1. Strategic Audit of Panera Bread Company Case 29 Strategic Management MGMT 436 Group 5

2. Current Situation (John L.) A. Current Performance Revenues between 2000 and 2003 rose sharply due to new unit expansion but masked a slowing year-to-year growth rate. New strategies and initiatives must be taken in order to continue growth. Revenues rose from $350.8 million in 2000 to $977.1 million in 2003, fueled by new unit expansion In 2000, comparable sales and annualized unit volumes (AUVs) increased 9.1% and 12.0% respectively. In 2003, those same figures increased only 0.2% and 0.5% reflecting slowed growth.

3. Current Situation (John L.) B. Strategic Posture Mission Mission Statement "A Loaf of Bread in Every Arm" (www.panerabread.com/about/company).www.panerabread.com/about/company Objectives Provide the following fast casual food service qualities The casual atmosphere of coffee shops The quality food of sandwich shops The quick service of fast food chains Strategies Specialize in the following five consumer dining needs Breakfast Lunch Daytime "chill-out" Lunch in the evening Take-home bread

4. Strategic Managers (Travis) A. Board of Directors

5. Strategic Managers (Travis) B. Top Management

6. External Environment (J.W.) A.Natural Environment Climate, crops such as wheat, grain, sugar cane, fruits and vegetables are affected by adverse weather conditions such as droughts, hurricanes, tornadoes, and excessive rain resulting in increased ingredient costs driving up product costs negatively affecting company profits Energy costs, rising gas prices will affect transportation and shipping costs while increasing electrical charges will also negatively affect company profits.

7. External Environment (J.W.) B. Societal Environment STEEP CategoryISSUEThreat/OpportunityRanking EconomicReal Estate costsThreat6 Competition with other specialty foods and casual dining restaurantsThreat1 Double digit growth with fast casualOpportunity2 Expansion into foreign marketsOpportunity5 FranchisesOpportunity4 Joint Venture StoresOpportunity4 Expansion into other US locationsOpportunity3 TechnologicalWIFIOpportunity1 In-store info systemOpportunity2 Political-LegalNone SocioculturalMove to Healthy foodsOpportunity1

8. External FactorsWEIGHTRATINGWEIGHTED SCORECOMMENTS Opportunities Double digit growth with fast casual0.251 opened average 23 new stores each year Expansion into foreign markets0.0100No expansion in foreign markets Franchises0.240.8 opened average 83 new stores each year Joint Venture Stores0.120.2no data Free WIFI0.0340.12 Rated best in tech mags for free offering In-store info system0.0150.05accurate inventory tracker Consumer move to Healthy foods0.0240.08main product offering Threats Real Estate costs0.0240.08 long term leases selective locations Competition with other specialty foods and casual dining restaurants0.140.4hitting the mark with consumers litigation for product defects0.0130.03 Quality product no negative outcomes at this time Franchise failures0.130.3 concern could have negative inpact on image and financial burden on buyback Food costs rise0.140.4questionable variable factor Distribution costs rise0.140.4questionable variable factor Total Scores13.86 EFAS Table (J.W.)

9. External Environment (Nick) C. Task Environment

10. Internal Environment (John T.) A.Corporate Structure Realized that the quality of employees was critical in a successful and unique company. (S) Invested in training programs to ensure quality of its operations. (S) Provides employees with stock ownership opportunities. (S) Rewards well managed and successfully operated locations with bonuses for managers along with ownership of minority interest in a bakery-café. (S)

11. Internal Environment (Shavera) B.Corporate Culture The essential ingredient: Panera Care. Warmth and caring are the fundamentals of Panera Bread culture. (S) Corporate culture is based on founder Ronald Shaichs’ commitment to doing the best bread in America; quality, tradition, specialization, leadership, caring for employees & family, customers, and the community. (S) Good employee relations with high retention rates. (S) One of the top ten fast food chains rated “excellent” for Quick Track studies according to Sandleman & Associates. (S) All 1,453 Company owned and franchise-operated bakery cafes in 40 states and Ontario, Canada adhere to Panera Bread Culture. (S)

12. Backup Slides for Natural Environment WASHINGTON, D.C.—September 29, 2003 Falling crop production resulting from extreme weather events, diseases and pest infestations will increasingly be fueled by global warming and create an uncertain future for U.S. agricultural production and the nation's food supplies, according to leading experts gathered here today at a Harvard Medical School Center for Health and the Global Environment briefing, made possible by the Civil Society Institute, the Energy Foundation and the National Environmental Trust. A news media event was followed by a congressional staff briefing sponsored by Sen. Harkin (D-IA), Sen. Brownback (R-KS), Sen. Bill Nelson (D-NE) and Sen. Lugar (R-IN).

13. http:// www.ers.usda.gov/Publications/ WRS0801/WRS0801.pdf