Panera Porters 5 Forces
The rivalry among competing sellers, often the strongest competitive pressure, is also fairly high for Panera in the restaurant industry. No switching costs, numerous competitors, and an increase in the availability of healthy food
For a company in the restaurant industry, there are no switching costs for consumers. It is not like, for instance, the cable industry where cancellation fees are prevalent or an electronics industry where prices for a new product are high. If one day, the consumer decides that he or she would like to go to Sweet Green for lunch instead of Panera, the only switching cost would be the price difference between the two meals (which may be …show more content…
In relation to other industries, the restaurant industry does not inherently have high barriers to entry. As stated, the financial barriers are manageable, there are not high capital requirements, and government regulations for a non-alcoholic restaurant are low. The biggest barriers lie with reputation and brand loyalty. These are areas in which Panera excels.
Threat of Substitutes: HIGH/MODERATE
The threat of substitutes is dictated by the availability of substitute products, the quality of substitutes, and the cost switching.
There is a high availability of substitute products. Consumers can choose from 970,000 eating establishments with choices of Asian food, American, Mexican Italian, etc. Since there are so many restaurants, a consumer would be able to find quality within any one of these substitutes.
Additionally, there is no cost of switching to a substitute aside from the cost of the meal, and the opportunity cost of any discounts that Panera may be able to offer to loyal customers.
Supplier Power: LOW
Supplier Power is based on the dependence that a company has on the suppliers of their input products. This refers to the supplier’s ability to dictate price and offer differentiated/high quality products, as well as the ability of the company to perform the supplier’s task (i.e. If the company could readily