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Panera bread case study
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| Words: 393 | Submitted: 06-Mar-2012
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DescriptionPanera bread case study
Panera Bread Company Case
Rising production costs: Increasing cost of raw materials and cost of production like wheat prices, fresh dough prices, labor costs, rent, and other input costs may force Panera to increase the cost of its product. On the other hand due to the inflation consumer purchasing power may go down forcing management team of Panera Bread to reduce the price of the product to counter the inflationary effect and appeal more customers. Therefore, it is one of the key challenges to the Panera Bread to manage the price that is affordable to its customers, competitive in the market and still earn profit to sustain in the market.
Growing competition: Both traditional fast food and dine in restaurants are beginning to respond to the success of fast casual restaurant like Panera Bread. Other fast food chains have started to offer similar kind of offerings to its customers as Panera Bread does. Meanwhile, dine in restaurants have instituted carryout programs, fast-lunch guarantees, and lower prices, all measures to counter the concept of fast casual. If these trends continue, Panera Bread can no longer enjoy the safety of the product niche that it has occupied, and will face greater competition in terms of pricing and food quality. Beside this, intense rivalry in the industry pressures both market share and profit margins. As a consequence, increased competitive activity requires chain operators seek opportunities for improving both unit productivity and profitability. Food safety issues: Panera Bread’s relatively nutritious menu does not make it completely immune to problems faced by other fast food regarding safety issues. Today customers are educated conscious regarding health issues and they are always looking for healthier alternatives. Furthermore, problems with the food supply, such as an avian flu outbreak, also pose a significant threat to Panera Bread’s business. Even the perceived risk of illness could detract from consumers’ willingness to eat at the company’s restaurants.
Restaurants are affected by recession: Fast food restaurants have often done well during recessions, as they are perceived as cheaper alternatives to sit-down restaurants. Panera, as a hybrid of these two models, may still face difficulties to maintain its positioning in the mind of its target customers. To remain competitive in the market they should able to manage low price in the future without reducing the quality image of its products and service
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