Opportunities and Threats That Panera

¶ … opportunities and threats that Panera Bread is encountering going forward with their strategies. The company is well positioned to take advantage of future growth with its chain of bakery stores, yet has several significant challenges to overcome. Presented below is a SWOT analysis of Panera Bread.

Strengths

Leadership in an emerging specialty bread/cafe category of combined stores and eat-in light restaurant locations - Operating combined stores and small eat-in restaurants or cafes with both the names of Panera Bread and Saint Louis Bread Company continues to differentiate this company's retail strategies. Both of these names, Panera Bread and Saint Louis Bread Company, are given to franchised and company-owned stores. Panera Breads have been able to accomplish this leadership through their unique series of breads, many of them unavailable anywhere else, and their casual dining experience that includes free WiFi in many locations.

As of Dec. 27, 2005, the company's retail operations consisted of 311 company-owned bakery-cafes and 566 franchise-operated bakery-cafes. At that date, there were commitments to open an additional 416 franchise-operated bakery-cafes. The company's bakery-cafes were principally located in suburban, strip mall, and regional mall locations and operated in 36 states. As of Dec. 27, 2005, the company's fresh dough operations, which supply fresh dough items daily to both company-owned and franchise-operated bakery-cafes, consisted of 16 company-owned fresh dough facilities.

Exceptionally strong revenue growth in their specific food category - Panera Breads continue to deliver above industry-average financial performance as is illustrated in the continual growth in sales shown in Appendix A.

Best-in-class customer listening and focus - One of the company's core strengths is also its ability to change direction and menu items specifically in response to the changing preferences of customers. Panera Bread was ranked the number one concept in customer satisfaction among 118 chains in a survey of over 70,000 consumers conducted by Sandelman & Associates in 2004 for example, and in a survey of customer loyalty by TNS Intersearch, Panera Bread enjoyed the highest consumer loyalty of any concept in the restaurant industry.

Weaknesses

High levels of selling, general and administrative expenses - Despite the meteoric revenue growth as is shown in Appendix A, there continues to be the weakness of having high levels of SG&A expenses. For example, the company has at times experienced over 19% growth in these expenses, as was the case between 2000 and 2003.

A lack of variety and reason to eat other meals besides breakfast at Panera Bread outlets - This is a major weakness and one the company is looking for resolve, as internally there are discussions today of moving into thin-crust pizzas based on their bread expertise, and also opening up a larger dinner menu.

Concentration in specific markets to the exclusion of others - Today Panera Bread is concentrated in several larger cities, and needs to break out into other smaller metro areas and look to diffuse economic risk by being in as many other economic zones of the nation as possible.