Panera Bread And The Fast Food Industry

Comprehensive Strategic Analysis
Panera Bread and the Fast Food Industry
Amy Mayhall, Nick Milberger, Ian Euler, Deleon Dallas
Concordia University, 2013

Comprehensive Strategic Analysis
Panera Bread and the Fast Food Industry
Amy Mayhall, Nick Milberger, Ian Euler, Deleon Dallas

1. What are the dominant characteristics of the industry?
There are many characteristics in the fast-casual industry. These characteristics are all important for competing restaurants to consider when trying to gain competitive advantage. The characteristics that are most relevant to this industry are; market size and growth rate, number of rivals, scope of competitive rivalry, number of buyers, degree of product differentiation and vertical integration.
Market size and growth rate are rapidly increasing. Sales reached $23 billion in 2010, that is 30 percent higher than it was in 2006. Survey results in 2010 mentioned that the reason for many people not eating at a fast casual restaurant in the last month was because there was a lack of availability. This means that there are people searching for fast casual because of the healthier choices but there are not as many establishments as there are of fast-food choices. This gives the industry a lot of room to grow. (Sena, 2011)
In 2009 there were approximately 600 fast-casual establishments in the U.S. Rivalry for this market is strong. There are hundreds of fast casual establishments that offer quick and easy food. This makes rivalry high. There is always a threat of a company breaking into the market with a new idea that will steal consumers and revenue. This threat causes companies to try whatever it takes to have an advantage over their rivals. (Sena, 2011)
One of the main pulls of fast casual restaurants is the experience and ambiance of dining in one of their establishments. The experience that they put forward is closer to a sit down restaurant rather than a fast food establishment. They can be a perfect place to read, study or hold a casual meeting. This industry is usually trying to capture their audience with the healthy options that they believe in. The food is a pricier than a fast food restaurant and can range anywhere from $8 to $15. This food is of better quality and is more nutritious for the consumers overall health. This is how they differentiate from fast food. It is the scope of competitive rivalry.
Buyers in this industry, Americans who eat outside of their homes, are growing, partly because of the obesity crisis in America. The whole draw to a fast casual restaurant and their product is the quality fresh food you can get while having that cozy coffee house feel, otherwise known as a “third place.” Buyers are flocking to this concept of nice healthy food with a comfortable clean environment.
The fast casual food market is large and has many food types and different products to offer. Clients have a plethora of choices. Other than just types of food people must into account dining experience as well because these restaurants have many different environments. For example the consumer can choose between Chipotle (Mexican food), Noodle and Company (pastas and soups) or a place like Panera (cafe and bakery). These three only touch the surface of the degree of product differentiation in the industry.
Panera bread has does integrate vertical integration into their business strategy. Fresh bread is Panera’s main draw into the store because the bread is made fresh everyday. However, they are not totally vertically integrated. They still use other companies to get their meat, cheese, lettuce, coffee beans and other supplies that they sell. They vertically integrate through their bread.
2. What is competition like in the industry?

Power of suppliers is a weak force. Large fast casual chains have thousands of suppliers to choose from. Switching costs are low and it is done easily. Fast-casual and other restaurants in general are very large

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