service prior to that is held strictly at the cash register where the customer orders, pays, given a number, and their order is brought to them. Lastly, because Americans are gravitating towards healthier items, the self-serve salad bar should be available during the lunch hours as well as the dinner hours.

Fact #3

Realizing the level of advertising expenses are for every big company in the food industry, Panera’s advertising model (Wheelen et al. 132) has fallen short and quite possibly resulted in lost revenue.

Solution

Franchise-operated bakery-cafés were required to contribute 0.7 percent of their sales to a national advertising fund and 0.4 percent of their sales as a marketing administration fee and were also required to spend 2.0 percent of their sales in their local markets on advertising. Panera contributed similar amounts from company-owned bakery-cafés toward the national advertising fund and marketing administration. The company primarily used radio and billboards advertising with a little television, social networking , and in-store sampling days which only captured current customers (Wheelen et al. 16-16). Panera avoided hard-sell or in-your-face marketing approaches, preferring instead to let consumers “discover” Panera Bread and then convert them into loyal customers by providing a very satisfying dining experience. Panera Bread’s marketing strategy needed a boost to reach a larger diversity of the available consumer population. Targeting demographics of 25-40 years of age with incomes of $40,000 per year isn't good enough. For example, many of the units offer free wi-fi which draws a significant number of college student patronage to work on projects. The company should implement a marketing strategy aimed at raising the awareness of quality and broadening the scope of target customers by:

- continuing to feature the caliber and appeal of its breads and baked goods

- hammering the theme “food you crave, food you can trust”

- enhancing the appeal of its bakery-cafés as a neighborhood gathering place

- boost trial experiences of dining at Panera Bread at multiple meal times (breakfast, lunch, “chill out” times, and dinner)

- increase the perception of Panera Bread as a viable evening meal option

- contract with delivery services such as Door Step as a means for delivery to work office or home

- use the power of the television and radio for wide-spread advertising

- use social networks and offer electronic discount coupons

- create a software application that can be downloaded to a smart phone to capture the large number of growing technological capable consumers

Summary

Panera Bread's business strategy has proven to work and be very profitable to date. Once a person has visited a Panera bakery-café, they are more likely to return and provide a bit of advertising by telling their friends about their visit and as such it has experienced high growth in the past few years. However, management should recognize this type of awareness to their brand has a shelf-life without making needed changes in their marketing model, advertising model, and creating change to continue to capture the consumer's interest and build upon their competitive advantage. To achieve these goals with limited cost, the company should increase its marketing budget and share the associated cost with its franchises. The marketing campaign should focus on the competitive advantage of the company, value, nutrition, and warmth. Finally, the company should evaluate the possibility of a semi-full service restaurant.

Works Cited

Wheelen, T. H., Hunger, D.J., Hoffman, A.N., & Bamford, C.E. (2015). Strategic Management and Business Policy, 14th ed. Upper Saddle River, NJ: Pearson Education, Inc.