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Management

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Panera Bread, Customer’s Decide
Kevin Moore
Embry Riddle Aeronautical University
MGMT 201 Principles of Management Instructor; Alan Labeouf
11/15/2012

Abstract In addition to Panera Breads restaurant business, Panera Bread has created community sustained restaurants called Panera Cares, where the customers decide what to pay for their food. Panera Cares is currently operating with positive margins based on this goodwill concept. Research shows that while some people cannot pay much or nothing at all, others that can afford to pay typically pay more (Ron Shaich, 2012). Panera Cares illustrates that business models do not always need to follow conventional management concepts. This concept is gaining recognition in the business world, local communities and also challenges other corporations to review their business models and strategies with consideration to the community and people that make them successful.

Introduction
Panera Bread has decided to take action regarding the slumping economy that has caused many Americans to go hungry. According to the US Department of Agriculture, last year, 17.2 million households faced food insecurity (Martin, 2012). The result of this growing epidemic is Panera Cares, a restaurant cafe where people can eat nutritious food in the same uplifting environment Panera is known for and pay whatever they can afford (Ron Shaich, 2012). Food insecurity in our country is the major concern of Panera Cares and is the heart of the company vision. A menu is available with a slight twist, no prices only suggestions; customers are encouraged to pay whatever they like. Each community cafe is self-sustaining; showcasing the common good in people to do the right thing. The business concept was created with the intent to build a partnership with the community and to raise awareness of the fast growing food epidemic in America. The goal is to help people and communities while inspiring other like business to join the fight.

Ethical and Social Responsibilities Letting the customers decide what to pay has poised a few obstacles and or opportunities. Management and employees have faced with the human desire to pass judgment on those less fortunate, not paying for their food. They were also faced with the responsibility to allow customers that were less fortunate to maintain their dignity, while not being able to pay. It was concluded that cash registers were not to be used; Panera felt it was best not to add any additional pressure to non-paying customers. The solution to this ethical issue would be a

donation box located in the café. Management displayed non bias disciplines and encouraged employees to follow. Management has taken the stance that profit is a gainful byproduct of the product they so happily provide to society and its stakeholders (Shaich, 2011). Panera management and leadership believe that profits will come when you provide a solid service to its customers, suppliers, and community. Panera leadership challenged the mission and values that built the 3.3 billion dollar revenue generated annually (Ron Shaich, 2012). Panera leadership was inspired to give more to the community which further illustrates their dedication to social responsibilities. Panera has proven that goodwill can sustain itself when given the opportunity, while using their approach to paying what you can.

Planning and Strategic Management Panera conducted research to find a solid business platform utilizing the approach, customers decide what to pay. Panera required the business platform to align with the vision while maintaining the Panera image. Research from soup kitchens, churches, and many other non-profit organizations were gathered and evaluated (Ron Shaich, 2012). The data collected reveled that a pay what you can approach would work if the locations in the communities were able to be self-supportive. Locations were the key to success of the new concept of letting the customers decide what to pay. Panera concluded from research that the concept would also carry the brand image and provide a clean nutritious meal with variety to choose from, a concept Panera had perfected. This marked the beginning of Panera Cares. Management concluded in the planning phase that the mission must not be lost in the weeds, and the focus of their efforts must align with their strategies (Ron Shaich, 2012). Panera is not trying to solve the poverty issue, its simply using its leverage in the food market to assist communities to support themselves through goodwill, displayed through the pay what you can concept, let the customers decide.

Managing Change and Culture
Panera quickly evaluated the customer and employee experience during the first few weeks of launching their first Panera Cares in. Extensive training modules were created to assist employees and management to understand and illustrate the necessary skills and mannerism required to uphold the Panera Cares brand while maintaining customer focus that is free of bias opinions. Panera instills the nature of their employees to be transparent. Panera has faced situations where customers have obviously ordered more than they need and had the money to pay for the food, but donated very little to none (Ron Shaich, 2012). Managing change and culture in these situations are difficult, according to Panera leadership. Another challenge faced with the customers deciding what to pay, was fear. Employees were scared that if the new practice was a disaster, their jobs would be lost. Top executives were with their employees every step of the way, leading by example and providing continuous support. Executives were at the opening of all Panera Cares café and remained with them until fears employee fears and concerns were exhausted.

Employee Training and Development Executives provided additional training for their employees to become transparent in their views and judgments’, encouraging them to remain focused on the integrity of the new business platform (Ron Shaich, 2012). Panera created training programs for all employee levels that are involved in the Panera Cares cafes. Training and development programs include segments for front line employees, cooks, general staff, supervisors, mangers, and even volunteers. Panera exhibits the understanding that the program cannot be successful without developing its employees and providing them with the necessary tools to succeed. Panera also added a volunteer program for its customers. The program allowed those that were less fortunate to work volunteer hours, earning meal vouchers. The volunteer program created an avenue for those less fortunate to make a difference for themselves and the café.

Appraising and Rewarding Performance Panera Cares cafes are regularly awarding their employees through various systems. Panera Cares mostly promotes self-rewarding benefits, giving employees and the community a since of pride of their accomplishments. Let the customers decide what to pay, rewards everyone involved in a program based off goodwill and virtues proving the community will support itself with the right program, like this new innovative approach to a food insecure America. Panera also releases and publishes monthly reports posting volunteer hours, earnings, losses, and expenditures (Ron Shaich, 2012). This open approach is another way to rewarding its employees, by creating awareness of their efforts and accomplishments. Panera Cares also publishes local stories and accomplishments with the surrounding community regarding their employees and volunteers.

Conclusion This innovative management practice is proven to be successful when applied with the right vision, business platform, training, and location. According to Panera, last year, their Portland market had the highest year-over-year comp increases of any Panera region in America (Ron Shaich, 2012). It is notable that the Portland region is the area that this innovative practice was launched in 2011. Panera reports that 2012 3rd Quarter revenue is up seventeen percent ( Harrison, 2012). Another notable accomplishment is that Panera Cares has initiated over 1.5 billion media impressions, which furthers their accomplishments in reducing food insecurities in America. Rational thought concludes this initiative will spread globally to other large corporations to take action and assist in reducing deficiencies in their respective business markets as it pertains to society.

References Harrison, M. (2012, October). Panera bread company reports q3 2012. Retrieved from http://www.panerabread.com/pdf/er-20121023.pdf Martin , J. (2012, November ). Usda grants support local efforts to fight hunger and food insecurity . Retrieved from http://www.fns.usda.gov/cga/pressreleases/2012/0052.htm Ron Shaich. (2012, 17 10). Management innovation exchange. Retrieved from http://www.managementexchange.com/story/panera’s-experiment-human-nature-let-customers-decide-what-pay Shaich , R. (2011, October). Corporations must become socially conscious citizens. Retrieved from http://blogs.hbr.org/cs/2011/10/corporations_must_become_socia.html

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