Case Analysis Panera Bread
Panera Bread’s sales growth rate for 2003 was 28.1% and 38.1% in 2002; therefore the sales growth rate for the company is increasing at a decreasing rate. The decreasing rate of sales growth may be attributed to the company’s current marketing strategy. The company’s ad-to-sale ratio was only 2.1% compared to the category average of 4% Also; Panera Bread does not have a lot sufficient of bargaining power with its suppliers, which may affect its net income.
A loaf of bread in every arm is the current mission statement for Panera Bread, which is a narrow statement and limits the scope of the company’s activities in terms of products and services. Considering the company is in the casual dining industry, the mission statement is irrelevant and inappropriate.
Revenues increased from $350.8 million in 2000 too $977.1 million in 2003 along with ROS, ROI, and ROE (see appendix 1); therefore leading to the conclusion Panera Bread has a quality top management team. Also, the company has a diversified Board of Directors with only one insider and five outsiders and the Board of Directors appears too be active in the company.
Panera Bread has several external factors which may affect the company, such as climate, inflation rates, unemployment level, and wage levels. Climate can have a dramatic effect on Panera Bread. If crops, such as wheat, lettuce, and tomatoes are damaged due to severe weather the price of the crops will increase. The increase in the price of crops will force Panera to either suffer the loss to net income or pass the increased cost to consumers. An increase in inflation rates causes the general price level of products and services to rise, therefore decreasing the purchasing power of the dollar
and forcing consumers to slow down their spending. If unemployment levels rise the labor force decreases, which decreases the buying power of those consumers. Wage levels can also have either a positive or negative impact on Panera Bread; if wage levels increase consumers have more disposable income and vice versa.
The sociocultural factors that may have an affect on Panera Bread is life style changes, and life expectancies. Consumers are becoming more health conscious; therefore more consumers are going to be seeking healthy alternatives for food consumption. Also, since seniors are included in the company’s niche market, the growth of the aging population could have a positive impact on sales.
There is a high threat of new entrants entering the casual dining industry; therefore the company needs to address the issue by creating entry barriers through product and service differentiation and economies of scale. Considering substitute products fill the same need as Panera’s products, the company needs to differentiate its products and services to create a want for Panera’s product instead of a need. The bargaining power of suppliers may be a potential weakness for the company, because the company has contracts with all of its suppliers.
The company appears to have a functional structure, which is appropriate for this
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