Case Study 15 Panera Bread Growing a Company with Personality Panera Bread is in the business of satisfying customers. W

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Case Study 15 Panera Bread Growing A Company With Personality Panera Bread Is In The Business Of Satisfying Customers W 1 (94.19 KiB) Viewed 52 times

Find data reporting on how Panera's sales were affected by the recent economic downturn. See if the effects were different in various regions of the country. Does Panera have special strengths that help it deal better than oth ers with challenges such as those posed by a difficult economy?

Case Study 15 Panera Bread Growing A Company With Personality Panera Bread Is In The Business Of Satisfying Customers W 2 (94.19 KiB) Viewed 52 times

Case Study 15 Panera Bread Growing A Company With Personality Panera Bread Is In The Business Of Satisfying Customers W 3 (94.19 KiB) Viewed 52 times

Case Study 15 Panera Bread Growing A Company With Personality Panera Bread Is In The Business Of Satisfying Customers W 4 (108.65 KiB) Viewed 52 times

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 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 in movies. But for Panera Bread, a company able to successfully spot long-term trends in the food industry, artisan-style bread served with deli sandwiches and soups is a combination proven to please the hungry masses. Despite its abundance of restaurants, Panera Bread is a rel- atively new company, known by that name only since 1997. Its roots go back to 1981, when Louis Kane and Ron Shaich founded Au Bon Pain Company Inc., which merged Kane's three existing Au Bon Pain stores with Shaich's Cookie Jar store. The chain of French-style bakeries offered baguettes, coffee, and sandwiches served on either French bread or croissants. It soon became the dominant operator in the bakery/café category on the East Coast. To expand its domestic presence, Au Bon Pain purchased the Saint Louis Bread Company, a Missouri-based chain of about 20 bakery-cafés, in 1993. It renovated the Saint Louis Bread Company stores, renamed them Panera Bread, and their sales skyrocketed. Birth of a Brand Executives at Au Bon Pain invested heavily toward building the new brand. In 1999, Panera Bread was spun off as a separate company. Since then, the firm has sought to distinguish itself in the soup-and-sandwich restaurant category. Its offerings have grown to include not only a variety of soups and sandwiches, but also soufflés, salads, panini, breakfast sandwiches, and a va- riety of pastries and sweets. Most of the menu offerings some- how pay homage to the company name and heritage-bread. Panera takes great pride in noting that its loaves are handmade and baked fresh daily. To conserve valuable real estate in the retail outlets, as well as to reduce the necessary training for new employees, many bread doughs are manufactured off-site at one of the company's 17 manufacturing plants. The dough is then de- livered daily by trucks-driving as many as 9.7 million miles per year-to the stores for shaping and baking. At this point, there Ton Gannam/AP/Wide World Photos are more than 1,500 Panera Bread bakery/cafés in 40 states and Canada: Panera's 801 franchise stores slightly outnumber its 740 company-owned outlets.21 Modern Tastes, Modern Trends Panera's success has come partly from its ability to predict long- term trends and orient the company toward innovation to fulfill bread well predated the curent national trend (now rebounded consumers' desires. Its self-perception as a purveyor of artisan from the brief low-carb craze) for fresh bread and the explosion of artisan bakeries throughout metropolitan America. Consumers' desire for organic and all-natural foods, once thought to be a marginal market force, has become the norm Keenly positioning itself at the forefront of retail outlets support- Panera Kids Kids can choose from items such as peanut butter ing this trend, Panera recently introduced a children's menu called and jelly, grilled cheese, and yogurt, and the all-natural and or ganic foods will please choosy parents. In addition, Panera proactively responded to unease in the marketplace about the negative impact of trans fats on a healthy diet by voluntarily removing trans fats from its menu. "Panera recognized that trans fat was a growing concern to our custom- ers and the medical community, therefore we made it a priority to eliminate it from our menu," said Tom Gumpel, vice-president of bakery development for Panera Bread. Though reformulating the menu incurred unexpected costs, all Panera menu items are now free from trans fats, except for some small amounts that occur naturally in dairy and meat products, as well as in some condiments. According to Ron Shaich, former CEO and now executive chairman of the board of Panera, "Real success never comes by simply responding to the day-to-day pressures; in fact, most of that is simply noise. The key to leading an organization is under standing the long-term trends at play and getting the organiza- tion ready to respond to it."
And let's not forget, we are a coffee nation. For customers who just want to come in, grab a quick cup, and get out, Panera has just the thing. In many stores, coffee customers can avoid the nor- 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 to the java station. Caffeine-crazed customers can avoid the mad- dening line during a morning rush and cut the wait for that first steaming sip. What Makes a Customer Stay? Panera learned from mega-competitor Starbucks that offering wireless Internet access can make customers linger after their initial purchase, thus increasing the likelihood of a secondary purchase. Now most of its stores offer customers free Wi-Fi ac- cess. According to spokesperson Julie Somers, the decision to offer Wi-Fi began as a way to separate Panera from the compe- tition and to exemplify the company's welcoming atmosphere. "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 a cappuccino and a pastry or a soup." She went on to note that the chief corporate benefit to offering Wi-Fi is that wireless cus tomers tend to help fill out the slow time between main meal segments. Executive Vice President Neal Yanofsky concurred. "We just think it's one more reason to come visit our cafés," he said. And wireless users' tendency to linger is just fine with him. "It leads to food purchases," he concluded. And he's right-the average Panera store has an annualized unit volume of $2.3 million. Profits Rise Along with the Dough All of Panera's attention to the monitoring of trends has paid off handsomely. Since Panera went public, the company's stock has grown thirteen-fold, creating more than $1 billion in shareholder value. BusinessWeek recognized Panera as one of its "100 Hot Growth Companies." And Forbes named it #4 on its list of "Top 20 Franchises for the Buck." And even more recently, the Wall Street Journal recognized the company as the top performer in the Restaurants and Bars category for one-year returns (63% return), five-year returns (42% return), and ten-year returns (32% return) to shareholders. In ad- dition, a Sandleman & Associates survey of customer satisfaction ranked Panera #2 among 120 other competitors last year, it had held the top spot for the prior eight years. Panera continued its rapid growth in the face of the recession: In 2011, its company-owned stores saw a 4.9% increase in same- store sales, while franchise stores saw a 3.4% increase. These numbers helped contribute to a record $1.8 billion in revenues for the year-a 15% increase over 2010-and brought the company's market cap to just over $4 billion." As a result of these increased sales and also new store openings, Panera hired about 25,000 new employees in 2010 and 2011.10 Sticking It Out Through wise financial management, Panera Bread found itself in the enviable position of having no debt, stable liabilities, and $250 million in the bank." Taking advantage of a weak U.S. real estate market, the company opened nearly 80 new stores last year, having only closed six stores in the last three fiscal years. With a debt-free balance sheet, the company plans to better position itself for the end of the financial crisis. Panera Bread has demonstrated that sticking to company ideals while successfully forecasting, and then leading the response to long- term industry trends will please customers time and time again. The low-carb craze didn't faze Panera, but can this company continue to navigate the changing dietary trends in today's un- stable market? Discussion Questions 1. How might consumers' perception of Panera's menu and atmosphere affect their dining experience and tendencies to return as customers? 2. Bescribe how stereotypes about the fast-food industry might positively and negatively impact Panera. Do you think of Panera as a fast-food restaurant, or has the com- pany managed to distinguish itself from this group? Problem Solving Ran an entrepreneurial and leadership personality like Ron Shaich's be replaced? But how much of its success comes directly from Shaich as a person? Is it possible for his personal qualities to be ingrained in the corporate culture to the extent they will continue after he departs? As a consultant, what would you identify as the three or four most important of Shaich's personal qualities? What would you suggest be done to firmly embed these qualities in the Panera culture? Further Research Find data reporting on how Panera's sales were affected by the recent economic downturn. See if the effects were different in various regions of the country. Does Panera have special strengths that help it deal better than oth- ers with challenges such as those posed by a difficult economy?