Panera Bread has a chance for growth within a challenging industry in 2 key areas – increased sales of specialty drinks and opening international locations – that will encourage the company to spread its mission of fresh bread for everyone while increasing the bottom line for investors. Through the use of many frameworks for thought and projecting the estimated financials of the company, we’re able to empirically demonstrate that these two strategies is going to be good for the client.
Utilize Historically High Margins on Specialty Drinks to operate Main Point Here Growth
While Panera’s core business revolves around fresh bread, the design and style from the locations implies that there is certainly substantial revenue in selling coffee and related drinks, much like Starbucks. Looking at the coffee market, estimated real growth is 2.7% or roughly 5.7% given a 3% inflation rate while the number of establishments, the specific coffee houses, is anticipated to cultivate only 1.6%, which means that each shop on average will spot increased revenue, due partly to a 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 enhancing the sales of specialty drinks will have a good effect on Panera’s bottom line – clearly the business keeps growing and is an excellent industry to be in for what time does Panera Bread close today. In accordance with Buffalo Wild Wings’ franchise disclosure document, a lot more than 40% of revenue is generated via alcohol and specialty drinks sales. If Panera could actually generate this degree of sales with a 19.3% profit margin, its main point here would increase by nearly 7.8% to 14.2%, abnormally high for the restaurant industry (which averages 4-5% margins). Though this profit margin level is likely not sustainable, the short-term increase in profit margin can help Panera expand its operations internationally to capture economies of scale with its suppliers.
Check out Industry Incumbents for Knowledge and Re-arrange Menu Locations
Visually, the layout of a Starbuck’s, Dunkin’ Doughnuts, or Caribou Coffee tend to be more fluid than Panera Bread with respect to the coffee ordering location. This analysis draws heavily on the Eden Prairie Mall and Downtown Minneapolis Nicollet Mall locations. The customer flow for Eden Prairie and Downtown is awkward; the client must go into the store, walk past the bakery and coffee areas, and then order in the registers. The problem is that this coffee menus are situated over the bakery items, not in clear look at the consumer at the time of ordering. By the time the consumer is ready to order, she or he has forgotten what drink to order; furthermore, the drinks are creatively named which is positive for brand identity, but awkward for your average male customer to order. At the minimum, the coffee and specialty drinks have 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 closer to the registers to entice more impulse purchases
· Remove queue line markers during non-rush times, especially before the bakery display cases
· Raise the offerings of specialty drinks, including researching alcoholic beverages, to bring in coffee shop regulars into Panera
By centering on combining the café design having a coffee house atmosphere, Panera could become a “chill out” spot as well as a premier location for both lunch and dinner. Furthermore, this transformation could be carried to the international markets where café atmospheres, like individuals in France, are more prevalent.
Expand Internationally to construct Brand Image and Diversify Economic Risks
Considering the fact that Panera is pursuing Canadian locations, it really is safe to imagine that the international market for fresh bread is increasing. Indeed, the international market breakdown of industry revenues can be found in Appendix B. Clearly, the European industry is a sizable market for fresh bread. However, IBIS World estimates that 135,000 bakeries function in Europe, meaning the current market is fragmented. A brand name having a large marketing budget behind it could quickly enter the market and require 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 items in Canada ahead of the overseas launch in the Panera brand. A fascinating element of the European market is the strong relationship in between the industrial agricultural and milling companies and the industrial bakeries. The greatest bakeries are owned by the biggest milling and agricultural firms inside 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.