Panera Bread has an opportunity for growth within a challenging industry in 2 key areas – enhanced sales of specialty drinks and opening international locations – that can allow the company to spread its mission of fresh bread for everybody while increasing the bottom line for investors. By utilizing many frameworks for thought and projecting the estimated financials of the company, we are able to empirically demonstrate that these two strategies will be beneficial to the customer.
Utilize Historically High Margins on Specialty Drinks to Drive Financial Well Being Growth
While Panera’s core business revolves around fresh bread, the style of the locations implies that there is certainly substantial revenue in selling coffee and related drinks, similar to Starbucks. Looking at the coffee market, estimated real growth is 2.7% or roughly 5.7% given a 3% inflation rate while the quantity of establishments, the specific coffee shops, is predicted to grow only 1.6%, which means each shop on average will spot increased revenue, due in part to some 3.5% increase in domestic demand (See Appendix A). Further, profit in specialty drinks is estimated at 19.8%, much higher than Panera’s 6.4% profit margin. This means that increasing the sales of specialty drinks could have a positive impact on Panera’s financial well being – clearly the industry is increasing and is an excellent industry to be in for https://www.storeholidayhours.org/panera-bread-holiday-hours-open-closed-today. In accordance with Buffalo Wild Wings’ franchise disclosure document, greater than 40% of revenue is generated via alcohol and specialty drinks sales. If Panera had the ability to generate this amount of sales with a 19.3% profit margin, its main point here would increase by nearly 7.8% to 14.2%, abnormally high for that restaurant industry (which averages 4-5% margins). Though this profit margin level is likely not sustainable, the short-term increase in profit margin may help Panera expand its operations internationally to capture economies of scale featuring its suppliers.
Check out Industry Incumbents for Knowledge and Re-arrange Menu Locations
Visually, the design of a Starbuck’s, Dunkin’ Doughnuts, or Caribou Coffee are far more fluid than Panera Bread with regards to the coffee ordering location. This analysis draws heavily on the Eden Prairie Mall and Downtown Minneapolis Nicollet Mall locations. The client flow for Eden Prairie and Downtown is awkward; the consumer must enter in the store, walk beyond the bakery and coffee areas, and after that order on the registers. The issue is that this coffee menus are situated over the bakery items, not in clear view of the client during the time of ordering. When the client is able to order, he or she has forgotten what drink to order; furthermore, the drinks are creatively named that is positive for brand identity, but awkward for the average male customer to order. At the very least, the coffee and specialty drinks need to undergo these changes:
· Move the menus for the same wall face since the meal menus to ensure customers really know what coffee exists when ordering
· Arrange the bakery display cases nearer to the registers to entice more impulse purchases
· Remove queue line markers during non-rush times, especially in front of the bakery display cases
· Boost the offerings of specialty drinks, including researching alcohol based drinks, to attract coffee shop regulars into Panera
By concentrating on combining the café design using a cafe atmosphere, Panera may become a “relax” spot as well as a premier place for both lunch and dinner. Furthermore, this change may be carried to the international markets where café atmospheres, like individuals in France, tend to be more prevalent.
Expand Internationally to develop Brand Image and Diversify Economic Risks
Given that Panera is pursuing Canadian locations, it really is safe to imagine the international marketplace for fresh bread is increasing. Indeed, the international market breakdown of industry revenues are available in Appendix B. Clearly, the European marketplace is a sizable market for fresh bread. However, IBIS World estimates that 135,000 bakeries operate in Europe, meaning the market is fragmented. A brand name using a large marketing budget behind it may quickly go into the market and take a key position (See Appendix C). Given waqpnq the culture and preferences of European customers may vary from Americans, it might be better to test new releases in Canada prior to the overseas launch in the Panera brand. A fascinating facet of the European marketplace is the strong relationship involving the industrial agricultural and milling companies and also the industrial bakeries. The largest bakeries are properties of the biggest milling and agricultural firms within the U.K., Sweden, and Austria. This might cause supply chain issues during these countries, though Panera could pursue a partnership or joint venture approach to these markets.