Sample Strategic Planning and prognosis For Panera Bread firm

Non Profit Corporate Bylaws Template - Sample Strategic Planning and prognosis For Panera Bread firm

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Panera Bread has an chance for increase within a interesting commerce in two key areas - increased sales of specialty drinks and chance international locations - that will enable the firm to spread its mission of fresh bread for every person while increasing the lowest line for shareholders. By utilizing many frameworks for plan and projecting the estimated financials of the company, we are able to empirically show that these two strategies will be useful to the customer.

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Non Profit Corporate Bylaws Template

Utilize Historically High Margins on Specialty Drinks to Drive lowest Line Growth

While Panera's core firm revolves colse to fresh bread, the style of the locations suggests that there is large earnings in selling coffee and connected drinks, similar to Starbucks. Looking at the coffee market, estimated real increase is 2.7% or practically 5.7% given a 3% inflation rate while the estimate of establishments, the actual coffee shops, is improbable to grow only 1.6%, meaning that each shop on midpoint will see increased revenue, due in part to a 3.5% increase in domestic examine (See Appendix A). Further, behalf in specialty drinks is estimated at 19.8%, much higher than Panera's 6.4% behalf margin. This means that increasing the sales of specialty drinks will have a sure impact on Panera's lowest line - clearly the commerce is growing and is a good commerce to be in for Panera. According to Buffalo Wild Wings' franchise disclosure document, more than 40% of earnings is generated via alcohol and specialty drinks sales. If Panera were able to generate this level of sales with a 19.3% behalf margin, its lowest line would increase by nearly 7.8% to 14.2%, abnormally high for the cafeteria commerce (which averages 4-5% margins). Though this behalf margin level is likely not sustainable, the short-term boost in behalf margin will help Panera improve its operations internationally to capture economies of scale with its suppliers.

Look to commerce Incumbents for Knowledge and Re-arrange Menu Locations

Visually, the layout of a Starbuck's, Dunkin' Doughnuts, or Caribou Coffee are much more fluid than Panera Bread with respect to the coffee ordering location. This diagnosis draws heavily on the Eden Prairie Mall and downtown Minneapolis Nicollet Mall locations. The buyer flow for Eden Prairie and downtown is awkward; the buyer must enter the store, walk past the bakery and coffee areas, and then order at the registers. The issue is that the coffee menus are placed above the bakery items, not in clear view of the buyer at the time of ordering. By the time the buyer is ready to order, he or she has forgotten what drink to order; furthermore, the drinks are creatively named which is sure for brand identity, but awkward for the midpoint male buyer to order. At the very least, the coffee and specialty drinks need to feel the following changes:

· Move the menus to the same wall face as the meal menus to ensure customers know what coffee is offered when ordering

· dispose the bakery display cases nearer to the registers to entice more impulse purchases

· remove queue line markers during non-rush times, especially in front of the bakery display cases

· increase the offerings of specialty drinks, along with researching alcoholic beverages, to attract coffee shop regulars into Panera

By focusing on combining the café design with a coffee shop atmosphere, Panera can become a "chill out" spot as well as a premier location for both lunch and dinner. Furthermore, this convert can be carried to the international markets where café atmospheres, such as those in France, are more prevalent.

Expand Internationally to Build Brand Image and Diversify Economic Risks

Given that Panera is pursuing Canadian locations, it is safe to assume that the international market for fresh bread is growing. Indeed, the international market breakdown of commerce revenues can be found in Appendix B. Clearly, the European market is a large market for fresh bread. However, Ibis World estimates that 135,000 bakeries operate in Europe, meaning the market is fragmented. A brand with a large marketing allocation behind it could quickly enter the market and take a key position (See Appendix C). Given that the culture and preferences of European customers may differ from Americans, it would be best to test new products in Canada prior to the overseas kick off of the Panera brand. An interesting facet of the European market is the strong relationship between the commercial agricultural and grist clubs and the commercial bakeries. The largest bakeries are owned by the largest grist and agricultural firms in the U.K., Sweden, and Austria. This may cause provide chain issues in these countries, though Panera could pursue a partnership or joint investment coming to these markets.

Leverage on Existing Assets to increase Shareholder Return and Expand

According to Panera's 2009 10-K, the firm had an interest coverage ratio of 200.9x, with Ebit of 0m and interest payments of 0k. Additionally, distance-to-default, a key metric for risk of debt, is quite large (larger is better) as the cash on hand of Panera is .1m and the debt/equity ratio is 0.0%. Retained earnings and total equity are 6m and 5m, respectively. This suggests a large upholstery prior to debt default in an greatest situation. In Appendix D, the large discrepancy between Panera and its rivals in terms of debt load is clearly seen. Given that Panera has 3.2m in Fcf, it is safe to assume that Panera could issue at the very least 1.0x Fcf, though a safe debt load for a firm can be as low as 2x Ebitda, or 0m in debt. With the midpoint café costing .6m, Panera would be able to finance the expansion of its brand over practically 250 corporate-owned locations internationally. As seen in Appendix E, Panera would be in the top three of its main competition with these new locations.

As with all communal companies, Panera must return value to its shareholders while not ignoring the broader array of stakeholders with whom it interacts. FactSet estimates Panera's 2010 sales increase at 10.4% with Eps of .41 per share, a 20.6% increase over 2009. Our proposed strategy would benefit the firm both in the short term and long term. In the short term, sales would be increased and behalf margin would increase by 500 bps to 770 bps based on specialty drink sales. If the international expansion plan is pursued, Panera would see sales increase in 2011 beyond the estimated 10.3% and Eps well beyond the projected .98. Though the increase in debt may force supervision to pay more attentiveness to the cash flow of the company, the increased leverage will allow Panera to increase its Roe substantially. If Panera wishes to remain competitive, it must use its economies of scale to grow faster than competition and continually innovate, becoming the "fast follower" by utilizing adjacent commerce innovations in its café atmosphere.

Appendicies can be found at Liekos Group's website.

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