First, Shaich assembled a team to simplify the costly bread-making process by developing a method of forming and freezing bread dough for later baking. This process eliminated the need for a professional baker on staff at each cafe while allowing for more precise stock control. Next, specially designed ovens helped reduce labor costs by making the production process fully automated, and in 1983 Au Bon Pain centralized dough production at a Boston facility. By 1985, the company had more than 30 cafes in the northeast US that all received dough from the Boston facility (“Au Bon Pain History”).
From a managerial standpoint, Kane selected high traffic urban sites and “clustered” the cafes in order to promote brand recognition and operating efficiencies. Unfortunately, a 1981 decision to fire all the cafe employees who “didn’t care about the business” resulted in an organizational crisis of high employee turnover, low morale, and unqualified employees with poor customer service. From 1986-1988, Shaich fixed this problem with increased training, premium wages, seniority bonuses, and a “mystery shopper” evaluation program.
In order to give each manager a vested interest in his shop’s performance, Shaich gave managers a minority stake in their cafes, as well as increased responsibility for inventory, staffing, and advertising (“Au Bon Pain History”).
Shaich and Kane could now focus more on corporate issues, like the company’s IPO in 1991, while instituting a system of hierarchical control between corporate executives, managers, and employees. From 1992-1993, Au Bon Pain expanded to the Midwest and suburbs through a series of acquisitions, including that of the Saint Louis Bread Co. which focused on more family-oriented clientele. In addition, they installed a database management system for store managers and corporate executives to monitor day-to-day operations, launched a catering department, and expanded internationally by adding franchises to their organizational structure (Thompson C-169).
The economy appears to be making a shift for the better. In the past few years, unemployment numbers have increased at shocking rates but recent occurrences say otherwise. Back to school shopping and the 'rallying stock market' are both indicators 'that the economy is set to motor into 2004' as stated in the Business Week article. With a heavy demand by consumers steadily increasing, businesses ...
Shaich used franchises to stimulate growth by requiring qualified outside investors to open and manage at least 15 franchised cafes in a six-year period under the company name (Franchise Information).
Another organizational crisis arose in 1995 when efforts to expand the Saint Louis Bread chain in order to increase brand awareness backfired as consumers favored Saint Louis Bread over its parent company. To solve this conflict, new divisional presidents were created for each chain, and in 1999 Shaich convinced the board of directors to sell all the Au Bon Pain cafes and restructure the Saint Louis Bread chain under the name Panera Bread.
Panera’s current organizational structure utilizes vertical integration, with 17 fresh dough facilities that deliver to 1,591 cafes and franchises (“Our History”).
Upper level managers now make menu and pricing decisions and overlook the marketing, franchise, concept development, legal, technology, supply chain, and human resource departments (“Organizational Chart”).
Lower level management and employees work as self-directed teams to create a warm atmosphere at each Panera location (Thompson C-171).