PANERA BREAD, A TRUE AMERICAN SUCCESS STORY

Just about every morning I have a cup of java at Panera Bread.  I have been going there just about every day for about three weeks and was wondering what keeps drawing me back to this place.  I discovered that I have a lot in common with other Panera customers, who like me, are repeat customers. My natural curiosity, inquisitiveness and desire to learn more, drove me to do some research on Panera Bread.

So what is so special about Panera Bread?  Everything. For me Panera has become a social watering hole, a place to see and be seen, make new friends, engage in interesting conversations, spread gossip, read a book or newspaper, surf the Internet, study and work  .   

Panera Bread is a true success story in Americana, and I thought that an informative blog post and Tweet were in order, and I present my findings here for my loyal fans and Twitter followers.

While other foodservice establishments have reduced their menu offerings, discounted prices, and even resorted to couponing, specials and even giving away free breakast meals to create customer traffic and keep afloat, Panera has succeeded in bucking this trend with double-digit growth in sales and earnings, a No 25 ranking among the Top 400 restaurant chains according to Restaurants & Institutions, some of the highest weekly gross sales in the specialty bread/cafe category and additional store openings.  

While other restaurant chains are retrenching, reorganizing, or going out-of-business in record numbers, Panera  added 102 new stores in 2008.alone and now has locations in just about every state in the Union.. This type of growth in new stores is unrivaled in the foodservice industry.

As of Dember 31, Panera had 1,325 locations.  562 are company-owned restaurants.  763 are franchised locations.  Franchising has been very important in driving Panera's growth in revenues, number of stores and sales of fresh dough which are produced for its franchisees at a dozen locations throughout the country.

Ronald M. Shaich, CEO, Panera Bread, states in the Panera Bread 2008 Annual Report that their success is attributable to offering the customer a "Total Experience".  This is often referred to as a "WOW" customer experience by marketers. 

Mr. Shaich believes that the Recession is the perfect time to improve its competititve advantage.  It manages to do this by providing customers a "Total Experience", delivering high-perceived value without discounting, offering great customer service, increasing and improving menu offerings, offering all-natural baked goods, beverages and other food items and aggressively opening new locations.

Panera competes on the basis of differentiation, not price.  Panera emphasizes value and broadening its customer base by employing a business model that is part specialty coffee cafe, Bistro-style restaurant, breakfast and sandwich sitdown, and bakery, all rolled into one, a true "Blue Ocean Strategy", if there ever was.   

Panera restaurants offers patrons a modern contemporary interior look and layout, trendy decor, large glass windows that let in lots of natural lighting, comfortable table seating that includes booths and spaciousness that is about twice the size of your typical Starbucks.  Another important draw is the WIFI service that offers access to the Internet and is available FREE at all its restaurants.

One of the trademarks of Panera is the aroma of freshly baked bread that hits you as you enter their restaurants.   HMMMM.  Freshly baked breads and pastries are neatly packaged and displayed in tables near the front counter.  Pastry racks and a glass enclosed area neatly display Panera's freshly baked creatons, that includes a broad selection of breads, bagels, souffles and a selection of pastries that is unmatched.   

So what kind of customers eat at Panera?  All types.  This includes students, singles, married couples with young children, professionals and blue-collar types, young and old, and even cops and firemen. One of the big draws for familes with young chidren are the children's high chairs that are available at all of its restaurants.

When you tally all of the above, you have a very successful restaurant business. Let's look at Panera's numbers, shall we?

• Number of Stores: 1,325 (as of 12/31/08); 562 company-owned and 763 franchised.
• Store Openings: 102 opened in 2008.
• Gross Sales (In billions): $1.298 (2008), $1,086.7 (2007), $0.828 (2006), $0.640.3 (2005 and $0.479 (2004)       
• Gross Profit: Panera's company-owned stores generated $1.106 billion in revenues in 2008 with a gross profit of $773.6 or 70% profit margin. 
• Pre-Tax Profit:  $0.108 billion in 2008 
• Average Revenues Per Location:  Company-owned - $1.97 billion; Franchised - $2.02 million

Information for this post was taken from Panera Bread's Annual Report for the year ending December 31, 2008

COMMENTARY: What more can I say that I haven't already said.  Time for a Panera sandwich.  See ya.