Panera Bread Company in 2016 Case Study Analysis
Financial Analysis
A financial ratio offers a way to evaluate and assess the financial performance of the company. The current ratio of Panera Bread has reduced from 1.48 in 2011 to 1.25 in 2015, demonstrating the inability of the company to pay its short term obligations. It also stipulates that the company is unable tomaximize the current assets to satisfy its currentpayables or debt.
Additionally, the capital structure is a mix of equity and debt. The debt portion in capital structure is increased from 36% in 2011 to 44% in 2015 and the equity portion has reduced from 63.8% in 2011 to 55.6% in 2015, which implies a less stable business with the potential of longevity. Also, it would be difficult for Panera Bread Co. to pay off the debt obligations in the near future, in uncertain economic times.
Furthermore, the asset turnover ratio of the company was 1.8 in 2015,which was higher than 1.7 in 2011, but was lower when compared to 2.01 in 2013, demonstratingthe efficient use of assets.Hence, the management is effective in generating revenue with its available assets. Lastly, the earnings per share ratio of the company have increased from 4.59 in 2011 to 5.81 in 2015, which shows the strong financial health of the company and implies that the company is more profitable and has generated more profits tobe distributed among its shareholders. Lastly, the return on equity of the company has increased from 0.20 in 2011 to 0.30 in 2015, indicating the efficiency of the company and its ability to generate cash internally.
Recommended Strategic Changes
In consideration of the issues discussed, the company should pull in their expenses or expenditures & manage the cost in an efficient way in order to turn most of its revenues into net income. The market penetration through store opening requiresa huge investment in additional restaurants and by increasing the production output, the company has experienced a decline in product quality.
The company should build a healthy relationship or contract with local farmers to reduce the rising cost of ingredients, thereby having the cost advantages.Innovation is an essential element which is highly required for a company to survive in the high competition & achieve the customers’ loyalty through maintaining the product’s consistent quality. The increased variety onthe menu would help in increasing the sales volume by satisfying the different preferences of different demographics. It would provide larger flexibility for the pricing of the menu. Also, the growing buyer preferences for the differentiated products is one of the driving force of change and success, due to which it is necessary for Panera to innovate creative and new items on its menu that would appeal to the target market. Such a vastmenu option would continue to maintain a viewpoint of exceptional and higher quality (Pisano, 2015). The marketing innovation over a period of time holds significant importance in persuading or compelling the customers to buy products.It should also increase its advertising or marketing budget to reach a larger customer base and to maximize the market share as well. By increasing marketing or advertising budget, the company could reach a larger audience, which in turn would increase its sales.(Dawar, 2013).
Action Plan
Undoubtedly, the most viable or feasible strategic option recommended to Panera Bread Co. is to increase its menu variety. The main focus of the company should be working on reducing the prices of the food items, adding new items as well as creating the alternatives in order to attract new customer from different demographics. Since the fast-food industry is a highly competitive and a rapidly growing market, and Panera has been growing with the passage of time, so to continue its growth journey; the company needs to enhance its menu by having consumer surveys in order to evaluate the desires of customers (Kenny, 2019).By doing so, the company would be able to use the customers’ feedbacksregarding theenhancement of the food items on itsmenu. It is also pertinent to determine the price range of consumers, which in turn, would allow the company to have a better understanding of what the customer can or cannotwish to include in the menu (Meyer, 2007). Afterward, the company should invest its time and budget to train its workforce to professionalize the cooking and baking of these new items. The company should capture or explore such opportunity by offering an exceptional quality and healthier food items, which would be breaking into an entirely new market arena, allowingPanera to increase its sales, followed by an increased net income...................
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Profitability
