Strategic Analysis of Panera Bread Company

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Guidance on Panera Bread Company Case

Strategic Alternatives and Recommended Strategy
1. Can the current or revised objectives be met through more careful implementation of those strategies presently in use (for example, fine tuning the strategies)?

Panera's financial objective was to increase the shareholder value by maintaining17-30% Earnings per share growth in 2010, increase the gross profit margin per transaction and the improvement in margins despite providing value offerings to its consumers. The company aims at maintaining its market leadership position in fast casual dining category and attain a stronger brand trust by offering its customers value for money. The company wishes to attain differentiation through leadership in quality management through its fresh baked products.
These objectives can be met through more careful implementation of these strategies. This can be done through application of the balanced scorecard approach of linking balanced scorecard to strategy which explains that the Financial objectives can be achieved through focus on customer satisfaction and delight which is based on improvement of its internal business processes which are further based on innovation, learning and growth within the organization (Kaplan & Norton, 1996). The linkages between these four perspectives are as follows:
1) Financial Perspective - The focus of Panera Bread company is to improve the shareholder value and increase profit margins.
2) Customer Perspective - This increase in shareholder value will be the result of increased return on investment which can be done through increase in company revenues and the revenues will improve when there is a customer satisfaction and delight. Improving profit margins can be done in two ways - i) increasing the revenues of the organization that drive company's overall margins or ii) reduce costs by bringing efficiency in operations. The reduction in costs can serve the improvement of margins but it should not lead to deterioration on quality of products and services offered to customer as the latter is the long-term revenue source for the company. The researches have already shown that consumers have stronger quality value perceptions about the food served at Panera Bread as healthiest. Customer would like to have a fresh and healthy breakfast with wider product variety and a good ambience and will like to pay a slightly higher price for healthier options.
3) Internal Business Processes - Delighting the customer means providing consumers with the fresh food options with an excellent ambience and store atmospherics with quick service. This needs an improvement of internal business processes of the company. Although the company has defied the tradition of selling microwaveable products through offering freshly baked products at its bakery cafes, the number of fresh dough facilities are only 23 as of 2009 and need to be expanded to reach in those areas where the trucks have to deliver for 500 miles. Similarly, HR policies of the company needs improvement so that the customer service executives are not only well trained but also delighted themselves due to job satisfaction relating to compensation and work life balance which is relatively lower (Glassdoor, 2016: n.d.). This will lead to higher motivation of these employees to deliver the best of the customer services. Since the company has 795 franchise operated cafes, despite standard operating procedures for these franchises, there is a greater need to focus on motivating customer service associates at these franchises.
4) Learning, Innovation and Growth Perspective - Panera bread company has a strong focus on Research & Development and the Café is a place where the company tests new ideas. The company also has a stronger investment in this R&D function but there is a need to further develop test kitchens and develop new products which are serving as healthier breakfast, lunch and dinner options and can lead the company to attain not only the competitive advantage but also realization of economies of scale.

McKinsey's 7s model can be used for effective implementation of the strategy identifying and analyzing the different 's' components as follows:
1) Strategy - The company has a unique strategy in the market place where the company is able to differentiate itself in the market place but the fresh dough facilities are limited and need to be increased to further improve its supply chain and increase efficiencies.
2) Structure - Alfred Schandler has proposed that "structure follows strategy" of an organization (Wheelen & Hunger, 2010). Therefore, there is a need to restructure the Panera Bread Company's organization dividing the three different businesses of Company owned bakery cafes, franchise bakery cafés and fresh dough facilities into three separate Strategic Business Units (SBUs) and since each SBU will function as an independent entity being responsible sales, cost and profit centers, it will bring more efficiencies in the organization. Fresh dough facilities will act as company in its supply chain and will have closer relationships with its customer SBUs - company owned bakery cafes and franchise bakery cafes.
3) Systems - Panera Bread Company has already implemented stronger information systems with electronic ordering with its fresh dough facilities and monitoring and tracking the orders along with support and wider application of analytics to forecast sales. All information including company's daily and hourly sales, costs, staffing and labor costs, costs of ingredients or raw materials etc. were integrated into one source of information called "The Harvest", the company's intranet site. The company further needs to strengthen its competitive intelligence systems to monitor and track the steps taken by competitor restaurants and cafes. Although the company provides online training and has HR system linking the compensation in the form of bonus to cash flow from bakery cafes, still there is a need to strengthen HR systems where the employees are motivated to perform. The data from glassdoor.com, an employee review and rating site reveals that only 57% employees recommend Panera Bread Company to a friend (Glassdoor, 2016: n.d). This means that there is a need to increase employee motivation and develop a positive attitude towards the company.
4) Staff - The company has a full time staff of more than 12,000 employees called associates in 2009 and 13,200 part time associates. Since the company is aggressively expanding its operations across United States of America and Canada, there will be a requirement of staffing more skilled employees and less unskilled employees due to automation of certain systems.
5) Skills - Panera Bread Company has invested in rigorous training programs for its associates for ensuring the quality of operations at the company. Further, there is a need to identify the areas where skill development is required such as customer service, supply chain, processing of fresh dough etc. and develop specific training programs targeted at the employees working in different areas.
6) Style - The leadership style of the CEO is appreciated by the employees as 78% of the employees at the company approve of the CEO (Glassdoor, 2016: n.d). Ronald Shaich has driven the company as a CEO with his strong vision and commitment to providing quality products to the consumers.
7) Shared Values - The shared values of the company constitute its work culture. Panera Bread has good employee relations as per the facts of the case. This is also supported the employee rating on glassdoor with an average rating of the company on culture as 3.5 out of 5 (Glassdoor, 2016: n.d). But still there is a need to ...