Strategic Audit of Panera Bread Company

Case 29 Strategic Management MGMT 436Group 5

Current Situation (John L.)

A. Current Performance

Revenues between 2000 and 2003 rose sharply due to new unit expansion but masked a slowing year-to-year growth rate. New strategies and initiatives must be taken in order to continue growth.

•Revenues rose from $350.8 million in 2000 to $977.1 million in 2003, fueled by new unit expansion

•In 2000, comparable sales and annualized unit volumes (AUVs) increased 9.1% and 12.0% respectively. In 2003, those same figures increased only 0.2% and 0.5% reflecting slowed growth.

Current Situation (John L.)

B. Strategic PostureMission•Mission Statement "A Loaf of Bread in Every Arm" (www.panerabread.com/about/company).

ObjectivesProvide the following fast casual food service qualities

•The casual atmosphere of coffee shops•The quality food of sandwich shops•The quick service of fast food chains

StrategiesSpecialize in the following five consumer dining needs

•Breakfast•Lunch•Daytime "chill-out"•Lunch in the evening•Take-home bread

Strategic Managers (Travis)

A. Board of Directors

Strategic Managers (Travis)

B. Top Management

External Environment (J.W.)

A. Natural Environment• Climate, crops such as wheat, grain, sugar cane, fruits and

vegetables are affected by adverse weather conditions such as droughts, hurricanes, tornadoes, and excessive rain resulting in increased ingredient costs driving up product costs negatively affecting company profits

• Energy costs, rising gas prices will affect transportation and shipping costs while increasing electrical charges will also negatively affect company profits.

External Environment (J.W.)

B. Societal EnvironmentSTEEP

Category ISSUE Threat/Opportunity Ranking

Economic Real Estate costs Threat 6

Competition with other specialty foods and casual dining restaurants Threat 1

Double digit growth with fast casual Opportunity 2

Expansion into foreign markets Opportunity 5

Franchises Opportunity 4

Joint Venture Stores Opportunity 4

Expansion into other US locations Opportunity 3

Technological WIFI Opportunity 1

In-store info system Opportunity 2

Political-Legal None None

Sociocultural Move to Healthy foods Opportunity 1

External Factors WEIGHT RATING WEIGHTED SCORE COMMENTS

Opportunities

Double digit growth with fast casual 0.2 5 1opened average 23 new stores

each year

Expansion into foreign markets 0.01 0 0 No expansion in foreign markets

Franchises 0.2 4 0.8opened average 83 new stores

each yearJoint Venture Stores 0.1 2 0.2 no data

Free WIFI 0.03 4 0.12Rated best in tech mags for free

offering In-store info system 0.01 5 0.05 accurate inventory tracker

Consumer move to Healthy foods 0.02 4 0.08 main product offering

Threats

Real Estate costs 0.02 4 0.08long term leases selective

locations Competition with other specialty foods and casual

dining restaurants 0.1 4 0.4 hitting the mark with consumers

litigation for product defects 0.01 3 0.03Quality product no negative outcomes at this time

Franchise failures 0.1 3 0.3

concern could have negative inpact on image and financial

burden on buyback

Food costs rise 0.1 4 0.4 questionable variable factor

Distribution costs rise 0.1 4 0.4 questionable variable factor

Total Scores 1 3.86

EFAS Table (J.W.)

External Environment (Nick)

C. Task Environment

Internal Environment (John T.)

A. Corporate Structure

Internal Environment (Shavera)

B. Corporate Culture• The essential ingredient: Panera Care. Warmth and caring are

the fundamentals of Panera Bread culture. (S) • Corporate culture is based on founder Ronald Shaichs’

commitment to doing the best bread in America; quality, tradition, specialization, leadership, caring for employees & family, customers, and the community. (S)

• Good employee relations with high retention rates. (S) • One of the top ten fast food chains rated “excellent” for Quick

Track studies according to Sandleman & Associates. (S) • All 1,453 Company owned and franchise-operated bakery

cafes in 40 states and Ontario, Canada adhere to Panera Bread Culture. (S)

Backup Slides for Natural Environment• WASHINGTON, D.C.—September 29, 2003• Falling crop production resulting from extreme weather events, diseases and pest• infestations will increasingly be fueled by global warming and create an uncertain

future• for U.S. agricultural production and the nation's food supplies, according to leading• experts gathered here today at a Harvard Medical School Center for Health and the• Global Environment briefing, made possible by the Civil Society Institute, the Energy• Foundation and the National Environmental Trust. A news media event was followed

by• a congressional staff briefing sponsored by Sen. Harkin (D-IA), Sen. Brownback (R-KS),• Sen. Bill Nelson (D-NE) and Sen. Lugar (R-IN).

http://www.ers.usda.gov/Publications/WRS0801/WRS0801.pdf