Success of Panera Bread on the Bakery Industry

Panera Bread Company

Ron Shaich and Louis Kane started Panera Bread in 1981 as Au Bon Pain Company. The company prospered internationally throughout 1980s and 1990s along the east coast of U.S.. It became the dominant and best operator within the bakery-cafe category. The company purchased St. Louis Bread Company, which was a chain twenty bakery-cafes in St. Louis area. After the purchase, St. Louis Company was re-staged and managed comprehensively. However, between 1993 and 1997, the average unit volume of St. Louis increased by 75%. After the changes and improvement in production, the name of the company was changed to Panera Bread. As of 1997, the quality of products, services, and improvement in production indicated that Panera Bread had the potential to be among the leading brands in the country. The company needed all the management and financial resources for it to be potential in the field.

In 1999, all the business units of Au Bon Pain Company were sold with the exception of Panera Bread. They sold the business units and the entire companies were renamed Panera Bread. After the completion of the transactions, the stock of the company grew to over $1 billion and a thirteen-folded shareholder value was created. In 2006, Panera Bread became one of the hot growth companies in Business Week. Panera Bread was also recognized as the best and top performer in the restaurant categories by the Wall Street Journal. The report was in relation to the returns for one, five, and ten years to the shareholders. The company purchased significant shares of Paradise Bakery and Cafe in 2007. The bakery was Phoenix-based having seventy locations in ten different states in both the west and southwest. In 2009, Panera Bread purchased the remaining Paradise bakeries and cafes. As of July 2014, over 1800 bakery-cafes operating in Ontario Canada and 45 different states were under three companies managed centrally. The companies were Panera Bread, Paradise Bakery and Cafe, and Saint Louis Bread. The companies delivered authentic artisan and fresh bread served in environments that attracted clients.

Value creation or proposition is a promise made by the company that the value will be acknowledged and delivered to the customer. The customer should belief that the value will be experienced at any cost if the entity promising it is dedicated. In the case of Panera Bread and its subsidiary companies, they adhere to any of the promises of value they make to the customers. Any promise made by the companies is recognized and delivered on time. The growth and development of the company shows that it acknowledges and delivers the value promises to customers. When the value promises are made and offered, the customers will rely on the company: they will keep visiting the company because of the value provided. As a result, the sales will increase leading to increased profits. Panera will then use part of the lucrative profits on growth and development.

Macro and microenvironments refer to the internal and external forces and factors that affect the ability of Panera Bread Company's ability to create and maintain good and stable relationship with customers. Macro environments affecting the company include competition and sources of funds for development. The company is receiving stiff competition from other companies producing bread and other bakery products in different countries. It is a serious challenge to the company because it will not have sufficient market for its products due to large production leading increased supply. Since the company is growing and expanding, it does not have enough funds for growth and development. The only source of adequate funds is financial institutions, which gives the funds as per the size of the company and the security provided. Since it is a growing company, Panera will not provide enough security to acquire enough funds from the financial institutions.

Microenvironments include poor customer relation, lack of trained staff, and employees' motivation. Customer relation is one of the internal factors affecting development of customer relation in Panera Bread Company. For customers to feel comfortable in the company, they should be treated in a polite and welcoming manner. Customer's questions and inquiries concerning products should be handled to their satisfaction. When a customer is harassed or mistreated, he/she will not visit the company again because he/she will seek where he/she will be treated comfortably. Panera Bread Company should employ qualified staff and continue offering frequent training to equip them with emerging knowledge and skills in different fields.

It is important to note that employment qualifications will determine the quality of products offered and the way the customers are treated at the company's facilities. If the employee does not possess the necessary skills, poor products will be produced, and the customers will not be satisfied and they will go to competitor companies. The employees should have the necessary skills on customer relation for them to serve the customers to their satisfactory. The company should motivate its employees for them to feel they are recognized as part of the company. Motivation includes rewards, incentives, promotions where necessary, and even participation in decision-making. When the employees are motivated, they will work to their best level leading improved product quality and customer satisfaction. The employees will even interact with customers in a friendly manner since they are satisfied by the motivation and remuneration given.

The company has many competitors producing similar products in the market. The major competitors of Panera Bread Company are Starbucks Corporation, Chipotle Mexican Grill, and Einstein Noah Restaurant Group. The tools used by the competitors to fight Panera Bread Company are price of products, customer relation, and quality of products. The three tools are the major ones that Panera should concentrate on to survive the competition in the market. The competitors are adjusting their prices slightly as compared to those of other companies in order to influence the customers. Adjustment of prices will work well with quality of products. Each company will adjust the prices in relation to the quality and comparing to other competitors. Target market, segments, and demographics of Panera Bread are designed in a manner that all people are satisfied irrespective of age, gender, family size, income, race, religion, and education. The products of the company are fit to be consumed by anyone in relation to age and gender. The products are produced in different sizes, which can fit any size of the family either small or large family. The prices of products are affordable to low and high-income earners.

Before a company engages on production, it should understand the needs of the customers. The company should produce the products as per the needs of the customers. In the case of Panera Bread, it should conduct extensive market research to know the needs and wants of the customers in relation to bakery and cafe products. The company will satisfy the customers and sustain stiff competition posed by other companies. Every organization or company should design a plan that will guide it in its operations. Panera Bread Company should have a well-designed plan for it to succeed in the business. The company will work as per the stipulated strategic steps to meet the set goals and targets. It will help the company not work blindly but as per the financial, management, production, and other strategies designed in the company.