Panera Bread Case study 15

Questions 1&2 and problem-solving question Please solve all those questions problem solving would be question 3 in this case it would take place after the first 2 discussion questions you do the problem solving question

Case Study 15 Panera Bread Growing a Company with Personality Panera Bread is in the business of satisfying customers with fresh baked breads, gourmet soups and efficient service, the franchise has surpassed all expectations for success. But how did a startup food company get so big so fast? By watching and carefully timing market trends French Roots, American Tastes Tom Ganna/AP/Wide World Photos What's so exciting about bread and soup? For some people, it conjures up images of bland food that soothes an upset stomach. Others think of the kind of simple gruel offered to jailed prisoners are more than 1,500 Panera Bread bakery/cafs in 40 states and in movies. But for Panera Bread, a company able to successfully Canada: Panera's 801 franchise stores slightly outnumber its 740 spot long-term trends in the food industry, artisan-style bread company-owned outlets. served with deli sandwiches and soups is a combination proven to please the hungry masses. Modern Tastes, Modern Trends Despite its abundance of restaurants, Panera Bread is a rele Panera's success has come partly from its ability to predict long- atively new company, known by that name only since 1997. Its term trends and orient the company toward innovation to fulfill roots go back to 1981, when Louis Kane and Ron Shaich founded consumers' desires. Its self-perception as a purveyor of artisan Au Bon Pain Company Inc., which merged Kane's three existing bread well predated the current national trend (now rebounded Au Bon Pain stores with Shaich's Cookie Jar store. from the brief low-carb craze) for fresh bread and the explosion of The chain of French-style bakeries offered baguettes, coffee, artisan bakeries throughout metropolitan America. and sandwiches served on either French bread or croissants. It Consumers' desire for organic and all-natural foods, once soon became the dominant operator in the bakery/caf category thought to be a marginal market force, has become the norm. on the East Coast. To expand its domestic presence, Au Bon Pain Keenly positioning itself at the forefront of retail outlets support purchased the Saint Louis Bread Company, a Missouri-based chain ing this trend, Panera recently introduced a children's menu called of about 20 bakery-cafs, in 1993. It renovated the Saint Louis Panera Kids. Kids can choose from items such as peanut butter Bread Company stores, renamed them Panera Bread, and their and jelly, grilled cheese, and yogurt, and the all-natural and or sales skyrocketed. ganic foods will please choosy parents. In addition, Panera proactively responded to unease in the Birth of a Brand marketplace about the negative impact of trans fats on a healthy Executives at Au Bon Pain invested heavily toward building the diet by voluntarily removing trans fats from its menu. "Panera new brand. In 1999, Panera Bread was spun off as a separate recognized that trans fat was a growing concern to our custom- company. Since then, the firm has sought to distinguish itself in ers and the medical community, therefore we made it a priority the soup-and-sandwich restaurant Category. Its offerings have to eliminate it from our menu," said Tom Gumpel, vice-president grown to include not only a variety of soups and sandwiches, of bakery development for Panera Bread. Though reformulating but also souffls, salads, panini, breakfast sandwiches, and a va- the menu incurred unexpected costs, all Panera menu items are riety of pastries and sweets. Most of the menu offerings some- now free from trans fats, except for some small amounts that how pay homage to the company name and heritage-bread. occur naturally in dairy and meat products, as well as in some Panera takes great pride in noting that its loaves are handmade condiments. and baked fresh daily. To conserve valuable real estate in the According to Ron Shaich, former CEO and now executive retail outlets, as well as to reduce the necessary training for new chairman of the board of Panera, "Real success never comes by employees, many bread doughs are manufactured off-site at one simply responding to the day-to-day pressures; in fact, most o of the company's 17 manufacturing plants. The dough is then de- that is simply noise. The key to leading an organization is under livered daily by trucks-driving as many as 9.7 million miles per standing the long-term trends at play and getting the organizat year---to the stores for shaping and baking. At this point, there tion ready to respond to it." And let's not forget, we are a coffee nation. For customers who market cap to just over $4 billion. As a result of these increased just want to come in, grab a quick cup, and get out, Panera has sales and also new store openings, Panera hired about 25,000 just the thing. In many stores, coffee customers can avoid the nor new employees in 2010 and 2011.10 mal line and head straight for the cash register, where they can pick up a cup, drop a small fee into a nearby can, and go directly Sticking It Out! to the java station. Caffeine-crazed customers can avoid the mad. Through wise financial management, Panera Bread found itself dening line during a morning rush and cut the wait for that first in the enviable position of having no debt, stable liabilities, and steaming sip. $250 million in the bank." Taking advantage of a weak U.S. real estate market, the company opened nearly BO new stores last year, having only closed six stores in the last three fiscal What Makes a Customer Stay? years. With a debt-free balance sheet, the company plans to Panera learned from mega-competitor Starbucks that offering better position itself for the end of the financial crisis. Panera wireless Internet access can make customers linger after their Bread has demonstrated that sticking to company ideals while Initial purchase, thus increasing the likelihood of a secondary successfully forecasting, and then leading the response to long purchase. Now most of its stores offer customers free Wi-Fi ac- term industry trends will please customers time and time again. cess. According to spokesperson Julie Somers, the decision to the low-carb craze didn't faze Panera, but can this company offer Wi-Fi began as a way to separate Panera from the compe- continue to navigate the changing dietary trends in today's un- tition and to exemplify the company's welcoming atmosphere stable market? "We are the kind of environment where all customers are wel come to hang out," Somers said. "They can get a quick bite or a cup of coffee, read the paper or use a computer, and stay as long as they like. And in the course of staying, people may have Discussion Questions a cappuccino and a pastry or a soup." She went on to note that 1. How might consumers' perception of Panera's menu the chief corporato benefit to offering Wi-Fi is that wireless cus- and atmosphere affect their dining experience and tomers tend to help fill out the slow time between main moal tendencies to return as customers? segments." Executive Vice President Neal Yanofsky concurred. "We just 2. Descnbe how stereotypes about the fast-food industry think it's one more reason to come visit our cafs," he said. And might positively and negatively impact Panora. Do you wireless users' tendency to linger is just fine with him. "It leads think of Panera as a fast-food restaurant, or has the com to food purchases," he concluded. And he's right--the average pany managed to distinguish itself from this group? Panera store has an annualized unit volume of $2.3 million. Profits Rise Along with the Dough Problem Solving All of Panera's attention to the monitoring of trends has paid off Can an entrepreneurial and leadership personality like handsomely. Since Panera went public, the company's stock has Ron Shaich's be replaced? But how much of its success grown thirteen-fold, creating more than $1 billion in shareholder comes directly from Shaich as a person? Is it possible for value. Business Week recognized Panera as one of its -100 Hot his personal qualities to be ingrained in the corporate Growth Companies." And Forbes named it #4 on its list of "Top culture to the extent they will continue after he departs? As 20 Franchises for the Buck." a consultant, what would you identify as the three or four And even more recently, the Wall Street Journal recognized most important of Shaich's personal qualities? What would the company as the top performer in the Restaurants and Bars you suggest be done to firmly embed these qualities in the category for one-year returns (63% return), five-year returns (42% Panera culture? return), and ten-year returns (32% return) to shareholders. In ad- dition, a Sandleman & Associates survey of customer satisfaction Further Research ranked Panera #2 among 120 other competitors last year, it had held the top spot for the prior eight years. Find data T orting on h Panera's sales were affected Panera continued its rapid growth in the face of the recession: by the recent nor downturn. See if the effects were In 2011, its company-owned stores saw a 4.9% increase in same different in vario gions of the country. Does Panera store sales, while franchise stores saw a 3.4% increase. These have specials -ngths it help it deal better than oth- numbers helped contribute to a record $1.8 billion in revenues for ers with chenges such a bose posed by a difficult the year 15% increase over 2010and brought the company's econo