Founded by Louis Kane and Ron Shaich in 1981, Au Bon Pain Company was the forefather of Panera Bread. After many years of success in St Louis, Missouri, the Company grew up fast and now Panera Bread Company represents 1,027 units in 36 states and is one of the dominant restaurant operators in the specialty bakery-cafe segment.
So what is the reason of this spectacular success?
During the 1980's the dominant model was those of fast-foods chains like McDonald's, Wendy's or Burger King. These types of restaurant were successful because they answered needs of customers who searched quick service meals, at the lowest price.
But in the 1990's trend has changed, Panera Bread's management noticed that many patrons of fast-food restaurants could be interested in a higher-quality and quick service meals. So there was a new unsatisfied need on the market. From this period Panera Bread instituted a Broad differentiation strategy.
To compete on the market of the fast-food restaurant and especially on the bakery-cafe segment the Company had to offer buyers something attractively different from competitors. In order to do that Panera Bread provide a premium specialty bakery and cafe experience to urban workers and suburban dwellers.
[...] Thanks to his broad differentiation strategy Panera Bread Company succeeded to reach a broad cross-section of the fast-food market. Indeed the company incorporated well the buyer-desired attributes into its product by offering a quality food and a cafe experience in their shops. Thanks to this successful differentiation, the company can allow itself to propose premium prices for its artisan bread made: Panera Bread's products are more expensive than other traditional fast-food product but it is compensated with the quality of these. [...]
[...] Thus, thanks to the cash Panera Bread Company had the possibility to invest in new facilities for instance without resorting to borrowing or raising more equity capital. Besides, if we look at the line (decrease) increase in cash and cash equivalents” we can notice that Panera Bread succeeded to release some cash from its activities, excepted during two years, because the firm used all of its cash to invest in new production materials (2005: 129,640 ; 2004: 102,291). - If we look at the revenues generated the last 5 years (exhibit we can see that they have increase in a constant way. [...]
[...] In the case of Panera Bread Company we can say that their competitive advantage is based on the higher quality provided to their customer. Indeed by differentiating on the basis of competencies and competitive capabilities, Panera Bread fast-casual restaurant chain delivers value to customers that rivals can't reach or can't afford to reach. In fact it is not easy for the competitors to reach such a quality level because it requires certain know-how that is difficult to get because it requires experience and a lot of employee trainings. [...]
[...] Panera Bread Company is a competitive actor on its market. The company is growing each year, and open new bakery-cafes all over the U.S. But if the company want to strengthen its competitive position and its business prospects vis-a-vis other restaurant chain rivals, Panera Bread will have to work on several things. In order to stay competitive on his market, the firm will have first to keep following its Broad differentiation strategy that is the key factor of success of Panera. [...]
[...] Without this analyze, managers of the company could face problems in the future that they would be unable to solve on time if they would arrive. Panera Bread Company is one of the leaders of the fast-casual restaurant market. Its original concept and its differentiation strategy made the firm competitive in a market where rivalry is fierce. But if the company wants to be more financially and competitively successful in the years ahead, she has to get first a clear fix of its strategic and competitive challenges. [...]
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