Panare Bread free essay sample

To be the â€Å"First Mover† in the fast-casual category, Panera Bread is differentiated themselves from other restaurant by adding bonus to the specialty food. The company is offering variety specialty bread along with the bagel, pastries and baked food. This unique position currently entered by the Panera Bread has a major contribution to the firm’s success. It helped the company grown from 602 company owned and franchised units in 2003 to 1450 in today. Despite the economic suffered in a difficult condition during 2008 to 2010, Panera Bread still managed to have a sales jumped up to 10. percent increment. These numbers reflect a strong contributed to the firm’s success. Besides that, Panera Bread is currently one of the largest restaurant chains in the United States. It serves nearly six million customers a week and has sales up to 1. 5 billion in 2010. In my opinion, I think Panera Bread is able to reach its goal of becoming a leading national brand in the re staurant industry, because the company manage to indentify the needs and wants of the customers in the early stage and take action before their competitors. This helps the firm carve out a unique and favorable position in a difficult industry. Besides that, Panera Bread always keeps looking to the new innovation, not only in the variety of the food provided but also the appearances and the location of the outlet. This is important for a company to keep adapt to the changing environment nowadays to sustain itself as the leader in the fast casual category and becoming a leading national brand in the restaurant industry. Q2) Analyze the restaurant industry using Porter’s five forces model. In what ways has Panera Bread successfully positioned itself against the forces that are suppressing the profitability of the restaurant industry as a whole? Porter’s Five Forces Model | High| Medium| Low| Threat of Substitutes| X| | | Threat of New Entrant| X| | | Rivalry among existing firm| X| | | Bargaining power of suppliers| | | X| Bargaining power of buyers| | | X| The diagram above analyses the restaurant industry using Porter’s Five Forces Model. From the diagram, overall of the result shown that it is not an attractive industry to the company and there are three of the threats to the profitability. Threat of the substitutes of the restaurant industry is high due to the high availability of other choice of the customer. Besides that, the threat of new entrant is relevance high, this is because there are low capital require to enter into the restaurant industry and this lead to the level of rivalry among existing firm high within the industry. Threat of Substitutes Price that consumers are willing to pay for a product highly depends on the availability of substitute product. Panera Bread successfully position itself against the threat of the substitutes by distinguish itself from its rivalry. Panera Bread has become nation’s bread expert to offer specialty bread to their customers. Customers are able to enjoy a fresh and quality meal in the restaurant and variety choice of the food and beverage provided by the company. Besides that, Panera Bread differentiated it restaurant from its rivalry by provide a pleasant environment to the customer. The company emphasis the neighborly atmosphere in their restaurant to make customers feel more comfortable dining in their restaurant compare to the other. With these strategy, Panera Bread able to reduce the threat of substitutes and have a higher profitability. Threat of New Entrant The firms in an industry may become a magnet to new entrants if the industry is highly profitable. Something has to be done to avoid the competition in the industry increase and average industry profitability decline. Panera Bread is trying to keep the number of new entrants low by erecting barriers to entry. Panera Bread has created a nontraditional barrier to entry which is first mover advantage to against the forces that are suppressing the profitability of the industry. The company is the first company position themselves in the â€Å"fast casual† category and this name recognition create a barrier of entry for the potential competitor. Besides that, Panera Bread has an expansion of it restaurant all around the state to create an access difficulty of distribution channel to the new entrants. Rivalry among existing firm Level of competition among the existing firm is the major determinant of industry profitability. Panera Bread has come out several ways to against the competition among the existing firm. The company provides catering services through its Via Panera Catering and this able to help the company easier to reach the customer compare to their competitor. Besides that, Panera Bread also suggest a new time of day to eat specialty foods which calling the time between lunch and dinner â€Å"chill-out† time and this enable the company has a competitive advantages over its competitor which only selling the usual dining time. Q3) What barriers to entry has Panera Bread created for the potential competitors? How significant are these barriers? Panera Bread has created several barriers to entry for its potential competitor, such as product differentiation, access to distribution channels and first-mover advantages. Panera Bread has differentiated its product by offers a variety of artisan and other specialty bread, along with bagel and pastries and baked food. All the baked food produced by the Panera Bread is made by the national’s bread expert, therefore the taste and quality of the food are being ensured. This creates a barrier to entry for the potential competitor because they need to put in more effort into their product than before in order to compete with Panera Bread. Besides that, restaurant can only be success if the turnover of the area is high. Therefore own a strategic location is important to the company in the restaurant industry. Panera Bread has become one of the largest restaurant chains in the United States. Most of the strategic locations in the country have been taken by Panera Bread and this erecting a significant barrier to the potential competitor to enter to the market. Potential competitor has to think twice before entering into the industry which selling the similarity product with Panera Bread in the area. Furthermore, Panera Bread has a â€Å"first mover advantages† as nontraditional barrier to entry for the new entrant. Panera Bread is the first company to position itself in the fast casual category and this help the company has name recognition in the industry. This made the company able to gain a high market share which will creates difficulty for the potential competitor to steal the market share from Panera Bread. Q4) What are the Panera Bread’s primary sources of the competitive advantage? In your judgment, are these sources of advantage sustainable? Why or why not? Brand strength, location, neighborly atmosphere of the restaurant, specialty bread with distinctive taste and quality are some of the primary sources of the competitive advantage owned by Panera Bread in today market. Panera Bread has strong brand strength over its competitor. The company has done a lot of renovation to the company to reposition their company on the fast casual category. Customer can feel confidence toward the taste of the food and the dining environment solely based on the brand name of the Panera Bread. The expectation from the customer can always be satisfied by the company and this lead to Panera Bread has strong brand name to attract more investor invest to the company. In my opinion, I think Panea Bread is able to sustain this competitive advantage. Panera Bread is the first mover to position their company in the fast casual category and their outstanding performances has been written down into most of the business book and being studies by lot of researchers about the key factor of success of their company. This help the brand name of the company is being recognized by the worldwide and sustain the brand strength in today. Besides that, Panera Bread is holding lot of strategic locations as competitive advantages nowadays. These distribution channels are often hard to crack by the competitor especially in the crowded market such as restaurant industry. Therefore, I think the company is able to sustain this competitive advantage. Panera Bread expanded their restaurant in large in the mid of 1990s. The company may have purchased land and building for their restaurant when it was less expensive than it is today. This give the company a cost advantages over its competitor who wants to enter into the same area with Panera Bread. The company is able to sustain this competitive advantage as long as the price of the land keeps rising in the future. In addition, Panera Bread differentiated its product by offering specialty bread with distinctive taste and quality and made this as one of the primary sources of the competitive advantages. In my opinion, I think Panera Bread is able to sustain this competitive advantage. Baked-food is the core business of Panera Bread and the company is understood the important of the quality of their baked-food provide to their customer. The company is believed will continue to putting more effort into their core product to meet the expectation of the customer. Lastly, neighborly atmosphere of the restaurant provided by the Panera Bread also one of the competitive advantage owned by the company over its competitor. In my opinion, I think the company is unable to sustain this competitive advantage in the coming future. The level of the competition among the existing firm is keep rising recent years. The competitor nowadays will have competitor intelligence gather to study the strength and weakness of their competitor to improve the performances. Competitor may copy the strength of the company and provides same atmosphere feeling to their customer and this caused Panera Bread loses the competitive advantage they used to have over their competitor.