Panera Bread Swot

SWOT

Strengths

Steady Fast growth: Panera is one of the fastest growing chains with sales over $200 million in 2001. According to exhibit 2 (Dess pg. 667) Panera Bread in 2002 ranked with the highest three-year sales growth rates as of June 2004. Panera Bread has about 1,027 baker-cafes in the United States, and is widely recognized for driving the nationwide trend for specialty breads. This is very impressive for this type of fast-casual food industry.

Part of exciting market segment: The new fast-casual market segment is developing quite rapidly and these restaurants are becoming key players in the industry. This market is a combination of the quick service of traditional fast-food restaurants with the higher quality food products found in sit-down restaurants. It?s a $6 billion industry growing at 15 to 20 percent each year. (Dess)

International Growth: By the en of 1997, the company had 96 bakery-cafes outside the United States, in Chile, the Philippines, Indonesia, Thailand, Brazil, and the United Kingdom. This is particularly important since international sales for the Top 100 chain restaurants are still at an increasing rate.

Quality Ingredients: Panera only uses the highest-quality ingredients, with only fresh dough and preservatives and the bread is baked fresh everyday. Panera Bread has a strong presence in the bakery-cafe segment. They have high quality food, including the award winning sourdough bread.

Meeting Customer Demands: In there attempts to take substantial steps in meeting growing customer demands, they have equipped their restaurants with free wireless internet. By offering this amenity they can fully meet the needs of sophisticated and diverse customer base. Panera Bread has strong customer loyalty; they have a strong appeal to customers. They also have a wide variety of food which appeals to a large group of people.

Commitment to the community: The Company established Operation Dough-Nation, a program that allows Panera Bread to contribute back to the community. One of the many interesting thing they do is at the end of each day, any unsold loaves of bread are taken to a local hunger relief agency. In addition to that, they have developed the Dough for Funds program that allows nonprofit groups to sell special coupons for Panera Bread products and keep half the proceeds for their causes. (Dess)

Weaknesses

No control over price of key ingredients: With an expected price increase of major ingredients such as butter, milk, hard cheese, and cream cheese, this will result in a high production cost, thus driving prices up for customers. Panera Bread Company will have no control over this factor. This will cause their profit margins to experience some pressure.

Franchise Operation: Due to the operational restrictions on franchise operations Panera Bread Company would prefer to establish area development agreements (ADAs). While there are many benefits to owning a franchise, there are also some drawbacks. According to an article on gaebler.com, one of the drawbacks of owning a franchise is cost. The initial cost of a franchise can be $50,000 or more on top of the cost of equipment, inventory, and business space. Also, franchises frequently require their franchisees to pay ongoing a percentage in royalties or franchise