Panera Bread SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

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Threat

1. Global economic slowdown and pandemic has brought disruption in operations: COVID-19 has spread at an alarming rate infecting all the countries and bringing trade, businesses, investments and other economic activities to a standstill. This pandemic is expected to impact most countries with worst recessions and in terms of per capita income since 1870. If the situation persists for a longer duration there would be prolonged disruption in economy leading to deeper recessions. Global market coming to an economic stand still pose a threat and is impacting in poor financial results, lower customer turnout, increasing input cost and moreover it brings volatility in oil prices and natural gas prices impacting supply chain and distribution cost to rise lastly reducing the profit margin.

2. Highly competitive and segmented market may impact business: This industry remains highly fragmented because majority of them are small to medium bakeries wherein Panera Bread has good market share in US and Canada. This factor on other hand also brings in the competition based on quality, price and nutritional value. In US, there are numerous regional small players who have started retail bakery outlets and cafes. This has happened because raw materials are easily available for this industry and cost of setting up a local work area or cafe is less and market or consumer is readily available at low marketing and advertising cost. However the deciding factor for the consumers is price. Consumers are can pay more for a brand like Panera Bread but small and medium baking companies are not able to compete the higher-quality and price.

Political

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Economic

1. High inflation rates are impacting operations of the company: United States agriculture department has been cautioning rise in prices of crops like wheat and soya as there has been high prices paid to farmers and imports coming in from China and rest of the world has been low. This will lead to increase in cost of the bakery products as the input cost will increase. On top USA has been suffering from dry or drought like condition in few agricultural states Montana, Dakota, etc. These states were the producers of wheat, oats and other high protein crops. Due to these conditions trading price of crop has gone up by 37% in few states. It has become difficult for Panera to acquire inputs at prevailing cost and offer baked products to customers at the same price as before.

2. Increased taxation has led to cut down on profit margins: Baking and café industry is a dynamic part of US economy. Baking industry alone contributes 2.1% to the GDP. This industry directly or indirectly employs approximately 1.8 million people who paid approximately $38.5 billion in tax to federal and state. US has been witnessing tax rise since two years. Increase in tax rates impacts businesses as the demand remains substantial or even smaller when economy is operational near capacity. One of the largest tariff increase was done in US after a decade in May 2019.

Social

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Technological

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Legal

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Environmental

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