Executive Summary

Panera Bread started its life as Au Bon pain in 1981, founded by Louis Kane and Ron Shaich. Upon acquisition of Saint Louis Bread company. It was later rename Panera Bread in 1998. Panera Bread Panera Breads strategy is to provide a premium specialty bakery and caf experience to urban worker and suburban dwellers. Panera Bread is trying to gain competitive through product excellence and its healthy offering. Its artisan sour dough breads made with a craftsmans attention to quality and details. The menus are regularly reviewed and revised to sustain the interest of regular customer and satisfy changing taste of customer. The second dimension to its strategy is to quickly capitalize on Panera Breads Growth by expanding its stores by opening both company owned and franchised Panera Bread. Panera breads marketing campaign also reflects on its strategy to provide customer an entire dining experience rather than on the basis of price. The SWOT Analysis The SWOT analysis revealed that the overall attractiveness of Panera Bread remained very positive. (see exhibit 1)Panera Breads strength lie in its ability to produce excellence product that customer desired. Panera Bread continue to improve their customer experience delivered through its signature caf design, great inviting ambiance and regular reviewed and revised menu to keep up to its customers changing taste. Price continues to be weakness to Panera Bread due to its organic ingredient that needed to be delivered on daily basis. This means that Panera Bread is subject to a possible ingredient price hike. Panera bread is still based its business on labor. A constant need to trained and maintained good artisan may become a problem in the future. The competition in market in fast- casual market is extremely high. Panera Bread core competence still lies in its ability to produce an excellence product in which customer desire. Panera Bread continues focus on customer experience is another of its core competence. This is function that Panera bread has done very well. This was shown in 2003 survey in which Panera Bread scored the highest level of customer loyalty among quick- casual restaurant. Financial Analysis In appraisal of Panera Breads financial performance we look at several key financial ratios. We will focus on 3 main dimensions. The first is Panera Bread s profitability ratios which are use to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. The gross profit margin shows the percentage of revenue available to cover operating expense. From 2002 to 2006, the gross profit margin showed a downward trend in 2002 the gross profit margin stand at 0.4 which is now reduce to 0.37 in 2006.This show a slight decline in Panera Breads ability to generate revenue to cover its operating expenses. In evaluation of companys operational efficiency we looked at the return-on-sale( ROS). Leverage Ratio definition from www.investopedia.com[Type text] Page 1

The ROS of Panera Bread is consistent at about 0.7 to 0.8. A slight increase in ROS indicates the company is growing more efficient. From the share holders perspective the return on stockholders equity (ROE) is used. The ROE measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. A return of 12%- 15% range is an average. Panera Breads ROE is slightly above average. The trend of ROE is also increase slightly means that stockholder is getting more return on their investment in Panera Bread. The second dimension in evaluating the financial performance is the liquidity ratio. The liquidity ratio measure a company's ability to turn short-term assets into cash to cover debts. A ratio under 1 suggests that the company would be unable to pay off its obligations within a short term period. Since the current ratio of Panera Bread is higher than 1 since 2002. This showed that Panera Bread is in a good position to meet its financial obligation within a short term. The third dimension is the leverage ratios which are ratio that are used to calculate the financial leverage of a company to get an idea of the company's methods of financing. The debt- to-equity-ratio of Panera Bread is consistently less than 1.0 which indicates high creditworthiness and acceptable debt level. The debt-to-asset ratio show the mean of companys financing. During 2002 to 2003, the ratio is below 1.0 this indicate the mean of financing is equity based. However at the turn of 2004 to 2006 the ratio is above 1.0 which indicates Panera Bread implement more of debt financing. Competitions Starbucks Corporation operates in the same fast casual market segment. Starbuck own more than 7500+ company operated and licensed locations. In term of product offering, Starbuck concentrate mainly on the beverage side of the caf. Panera Bread also offers coffees and cappuccinos as Starbucks does, but Panera has a wider variety of products offerings. In term of caf concept design they are closely resemble each other. Starbucks has performed well financially in years past. Both companies take advantage of the unique store ambiance as well as excellence product offering. Au Bon Pain own and operated 190 stores in 29 states. Perhaps interesting fact was the Au bon Pain and Panera Bread used to be of the same company. There are now close rivals. Au Bon pain and Panera Bread compete in the same market. Both offer freshly baked goods sandwiches, healthy wrap and beverages. Strategic issues and problems A major concern facing Panera Bread is the high level of competition that exists in their industry. The recent trend of consumers increasing concern about their health had serve Panera Bread well in the past. However this also had attracted competition. Many major fast food chains that already have a strong reputation in the industry now had been changing their menus toward healthy option in order to compete for customers dollar. Panera Bread must continue to differentiate itself from this competitor through product quality and dining environment. Leverage Ratio definition from www.investopedia.com[Type text] Page 2

Other strategic issues that Panera Bread lie in its aggressive growth strategy. Panera Breads ability to increase sales of franchises has enabled Panera to grow rapidly. The growth of company in recent year is dependent on franchises. The strict guidelines may prohibit some potential franchisees from being formed. Panera Bread aggressive expansion may also lead to quality control problems. The management needs to formulate a solid plan to deal with quality control of its franchisees. Since the core competence of Panera Bread rely on providing product excellence. Recommendation. Need to 1 capitalize emerging opportunity Maintain leadership in product excellence and customer ecpericne Enhance comepetitiveness Improve cost

Sources
Panera Bread Company Website
http://www.panera.com/ Definitions of Financial Ratios. http://www.investopedia.com

Leverage Ratio definition from www.investopedia.com[Type text]

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