Panera Bread Value Chain Essay

Value Chain

During the economic collapse of 2008 when restaurants were experiencing loss or closing altogether, Panera Bread managed to have one of its strongest years in history. They met or exceeded earnings targets in each quarter. In the 2008 annual report to stockholders, Panera Bread bragged, and rightly so, about stock rising 50 percent and ending up the best performing restaurant of 2008 and the second best performing stock in the Russell 1000 Index. How? Through the value chain.

In order for Panera to create value to the customer that exceeds the cost of providing the food and the excellent customer service, the company must have an effective value chain. The primary activities in the value chain include: marketing, Bakery Cafe Operations/service, site selection and cafe environment, supply chain and franchise operations.

Dough for breads and bagels is made daily at over 24 facilities that are company owned and/or franchise operated. The dough contains no chemicals or preservatives. It is never pre-baked or never frozen. It sometimes travels more than 500 miles to its final destination to be baked by Panera’s professional bakers. Distribution to Panera Bread Restaurants is done by a Panera-driven fleet of approximately 200 temperature controlled trucks. When a region has experienced enough growth to support its own ‘dough facility’ and trucks, another is made operational. Sweet goods are contracted through external bakeries. These items are made and delivered to each café to be baked, garnished, decorated and inspected according to Panera’s recipes by Panera bakers. Some ingredients are contracted by Panera with a single supplier delivering to all cafes. Other ingredients needed, not under contract for all cafes or made at the regional facilities, can be ordered from a list of approved vendors to ensure consistency