The Panera Bread Company runs company-owned and franchised retail
bakery-cafes in Canada and the US. The business is divided into three
sections: franchise-owned bakery cafes, fresh dough facilities & other
product sales, and company-operated bakery cafes. The company
concentrates on supplying its customers with high standard food items
such as fresh pastries, beverages, baked goods, and sandwiches at
competitive prices. The organization has 1,625 retail outlets, both
company-operated and franchise-owned respectively. Panera Bread Company
was established in 1981, and its headquarters is located in St. Louis,
Missouri. The objective of this research is to analyze Porter’s five
forces of competition in relation to the Panera Bread Company and its
Panera Bread Company’s has excelled for many reasons ranging from
store design, ambiance, strategic location, and distinct menu. In the
article, “It all begins with Fresh-Baked Bread…” the company
asserts that it attributes its tremendous growth to its ability to give
their customers manifold solutions for various requirements suitable for
various times of the day from one destination. Moreover, the company
dominates in supplying fresh-baked breads thus, it can provide
first-class dining experience to all its clients. Among the main diets
that have given the company great reputation include sandwich and salad
category as well as, “better soup” that people crave and trust. The
company’s location is also located in friendly places where clients
can access easily at any t0ime of the day (Thompson, 2012). Moreover,
Panera Bread brand has successfully penetrated the Canadian and the
United States market. This vast growth encourages tremendous brand
growth in the market.
Panera Bread specializes in making regular food unique. The company
integrates the power of unique menus with artisanship and innovation for
food development. Vegetable products such as tomatoes, lettuce, and
avocados come fresh from farms. This helps in ensuring that clients
consume fresh products that are both healthy and tasty thus, many
clients in the cafés are loyal and regular customers. In addition, the
company offers healthy and tasty diets such as salmon, sous-vide roasted
turkey and chicken that is free from antibiotics, and processes pasta
and panni press that allows the company a competitive edge over its
competitors (Schlosser & Wilson, 2006).
The original business concepts of Panera Bread Company were supplying
fresh baked products in the upscale market. The idea of the bakery-cafes
came from the necessity of offering clients with a suitable place where
they can consume their preferred baked products from the company. The
company’s management also executes several strategies that aim at
promoting the popularity of the brand (Thomson, 2005).
In spite of the steady overall growth that the company has achieved
since its establishment, it has overcome several challenges. For
instance, foodservice business underwent a recession between 2008 and
2009during the housing crisis. Fortunately, the sector has been
recovering steadily. According to Thompson (2012), the business will
continue developing in the near future. However, the management of the
company is worried concerning runaway inflation and weak economic
recovery because of the non-functioning Federal Reserve stimulus
response. The major risk is that many consumers might start spending a
little money since they have dwindled disposable income. Every time the
population is not at a position to spend a lot of money on baked
products, they hurt the entire industry dealing with baked products
Threat of new entrants
Panera Bread Company is a well-established local brand with numerous
chains across the country. Chances of new entrants in the industry who
can add pressures on costs and prices of the products are low. This is
because the company has a popular brand name that would take potential
clients a long time and huge capital to reach such success level. On the
same note, the company sells proprietary baked products that are popular
among the clients of the company. Considering that Panera Bread Company
targets economy clients, their products are quality and made, with high
precision, to meet clients’ needs (Panera Bread, 2013). Moreover, the
company can sell its products at competitive rates due to economics of
large scale. Competing with Panera Company is also challenging since its
stores are strategically located in positions where their clients can
access the outlets easily. Besides, the business has expanded into
Canada thus, expensing its market range beyond the United States.
Lastly, the company offers unique dishes that have attracted loyalty of
many clients (Michman & Mazze, 2008). It follows that these foods have
helped the company to withstand the test of time.
Threat of substitute products or services
Although Panera Bread Company faces the threat of substitutes, its
proprietary products dominate the market. This is because the management
of the company strives to deliver high quality products to the clients
of the company. According to Thomson (2005), the company is based in the
fast food industry which faces competition from assorted ethnic
cuisines, including, Mexican, Asian, and European diets. Moreover, the
company competes for clients with pay-after-eating restaurants that give
cozier and warmer environment than the fast food businesses atmosphere.
Besides, bakery and coffee outlets such as Dunkin’s Donuts increases
the alternatives for consumers in the foodservice industry. Furthermore,
Panera Bread clients have the option of dining-in, a recent trend
enhanced by the crisis in the housing market. This includes supermarkets
in the list of competitors as some of the large outlets are now offering
ready-made foods. With the wide variety of alternatives in place, Panera
Bread market faces extremely high rivalry from substitute products
Bargaining power of buyers (customers)
Panera Bread Company clients have high bargaining power since there are
diverse options readily available in the market. For instance, consumers
can choose to dine in family and ethnic run local restaurants available
in all urban centers. Clients may also choose to dine in chain
restaurants that may vary from a selection of steakhouses to Japanese
dishes, and fast food stores offering assorted ethnic stores, burger
venues, and sandwich shops. Thompson (2012) asserts that clients of the
Panera Bread Company have high bargaining power since they choose the
service of the company from a wide variety of other services.
Bargaining power of suppliers
Suppliers have low bargaining power since there are many competing
industries demanding similar products. The main raw materials that all
these food industries demand include meats, frozen foods, fruits, dairy
products, beverages, and vegetables. According to Porter (2008),
suppliers have no bargaining power when there are many businesses that
are demanding similar products (Magretta, 2012).
Rivalry among existing competitors
The company is facing stiff competition among existing rivals companies.
For instance, the large fast food businesses run costly campaigns since
the cost of financing the programs is among several business units
across the country. Moreover, the large stores are able to sell their
products at discounted prices. Although the profit margin is small,
company can generate a significant amount of profit from these sales.
Since the housing crisis stalled growth of fast food industry between
2008 and 2010, competition among existing on Panera business from rival
investments has increased steadily as each company is looking to expand
Thomson, N.F. (2005). Bona fide occupational qualifications: what are
they? Proceedings of the International Academy for Case Studies, Vol.
12, Issue 1.
Thompson, A.A. (2012). Panera Bread Company in 2012 – Pursuing growth
in a weak economy. University of Alabama Press.
Porter, M.E. (2008). The Five Competitive Forces That Shape Strategy.
Harvard Business Review 79.
Panera Bread, (2013). It All Begins with fresh-baked bread. Web.
Retrieved on January 1, 2013 from
Michman, R. D., & Mazze, E. M. (2008). The food industry wars: Marketing
triumphs and blunders. Westport, Conn: Quorum.
Schlosser, E., & Wilson, C. (2006). Chew on this: Everything you don`t
want to know about fast food. Boston [Mass.: Houghton Mifflin Co.
Magretta, J. (2012). Understanding Michael Porter: The essential guide
to competition and strategy. Boston, Mass: Harvard Business Review
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PANERA BREAD COMPANY 1
The Panera Bread Company runs company-owned and franchised retail