Panera Bread has a chance for growth within a demanding industry in 2 key areas – enhanced sales of specialty drinks and opening international locations – that will allow the company to spread its mission of fresh bread for everybody while increasing the bottom line for investors. By making use of many frameworks for thought and projecting the estimated financials of the company, we are able to empirically show that these two strategies will likely be helpful to the client.
Utilize Historically High Margins on Specialty Drinks to get Main Point Here Growth
While Panera’s core business involves fresh bread, the design in the locations implies that there exists substantial revenue in selling coffee and related drinks, much like Starbucks. Exploring 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 houses, is anticipated to develop only 1.6%, meaning that each shop normally will spot increased revenue, due in part to your 3.5% development in domestic demand (See Appendix A). Further, profit in specialty drinks is estimated at 19.8%, greater than Panera’s 6.4% profit margin. Because of this improving the sales of specialty drinks may have an optimistic effect on Panera’s financial well being – clearly the business is growing and is a great industry to stay 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 were able to generate this level of sales using a 19.3% profit margin, its financial well being 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 boost in profit margin can 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 the Starbuck’s, Dunkin’ Doughnuts, or Caribou Coffee are much 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 client flow for Eden Prairie and Downtown is awkward; the customer must enter the store, walk past the bakery and coffee areas, then order at the registers. The issue is the coffee menus can be found over the bakery items, not in clear view of the client during the time of ordering. By the time the consumer is able to order, he or she has forgotten what drink to buy; furthermore, the drinks are creatively named which can be positive for brand identity, but awkward for the average male customer to order. At a minimum, the coffee and specialty drinks need to undergo these changes:
· Move the menus to the same wall face since the meal menus to ensure customers know what coffee is offered 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 in front of the bakery display cases
· Boost the offerings of specialty drinks, including researching alcohol based drinks, to draw in coffee house regulars into Panera
By concentrating on combining the café design having a coffee house atmosphere, Panera can become a “chill out” spot in addition to a premier location for both lunch and dinner. Furthermore, this modification can be carried to the international markets where café atmospheres, such as individuals in France, are more prevalent.
Expand Internationally to develop Brand Image and Diversify Economic Risks
Considering the fact that Panera is pursuing Canadian locations, it really is safe to imagine that this international marketplace for fresh bread is growing. Indeed, the international market breakdown of industry revenues can be found in Appendix B. Clearly, the European market is a big 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 enter in the market and require a key position (See Appendix C). Given waqpnq the culture and preferences of European customers may differ from Americans, it might be advisable to test new products in Canada before the overseas launch of the Panera brand. An interesting component of the European market is the strong relationship involving the industrial agricultural and milling companies and the industrial bakeries. The largest bakeries are properties of the greatest 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 strategy to these markets.