What is Panera Bread’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Panera Bread is taking? What type of competitive advantage is Panera Bread trying to achieve?
Panera Bread’s strategy is to used focused differentiation to create the “quick-casual” style of dining that many new food chains are adapting today. Urban workers construct a large portion of Panera’s target, while suburban residents make up a differentiated target demographic. Panera provides comfortable, clean dining with fresh and healthy ingredients, which consumers pay a slight premium for over fast food. Panera’s competitive advantage is the high-quality product at a reasonable price that customers will choose over the options of their competitors.

2. What does a SWOT analysis of Panera Bread reveal about the overall attractiveness of its situation? Does the company have any core competencies or distinctive competencies?
Strengths:
Product Differentiation
Good dining experience
Franchises
Strong Brand
High Quality/healthy Ingredients
Vertical Integration
Strong Growth Model
Known for generally good corporate ethics

Weaknesses:
Pricey food options
Geographic Concentration
Ingredients have short shelf-life

Opportunities:
More Franchise locations
Breakfast foods
Improving economy (more disposable income)
Rising Organic Market
Take-Home Grocery option

Threats:
Rely on many gluten foods
More competitors entering constantly

Panera can utilize their vast number of strengths to improve the overall customer experience vs. competitors. Creating new innovating menu items that adapt to food related trends will allow Panera to ride the health curve upwards as more consumers utilize the fast-casual dining experiences. Panera must also minimize the negative affects of their weaknesses and threats. Strategic planning must be meticulously implemented in order to stay ahead of the close competitors. One way to take care of a rising threat is to add gluten-free food options. Continuing to adapt to trends in the food industry and pleasing as many customers as possible will help Panera eliminate their weaknesses and focus on the strengths/opportunities. 


3. What are the primary components of Panera Bread’s value chain?
The primary components in Panera Bread’s value chain are operating performance, inbound logistics and good customer service. Panera focuses on creating a quality food product on a consistent basis, so there operations must be closely monitored for superior performance. Inbound logistics differentiates the Panera Bread product from competitors. Inbound logistics allow for fresh ingredients and an innovative menu to draw consumers from many demographics. Lastly the experience for the customer creates the fast-casual experience that has grown so popular in recent years. The standards for service must be adhered to in each franchise location so that the customer experience is not tampered with. Each of these components creates the value chain that is so valuable to Panera Bread’s huge success, and each are equally important for continued success. 


4. What does the data in case Exhibit 1 reveal about Panera Bread’s financial performance? How well is the company doing financially? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Panera’s recent financial performance. In addition to the ratios in Table 4.1, there are occasions when you will also need to calculate compound average growth rates (CAGR) for certain financial measures. The formula for calculating CAGR (in percentage terms) is as follows:
Based on the data in Exhibit 1. Panera Bread is improving their important financial figures on a regular basis, which is a good sign for future growth. Profit margin is growing and thus shareholders can witness the benefits of higher net income. Gross Profit Margin 74.2%
Operating Profit Margin 12.1%

Return on Equity 0.207536225
Current Ratio 1.481614037

Total debt-to-assets ratio 0.362345983
Earnings Per Share $4.59

Bakery-café sales 128.622932
Total Revenues 126.2539763
Total bakery-café expenses 128.7868925
Net income to shareholders 126.0740632 Through these ratios we can observe sales growth at Panera Bread for the given period. Total expenses grew, naturally, with growing sales, but net income was still higher regardless. The 1.48 current ratio indicates that Panera is well able to handle short term liabilities, which further indicates potential for growth in the near future. Finally, earnings per share is at $4.59, which indicates a good amount of net income generated for each share that is owned by stockholders.

5. What does the data in case Exhibit 2 reveal about Panera Bread’s operating performance?
Exhibit 2 presents data that demonstrates effective operating performance by Panera Bread. Since 2002, and through the economic downturn in 2008, return on all of Panera Bread’s locations have grown considerably. A loyal customer base and dynamic menu, coupled with efficient operations that allow for high quality food at relatively low prices, create the value that has allowed Panera to improve over the past decade.

7. Based on the information in case Exhibit 3, which fast-casual and full-service restaurant chains appear to be Panera’s closest rivals? Do a 5 Force analysis.
The establishments in Exhibit 3 offer similar products as Panera and create a comparable experience. Chipotle, Qdoba, Five Guys and California Pizza all offer a good food, low price fast-casual dining the directly competes with Panera Bread’s competitive strategy. There are also several sit-down chains that encompass the ‘quality’ food products and relaxing customer atmosphere while avoiding high restaurant prices. These companies include Applebees, Cracker Barrel and Chilis. Each of these locations offer a similar food experience and compete for essentially the same customer base, and Panera must consistently monitor competitors actions to maintain competitive advantage.

Five Force Analysis:
Rivalry Amongst Competitors:
Starbucks can be considered a rival to Panera Bread because they offer a similar bakery experience with very similar interior atmospheres. Starbucks and Panera both offer wifi service and encourage patrons to stay and work, relax within their brick and mortar locations.

Threat of Substitutes:
Though Panera offers fast-casual dining, they present a specific bakery/cafe array of menu items. The threat of substitutes comes from other fast-casual establishments which offer newer food trends and menu items. Examples of these food trends include the Mexican/southwestern movement with Qdoba and Chipotle, as well as PitaPit and the greek food phenomenon.

Threat of New Entrants:
Low barriers to entry in the food industry create a high threat of new entrants for Panera. At any time a new food craze could spawn an explosion of fast-casual establishments that do not exist at this time. New fast-casual restaurants will gain the advantage of consumer excitement, as patrons are more excited to try new food options than resort to well established companies like Panera.

Buyer Bargaining Power:
Panera has high buyer bargaining power. If they do not consistently monitor customer experience and needs one of the many other fast casual establishments will step in and serve them better. Close margins and many competitors also force Panera to closely monitor menu costs, as the already high prices are sensitive to changes in the economic climate or market.

Supplier Bargaining Power:
Panera’s suppliers have low bargaining power because Panera Bread is effective in vertically integrating the most important operating (like dough making) while keeping in contact with many suppliers in order to keep costs efficient. Because the food industry is massive and steady, there is a large choice of suppliers for basic food and beverages. Creating fresh dough distribution facilities allows Panera to maintain a steady supply of important ingredients without having to negotiate with suppliers. 


9. What does Panera Bread need to do to strengthen its competitive position and business prospects vis à-vis other restaurant chain rivals?

Based on the literature in the case, I believe Panera Bread is in good standing against its competitors. If the company is able to stay on top of food trends and provide a consistently updated menu to keep even the most long-time customers coming around, they have every reason to continue to grow in the vastly expanding fast-casual market. A large portion of Panera’s given competitors have a set menu, often a build-your-own set up, that stays relatively steady and often does not change for years, which can cause patrons to lose interest and experiment with new options.

A suggestion I would give is to increase geographic reach so that more customers have access to Panera locations. Focusing on high income, health conscious market segments as they expand will allow Panera Bread to vastly increase sales volume.

Lastly, I have visited Panera countless times but do not recall ever being offered a rewards card. I believe if Panera Bread promotes a loyalty rewards program that allows the company to hold loyal customers while attempting to gain more, they will capitalize on their already competitive market share and continue to increase revenues. As an established fast-casual powerhouse, these adjustments can be implemented by Panera Bread to maintain steady growth and loyal customers.