The food service industry is the United States is undergoing significant transformation. Competition is the main force that is driving the changes taking place in the industry. In a bid to maintain their relevance, the firms in this industry are implementing a wide range of strategies. Most of these strategies have enabled the firms to remain operational while others have failed to deliver the desired outcomes. Panera Bread Company is among the players in the food service industry whose operations and performance have been shaped by intense competition. As part of a campaign to sustain its growth, this company has adopted a raft of measures. Overall, these measures are insulating the company against competition but more needs to be done if its continued growth is to be guaranteed.
Summary of Case
The various strategies that Panera has adopted are the key focus of the case. In this case, in-depth discussions on the different marketing strategies, operational measures and approaches intended to drive growth are offered. The case begins with a general overview of the company’s current status. Here, it is noted that the firm has experienced growth (Thompson, 2017). For example, despite turbulences in the American economy, the company has established hundreds of new stores in various locations across the US. The case proceeds to offer background information on the company. This information focuses on the history and the growth that the company has experienced since its establishment. Also included as part of the background are the general values, beliefs and principles that guide Panera’s operations (Thompson, 2017). The background information is followed by a look at some of the strategies that the company is pursuing. Offering unrivalled experiences to its customers is the key strategy that has enabled the company to remain relevant in the face of intense competition from such other firms as McDonald’s. Other strategies that the company has implemented include offering a wide selection of products, partnering with retailers for the purpose of distributing its products, establishing a loyalty program through which regular patrons are rewarded, and setting up an order delivery service (Thompson, 2017). Panera has also invested in various corporate social responsibility initiatives. The case also examines the marketing and supply chain strategies that are fueling Panera’s growth. As part of its conclusion, the case offers an overview of the current state of the restaurant industry in the US (Thompson, 2017). Here, it is observed customers are demanding healthier options and expressing preference for products made using local materials. These trends are expected to shape the future of the industry.
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SWOT Analysis
An analysis of the internal environment and the external conditions that define the operations of Panera is needed. There are various strengths which have enabled the company to enter the 21 st century from a position of dominance. The wide selection of foods is one if its key strengths. Soups, bread and pantries are among the products that feature on the company’s menu (Thompson, 2017). By having a wide range of products, firms offer their customers greater choice, thereby recording impressively high sales volume (Ho & Tang, 2012). Another strength that should receive credit for Panera’s growth is its culture. In a bid to secure its dominance in the food industry, Panera pursues excellence. Its patrons experience unrivalled service that is accompanied with quality and affordable food (Thompson, 2017). Panera has also established franchise operations. Thanks to these operations, the company has been able to expand its presence in the US and Canada. Franchise operations are effective as they allow firms to leverage the experience and capabilities of other companies which are already established in a particular market. Investing in the wellbeing of the vulnerable and disadvantaged is another strength that is partly responsible for the success of Panera. This company has adopted a not-for-profit model at some of its locations. At these locations, there are no standard prices and patrons are allowed to pay whatever amount they wish (Thompson, 2017). These locations are aimed at individuals grappling with food insecurity. As they invest in corporate social responsibility programs, firms enhance their image and attract customers. It is therefore reasonable to state that Panera’s CSR initiatives are behind its success.
The strengths identified above are enabling Panera to navigate the complex restaurant industry. However, there are some weaknesses which are eroding the company’s profitability. The company’s over-reliance on traditional approaches is among its greatest weaknesses. For example, franchising and loyalty programs are among the key features of the firm’s strategies (Thompson, 2017). While these strategies have enabled the company to protect its position in the industry, they are doing little to help the firm appeal to new customers. Today, digital technologies are gaining prominence. More and more firms are using such technologies as social media to market to younger generations (Evans, 2010). Another weakness that could be holding Panera back is the stringent criteria that it requires firms which wish to enter into franchise arrangements, to satisfy (Thompson, 2017). While the criteria is intended to ensure that these firms possess the capabilities to work with Panera, they may keep some companies from helping Panera expand its presence.
The external environment plays a critical role in determining the level of a firm’s success. There are various opportunities in the restaurant industry that Panera could leverage for growth. Responding to the health concerns of customers is among these opportunities. Customers in the US have become more enlightened and have expressed preference for healthy options. Panera needs to include such options as organic foods if it is to tap the potential that these customers hold. Integrating digital technology into its operations is another opportunity. A majority of customers believe that technology offers convenience and improved service (Thompson, 2017). Panera needs to include technology in its marketing and customer service strategies. As it responds to current trends in the restaurant industry, Panera should understand that there are some weaknesses that may hinder its efforts. The intense competition in the restaurant industry and a fragile American economy are some of these threats.
Financial Analysis
No discussion on the operations of Panera can be considered complete or thorough without an analysis of the firm’s financial status. Overall, Panera enjoys solid financial performance. In 2015 alone, the revenues that the firm obtained from its corporate operations totaled an impressive $2.7 billion (Thompson, 2017). The firms’ network of stores brought in $4.5 billion in revenue. While Panera’s financial performance is positive, there are some issues that should concern the company’s leadership and shareholders. The decline in income and earnings per share is among these issues. In 2013, the firm’s net income stood at $192.6 million (Thompson, 2017). This figure had dropped to $179.3 million by 2014. Further declines were witnessed in 2015. The company’s earnings per share dropped from $6.85 in 2013 to $6.67 (Thompson, 2017). While the poor performance is cause for concern, the company’s financial position remains solid.
Strategic Issues and Challenges
There are a number of strategic issues and challenges that Panera should account for as it plans its way forward. Working with other companies without compromising its values and philosophy is among the strategic issues that Panera is confronted with. The company has joined forces with dozens of small firms. Through these partnerships, it has set up franchised stores across the US (Thompson, 2017). While it is true that these partnerships have delivered positive outcomes, the firm needs to be wary of the threat of losing its identity. Another strategic challenge that the company should address is balancing its CSR obligations with its need to generate revenue. As noted earlier, Panera implements a not-for-profit model at a number of its locations. Thanks to this model, it is able to ensure that food insecure people are fed (Thompson, 2017). However, the company also needs to secure its financial interests. Its leaders must ensure that even as it feeds the poor, it is able to finance its operations. Ensuring that its efforts to differentiate its products do not drain its financial reserves is another strategic challenge that Panera faces. This firm is not the only company in the restaurant industry that is investing in quality and excellence. As it continues to offer quality products, the firms should monitor the operations of competitors and identify differentiation strategies that are not capital-intensive. Overall, the intense competition that defines the restaurant industry has given rise to numerous strategic challenges that pose a serious threat to Panera.
Strategic Plan
For the most part, the strategies that Panera has adopted are yielding fruit. However, the company cannot continue to rely on these strategies. It needs to develop a strategic plan that will guarantee its future. It is recommended that the company should overhaul its marketing communication approaches. Currently, the firm uses techniques that are rather traditional and do not reflect the changes in the restaurant industry. As already mentioned, digital technologies are redefining the restaurant industry as more companies incorporate these technologies into their marketing initiatives. Panera needs to join these firms. Using such digital technologies as social media, the firm will be able to engage new audiences (Brown, 2012). The restaurant industry is so saturated that to succeed, firms need to implement fresh approaches. Social media offers opportunities for an expanded presence and greater engagement with young customers. Therefore, if it is to survive the competition and remain relevant, Panera needs to make social media an integral component of its marketing strategy. Social media is a cost-effective tool for marketing. This means that the company will not incur huge costs as it markets its products.
In conclusion, Panera represents the many firms that are struggling to remain relevant in the age of competition. This company has established a reputation of quality and this reputation has enabled it to capture the loyalty of its customers. Other strategies that it is pursuing include franchise arrangements and heavy investment in corporate social responsibility. If this company is to stave off competition, it needs to refine its marketing approach. It should make social media and other digital technologies an essential component of this approach. Digital technologies hold the key for effective marketing.
References
Brown, E. (2012). Working the crowd: social media marketing for business. London: BCS.
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