Founded 31 years ago, Panera Bread has made a name of its own in the current date. It has expanded to now have 2,100 stores as of November 2017 (Panera Bread, 2017). The company is currently owned by JAB Holding Company which also owns Paradise Bakery & Café, Peet’s Coffee, Mighty Leaf Tea, and several other brands. The company specializes on bakery café type menu category as per its name and falls under the fast-casual segment of the market. As per one of the ranking Panera Bread falls on the 11th rank as per the sales revenue in the United States as of 2017 (Technomic Inc, 2018). They left behind some of the popular brands like KFC behind as well. The company aims to use cage-free eggs in all their store by 2020 (Ross, 2015). To see how well the business flairs when it comes to four tests of the competitive power, the business ability with regard to VIRN is accounted for. VRIN tests for valuable, rare, inimitable and non-substitutable (Gamble, Thompson & Peteraf, 2016). The more of the test and the performance in each one of them is as explained below:
Valuable : The company with 2017 store locations in the United States and hundreds more in Canada, grew the total number of stores by 3.2% from the previous year and their YOY sales by 5.8% show it is certainly valuable (Panera Bread/Saint Louis Bread Co., 2018). The company with that large number of stores have a wider coverage and convenience for people to visit their store. When you have one close to you, you’re more likely to visit it else people may move out to another competing product. This large number of stores allow them to cover a wider area and cater to the needs of the people. This does show that the company passes this test.
Rare : Panera Bread is a bakery café and offers items like bakery item, soups, specialty drinks, salads, sandwiches, and pasta. The business also has over two thousand stores in several parts of the United States and Canada. This is not that easy to copy for business, not in this category. Einstein Bros. Bagels is the closest competitor to the business and they’ve got a negative growth of 7.2% last year and were forced to close few of their outlet to survive, which does suggest that the entry into the market and rapid expansion isn’t possible easily (Einstein Bros. Bagels, 2018). They also have less than 10 times the sales as of Panera Bread. There are other market players however in fast food category which may enter the fray but their USP is a lot different from what Panera Bread does and thus may cause more harm than good. So, the company does pass this test as well.
Inimitable : If we’re to look at the bakery café that exists, the second highest number of outlet is by Einstein Bros. Bagels which has 395 stores and behind it is Bruegger’s Bagels which has 260 stores as of 2017. Both of them have lesser number of stores compared to the previous year. Other brands like Dominos, Pizza Hut, Chick-Fil-A which gross the highest sells even more than that of Panera Bread do have the capability to expand their menu item and enter into the new segment at least if we’re to look at the financial power. But to get anywhere close to where Panera Bread is and also move away from their current offerings of Pizza, Chicken and other specialized items, it’s a huge undertaking. Even with the financial power, when it comes to gaining a new customer, suppliers and to even acquire or train employees with regard to a different system of the bakery is a huge challenge. Considering this, Panera Bread does pass through this test as well.
Non-substitute : Panera Bread is known as a clean-ingredient bakery-café chain. Other businesses can come up with a different product under the same category to slowly make people move away from the brand. Also, rivals can start taking online order with home delivery service such that they can cater to the customer who is a bit far from their normal store location. That way they can start gaining more and more customer and expand their reach. With the financial power of the rivals in a similar category, that is very much possible and could lower the profit of Panera Bread. Thus, the business doesn’t pass this test.
From the analysis and explanation above, Panera Bread passes three of the four test of the competitive power of resource.
Founded 31 years ago, Panera Bread has made a name of its own in the current date. It has expanded to now have 2,100 stores as of November 2017 (Panera Bread, 2017). The company is currently owned by JAB Holding Company which also owns Paradise Bakery & Café, Peet’s Coffee, Mighty Leaf Tea, and several other brands. The company specializes on bakery café type menu category as per its name and falls under the fast-casual segment of the market. As per one of the ranking Panera Bread falls on the 11th rank as per the sales revenue in the United States as of 2017 (Technomic Inc, 2018). They left behind some of the popular brands like KFC behind as well. The company aims to use cage-free eggs in all their store by 2020 (Ross, 2015). To see how well the business flairs when it comes to four tests of the competitive power, the business ability with regard to VIRN is accounted for. VRIN tests for valuable, rare, inimitable and non-substitutable (Gamble, Thompson & Peteraf, 2016). The more of the test and the performance in each one of them is as explained below:
Valuable : The company with 2017 store locations in the United States and hundreds more in Canada, grew the total number of stores by 3.2% from the previous year and their YOY sales by 5.8% show it is certainly valuable (Panera Bread/Saint Louis Bread Co., 2018). The company with that large number of stores have a wider coverage and convenience for people to visit their store. When you have one close to you, you’re more likely to visit it else people may move out to another competing product. This large number of stores allow them to cover a wider area and cater to the needs of the people. This does show that the company passes this test.
Rare : Panera Bread is a bakery café and offers items like bakery item, soups, specialty drinks, salads, sandwiches, and pasta. The business also has over two thousand stores in several parts of the United States and Canada. This is not that easy to copy for business, not in this category. Einstein Bros. Bagels is the closest competitor to the business and they’ve got a negative growth of 7.2% last year and were forced to close few of their outlet to survive, which does suggest that the entry into the market and rapid expansion isn’t possible easily (Einstein Bros. Bagels, 2018). They also have less than 10 times the sales as of Panera Bread. There are other market players however in fast food category which may enter the fray but their USP is a lot different from what Panera Bread does and thus may cause more harm than good. So, the company does pass this test as well.
Inimitable : If we’re to look at the bakery café that exists, the second highest number of outlet is by Einstein Bros. Bagels which has 395 stores and behind it is Bruegger’s Bagels which has 260 stores as of 2017. Both of them have lesser number of stores compared to the previous year. Other brands like Dominos, Pizza Hut, Chick-Fil-A which gross the highest sells even more than that of Panera Bread do have the capability to expand their menu item and enter into the new segment at least if we’re to look at the financial power. But to get anywhere close to where Panera Bread is and also move away from their current offerings of Pizza, Chicken and other specialized items, it’s a huge undertaking. Even with the financial power, when it comes to gaining a new customer, suppliers and to even acquire or train employees with regard to a different system of the bakery is a huge challenge. Considering this, Panera Bread does pass through this test as well.
Non-substitute : Panera Bread is known as a clean-ingredient bakery-café chain. Other businesses can come up with a different product under the same category to slowly make people move away from the brand. Also, rivals can start taking online order with home delivery service such that they can cater to the customer who is a bit far from their normal store location. That way they can start gaining more and more customer and expand their reach. With the financial power of the rivals in a similar category, that is very much possible and could lower the profit of Panera Bread. Thus, the business doesn’t pass this test.
From the analysis and explanation above, Panera Bread passes three of the four test of the competitive power of resource.
References
Einstein Bros. Bagels. (2018). Retrieved from restaurantbusinessonline.com/top-5...
Gamble, J., Thompson, A., & Peteraf, M. (2016). Essentials of Strategic Management (5th ed.). New York: McGraw-Hill Education.
Panera Bread History. (2017). Retrieved from panerabread.com/en-us/company/abou...
Panera Bread/Saint Louis Bread Co. (2018). Retrieved from restaurantbusinessonline.com/top-5...
Ross, A. (2015). Panera to Use All Cage-Free Eggs by 2020. Retrieved from time.com/4101884/panera-cage-free-...
Technomic Inc. (2018). 2017 Top 500 Chain Restaurant Report . Chicago, Illinois.