Panera Company Strategic Analysis - Case Study Example

Strategic Analysis Due Strategic analysis Introduction Panera Company is a well-established firm in restaurant industry,whose main products include food and foodstuffs such as cakes and breads. It is a restaurant full of ambience, quality, warmth and trust in all their operations. It has diversified in portfolio products including cake, opened the new business units in more than 76 stores. For instance, in the past three years, it has pursued operational excellence strategies in customer service, increased the speed of delivery, order accuracy and has in turn reduced the employee turnover. This has resulted in more employee motivation and subsequent improvement in outputs. This in turn has driven Panera to be a leading firm in restaurant industry and grown in sales and profit pies (as evidenced in figure 1 and 2) Strategic analysis Panera has undertaken quite a number of strategies that have spurred it to stay ahead of its competitors. First, it has pursued customer excellence strategies manifested in areas such quality customer service rooted in all its systems and procedures. For instance, the order accuracy, time of delivery and ambience of service have improved the rate of satisfaction. This has boosted the loyalty and brand name of the firm.(comerford and Collaghan,p.14). Second, it has pursued both product and market development strategies. These have been evidenced in diversifying in more regions in order to bring products and services closer to their customers. Sales have increased through the adoption of innovative programs such as improving product features to suit and satisfy quite a variety of customers with various tastes and preferences.(Porter, 13) The firm has also undertaken proper financial management strategies that have ensured no debt. Its liquidity has trended upwards than any of its competitors. It is most efficient evidenced in asset that has translated into more profit. It has a narrower operating margin. The firm can also improve its value by pursuing the following strategic options (Collaghan and comerford,) Instituting training programs on front office staff such as customer care, cashiers and waiters will increase in sales volume thus translating into profits. Diversify into more strategic units so that a wide customer base. The improvement of service will create a better relationship with the community thus improving the profit margin pies of the firm in the end. Reduce real estate expenses such as taxes that will be proportionate to the revenues as shown in fig 2. Increase the budget in social marketing strategies with an aim of making a wider customer community. Today’s customer like sophisticated technologies such as facebook, twitter and yelp. This will involve a substantial financial investment. Assumptions in the process of strategic choice formulations 1) The economic environment remains the same for seven-year period. For instance, that there will be no change in prices of goods, no increase in taxes by the government, perfect markets and with normal state of technology. 2) Both the internal and external stakeholder will continue applying the same rules and regulation that affect the firm. This implies that the structure of the organization, the management style and the international financial rules, standards and procedures and the relationship between the firm and the entire stakeholder group will remain the same. 3) Other material facts relating or affecting the organizations will not change for a substantial period. The financial management systems, procedures and rules will greatly determine the performance as the competition in the industry is ever increasing. Panera will therefore need to apply a sound financial management system to survive, grow and be profitable. The asset has increased by 0.14 in a period of five years as shown below. Fig 1 2006 2007 2008 2009 2010 1.53 1.53 1.93 1.62 1.67 Fig 2 Income Statement For the Fiscal Period Ending 12 months Dec-26-2006 Reclassified 12 months Dec-25-2007 Reclassified 12 months Dec-30-2008 Reclassified 12 months Dec-29-2009 12 months Dec-28-2010 Press Release 12 months Dec-27-2011 Currency USD USD USD USD USD USD Revenue 829.0 1,066.7 1,298.9 1,353.5 1,542.5 1,822.0 Other Revenue - - - - - - Total Revenue 829.0 1,066.7 1,298.9 1,353.5 1,542.5 1,822.0 Cost Of Goods Sold 536.4 720.9 884.1 904.4 1,005.9 1,186.0 Gross Profit 292.6 345.8 414.7 449.1 536.6 636.1 Selling General & Admin Exp. 59.3 69.0 81.0 83.2 101.5 113.1 Pre-Opening Costs 8.3 3.4 2.5 4.3 6.6 R & D Exp. - - - - - - Depreciation & Amort. 44.2 57.9 67.2 67.2 68.7 79.9 Other Operating Expense/(Income) 92.2 121.2 147.0 153.6 177.0 216.2 Other Operating Exp., Total 201.8 256.4 298.6 306.4 351.4 415.8 Operating Income 90.8 89.4 116.1 142.7 185.2 220.3 Interest Expense (0.1) (0.5) (1.6) (0.7) (0.7) (0.8) Interest and Invest. Income 1.8 0.2 - - - - Net Interest Exp. 1.7 (0.3) (1.6) (0.7) (0.7) (0.8) Other Non-Operating Inc. (Exp.) 1.7 1.2 1.0 (1.6) (4.8) 0.5 EBT Excl. Unusual Items 94.2 90.3 115.5 140.4 179.7 219.9 Restructuring Charges - - (2.8) - - - Merger & Related Restruct. Charges (1.5) (0.2) - - - - Impairment of Goodwill - - - - - - Gain (Loss) On Sale Of Invest. - (1.0) (1.9) 1.3 - - Gain (Loss) On Sale Of Assets - 0.5 - - 0.6 - Asset Writedown - (0.1) - (1.8) (0.1) - Legal Settlements - - (0.6) - - - Other Unusual Items - (1.1) - - - - EBT Incl. Unusual Items 92.7 88.5 110.2 139.9 180.2 219.9 Income Tax Expense 33.8 31.4 41.3 53.1 68.6 84.0 Earnings from Cont. Ops. 58.8 57.0 68.9 86.9 111.6 136.0 Earnings of Discontinued Ops. - - - - - - Extraord. Item & Account. Change - - - - - - Net Income to Company 58.8 57.0 68.9 86.9 111.6 136.0 Minority Int. in Earnings - 0.4 (1.5) (0.8) 0.3 - Net Income 58.8 57.5 67.4 86.1 111.9 136.0 Pref. Dividends and Other Adj. - - - - - - NI to Common Incl Extra Items 58.8 57.5 67.4 86.1 111.9 136.0 NI to Common Excl. Extra Items 58.8 57.5 67.4 86.1 111.9 136.0 Strategic choices on above income statement The operating income should be income while the operating expenses reduced as shown above (fig2). Sound financial policies should be adopted to guide the entire staff on the expenses. Work cited Comerford, Robert A., &Collaghan, Dennis W., Strategic management: Text, tools and cases for business policy. Kent Publishing company, Boston, 1985 Porter, Michael E., "Competitive Advantage"., Ch. 1, pp 11-15. The Free Press. New York, 1985 Read More