OCCUPYING A FAVORABLE POSITION IN A HIGHLY COMPETITIVE INDUSTRY

Group nu 2Valerie- MA1N0220David- MA1N0219Bảo Bảo- MA1N0230Amos- MA0N0241

INTRODUCTION TO THE CASE

Restaurant industry focus: highly competitive environment

Panera-Bread:a chain of specialty bakery-cafes

Rapidly growing 602 company-owned and franchised units in 2003

-- > 1270 today In 2008: sales increased by 23%, 941 million USD

How come that Panera-Bread is prospering while others are experiencing difficulties?

DEVELOPMENT OF PANERA-BREAD

1981: founded under Au Bon Pain Co. (3 bakery-cafes, 1 cookie store)

Slow growth until mid 90s when it acquired Saint Louis Bread Company (chain of 20 bakery-cafes)

Customers wanted good food, served quickly in a pleasant environment New food category „fast casual“ = advantage of fast

food (speed) and casual dining category (good food) New company name Panera Bread, offering also

specialty food

POSITION STRATEGY OF RESTAURANT CHAINS

PANERA BECAME

Nation‘s bread expert offering artisan and other specialty breads (bagels, pastries, baked goods, salads, signature sandwitches, soups)

Also provides: Via Panera Catering service Nice and inviting atmosphere in the

restaurants Open for breakfast, lunch, dinner Chill out time: time between lunch and

dinner to eat specialty food Leader in fast-casual category,

observing needs of customers and following trends

Q1: HOW HAS PANERA BREAD ESTABLISHED A UNIQUE POSITION IN THE RESTAURANTS INDUSTRY?

By following the trend and listening to the customers

Offering good food served quickly in a pleasant environment

Creating a new category „fast casual“

Q1: HOW HAS THIS UNIQUE POSITION CONTRIBUTED TO THE SUCCESS?

This unique position was driver of the success

People wanted not only food served quickly but they also wanted to dine in an inviting and pleasant environment

Q1: DO YOU THINK PANERA BREAD WILL REACH ITS GOAL OF BECOMING A LEADING NATIONAL BRAND IN RESTAURANT INDUSTRY? WHY OR WHY NOT?

YES $3 billion in systemwide sales, the company exhibits purchasing

power and leverage rare in the fast-casual category Panera’s national name recognition attracts customers and quality

staff, while longstanding relationships with vendors lead to proprietary equipment capable of increasing the bakery-cafés’ efficiency and throughput.

http://www.qsrmagazine.com/executive-insights/moreton-s-view-top

Quotes of Moreton, CEO of Panera“Panera’s DNA—how you treat customers, how you improve, how you innovate—didn’t budge.”“While some would use that leverage to cut costs, we’ve chosen to use it to come up with quality and innovation that others cannot match,”

Q2: FIVE FORCES ANALYSIS

The Restaurant Industry

Competitive Forces

Threat to Industry Profitability

low medium HighThreat of

substitutes

Threat of New Entrants

Rivalry among existing firms

Bargaining power of Suppliers

Bargaining power of Buyers

Q2: FIVE FORCES ANALYSIS

Threat of Substitutes – Panera has lessened the threat of substitutes by creating a pleasing atmosphere in its restaurants and making its bakery second to none.

Threat of New Entrants – Panera has lessened the threat of new entrants by establishing a first-mover advantage (or near first-mover) in the fast-casual portion of the restaurant industry.

Rivalry Among Existing Firms – Panera has lessened the threat of rivalry among existing firms by creating a position that appeals to both fast-food consumers and casual dining consumer. The strength of its brand creates a barrier to entry.

Bargaining Power of Suppliers – This is not a major threat to Panera.

Bargaining Power of Buyers – This is not a major threat to Panera.

QUESTION 3

What barriers to entry has Panera bread created for potential competitors?

How significant are these barriers?

BARRIERS OF ENTRY AND THEIR SIGNIFICANCE

Barriers of entry created

1. Economies of Scale

2. Products differentiation

3. Cost advantages independent of size4. Access to distribution channels

5. Capital requirements

Significance

1. Created large economies of scale, difficult to enter

2. Strong brand name, welcoming environment

3. In existence for long time

4. Shops Spread all over

5. Already has large capital

Q4: WHAT ARE PANERA‘S PRIMARY SOURCES OF COMPETITIVE ADVANTAGE?

Positioning in restaurant industry (good food served quickly)

Establishing of new category fast casual (is not associated with unhealthy food) good and healthy food is served fast Food is more healthy than in fast

food (Mc Donalds) and the food is served quickly than in restaurants

Nice and warm atmosphere of restaurants (exterior and interior)

Q4: IN YOUR JUDGEMENT ARE THESE SOURCES SUSTAINABLE? WHY OR WHY NOT?

Yes Since people put more and more focus on

healthy living style as well as are busy and do not have lot of spare time, they will always need healthy food that is served quickly

Panera-Bread has great background (knowledge as well as finance) to maintaint this business sustainable by keeping follow the customer‘s needs (regarding assortment, environment…innovation)

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