Running head: PANERA BREAD SWOT ANALYSIS

Panera Bread SWOT Analysis Prepared by: Brian McDonald, Ora Carson, Bree McCraw, and Ginger Terry MOD 440 Facilitator Dr. Berry Ziggler Week 4 July 31, 2012

PANERA BREAD SWOT ANALYSIS

HISTORY The Panera Bread restaurant chain was founded by Ron Shaich and Louis Kane as Au Bon Pain Co. After acquiring the St. Louis Bread Company chain, the Panera Bread concept evolved. In 1999, the Au Bon Pain restaurants were sold, and the company put its primary focus on growing the Panera Bread restaurants. The St. Louis Bread Company restaurants continue to operate with the same Panera Bread concept and menu in the state of Missouri. There are currently 1,504 company-owned and franchise-operated bakery cafes (Panera Bread, 1999-2011). Panera Bread is considered to be in the restaurant industry, but they are in a different group as the others. Panera Bread has one of the highest stock market prices of all their competitors in the industry.

PANERA BREAD SWOT ANALYSIS INTRODUCTION In every business there will come a time when the business needs to understand the things that will help a business and what will hurt that business. A business can determine their opportunities and the threats that are associated with that specific business. In determining these opportunities that a business has will help in directing the businesss future plans. The threats that the business determines will help in making that business aware of the potential problems that can plague the business and cause it not to succeed. Panera Bread is a company that is incorporated into the food industry. In being associated with this group of businesses, Panera Bread will be dealing with the government and many other agencies. One of the main agencies that they deal with is the U.S. Food and Drug Administration (FDA). Panera Bread acknowledges both their opportunities and threats, which in turn helps the business to become a success.

STRATEGY Panera Bread is the Apple of fast food. Panera continues with its pre-recession strategy of charging premium prices for its sandwiches and salads as if they were iPhones. While other businesses might be suffering or worse; Panera Breads owner Ron Shaich has no plans on slowing down. He plans to add at least 80 locations to his ever growing company, all the while hes upping Paneras investment in its distribution system. The company's expansion seems sharp actually. The value of commercial real estate has collapsed along with home prices. Shaich says he's been able to bargain down lease rates by 20% to 25%. Plus, Panera can lock in these low terms for the next 20 years. Ron has also set a new bar by bringing in fresh produce daily opposed to the 12 to 18 day old produce that is typical for most restaurants. So far, selling high-

PANERA BREAD SWOT ANALYSIS quality, high-priced fast food has worked just fine for Panera. Its same-store sales increased 3.6% in 2008 (see Exhibit 1), vs. declines at many other chains including Starbucks (see Exhibit 2). Its average check rose to $8.50, and each restaurant is now pulling in $2 million on average, putting Panera just behind McDonald's and double what a typical Arby's and KFC unit grosses. Main Issue The main issue with Panera Bread is the economy. Many consumers because of the downturn in the economy have cut back on their dining out. This has cause a loss of customers at Panera Bread Cafes. If Panera Bread cannot get customers into the cafes then they do not sell their product and do not make a profit. Panera Bread prices for their product is higher than the average fast food product which determines if a customer will visit their store or one of their competitors. Panera Bread will need to determine new ways and promotions that will entice the customers to visit their cafes. SWOT
Strengths Well-known brand name High quality product Strong financial condition Great strategy Weaknesses Consumer preferences Decline in customer service Narrow product line Higher prices

Opportunities Expansion Culture Introduce new items Expand product line

Threats Economy Competitors Government regulations Price changes in product

PANERA BREAD SWOT ANALYSIS Recommendations Panera Bread needs to understand the customers needs and desires in the present economy. The promotions that the company presents will help in getting the customers into the cafes and buying the product. Panera Bread strategy of introducing new products on a regular basis will help in convincing the consumers that Panera Bread is the choice that they want to make for that lunch or dinner trip out.

Conclusion Panera Bread has shown that they know how to manage their business to delight of their investors and creditors. They have kept their ratios to the correct levels and maintained decent inventories for the company. Their stock has risen very high and seems to be going even higher. The future of this company seems very bright and will keep bringing in profit for the investors and security for its creditors. Panera Bread is trying to provide premium specialty bakery and caf experience to urban workers and suburban dwellers. Panera is trying to be "better than the guys across the street." They are trying to make the experience of dining at Panera so attractive that customers would be willing to pass by the outlets of other fast-casual restaurants competitors to dine at a near-by Panera Bread. Every business needs to know what its strengths and weaknesses are in the industry. A business that knows its opportunities and threats will become a more stable company and make plans for its future. A business needs to use its strengths in making decisions. The business needs to understand its weaknesses and improve on them. A business that uses its strengths and manages its weaknesses will determine if that business will be a success.

PANERA BREAD SWOT ANALYSIS Exhibit 1

Annual Income Statement (values in 000's)

Get Quarterly Data

Period Ending:

Trend

12/27/2011 $1,822,032 $1,185,969 $636,063

12/28/2010 $1,542,489 $1,005,912 $536,577

12/29/2009 $1,353,494 $904,419 $449,075

12/30/2008 $1,298,853 $1,031,155 $267,698

Total Revenue Cost of Revenue Gross Profit Operating Expenses

Sales, General and Admin. Non-Recurring Items Other Operating Items

$329,320 $6,585 $79,899 $220,259 $466 $220,725 $822 $219,903 $83,951 $0 $135,952 $135,952 $135,952

$278,553 $4,282 $68,673 $185,069 ($4,232) $180,837 $675 $180,162 $68,563 $267 $111,866 $111,866 $111,866

$238,565 $2,451 $67,162 $140,897 ($273) $140,624 $700 $139,924 $53,073 ($801) $86,050 $86,050 $86,050

$84,393 $3,374 $67,225 $112,706 ($883) $110,314 $1,606 $108,708 $41,272 ($1,509) $67,436 $67,436 $67,436

Operating Income Add'l income/expense items Earnings Before Interest and Tax
Interest Expense

Earnings Before Tax

Income Tax

Minority Interest Net Income-Cont. Operations Net Income Net Income Applicable to Common Shareholders

Taken from nasdaq.com

PANERA BREAD SWOT ANALYSIS

Exhibit 2

Income Statement

Get Income Statement for:

GO

View: Annual Data | Quarterly Data

All numbers in thousands

Period Ending
Total Revenue Cost of Revenue Gross Profit

Oct 1, 2011 Oct 2, 2010 Sep 26, 2009

11,700,400 4,949,300 6,751,100 Operating Expenses 10,707,400 4,458,600 6,248,800 9,774,600 4,324,900 5,449,700

Research Development Selling General and Administrative Non Recurring Others Total Operating Expenses Operating Income or Loss

4,703,200 523,300 1,524,600

4,414,100 53,000 510,400 1,271,300

4,142,500 332,400 534,700 440,100

Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops 146,100 1,844,400 33,300 1,811,100 563,100 (2,300) 1,419,400 50,300 1,469,700 32,700 1,437,000 488,700 (2,700) 1,093,700 37,000 599,000 39,100 559,900 168,400 (700) 512,700

Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items -

PANERA BREAD SWOT ANALYSIS

Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares 1,245,700 1,245,700 945,600 945,600 390,800 390,800

Taken from nasdaq.com

PANERA BREAD SWOT ANALYSIS

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PANERA BREAD SWOT ANALYSIS References Admin. (2010, April). Managing Growth in Business. Nasdaq. (2012). Panera Bread Company Financials. Retrieved from Nasdaq Stock Market Panera Bread. (2012). Panera Bread Corporation. Retrieved from www.panerabread.com