Panera Bread Essay

Substitutes (Moderate) o Substitutes to restaurants in the Fast-Casual category would be other restaurant segments like midscale dining, fast food, or cooking at home. o The level of threat given by these substitutes vary and can be affected by factors like store location and the economy. When money is tight, fast-food alternatives gain an advantage because their prices are lower; this may also cause people to simply cook at home. On the other side, midscale or fine dining may gain competitive advantage when consumers have more money to spend. Poor store location can increase this threat as there are significantly more QSR’s than fast-casual chains, especially in terms of free-standing units. While there is strategic benefits to opening …show more content…
Supplier Power (Moderately Low) o Most restaurants require many of the same ingredients which means there isn’t great differentiation among suppliers’ competitive offerings. o Switching costs are typically low o For a majority of Panera Bread’s ingredients there are numerous suppliers to source from. o One factor that strengthens supplier power in Panera Bread’s case is that there is a more limited selection of vendors that can reliably source items such as antibiotic-free chicken and organically-grown produce. These items are vital for the company’s goal to provide healthier, more nutritious menu offerings. New Entrants (Moderately High) o Costs are quite straight-forward and predictable in terms of payroll, rent and inventory. Fixed costs remain rather low compared to variable costs. o There are franchising opportunities, especially within the fast-casual segment, that make the start-up less expensive. o The dining environment & experience is just as important as the pricing and menu options in the fast-casual segment. This means that a new firm has potential to enter the market if they’re able to innovate the atmosphere and experience of their