Harvard Case - Au Bon Pain
"Au Bon Pain" Harvard business case study is written by John J. Kao, Lee C. Field. It deals with the challenges in the field of Entrepreneurship. The case study is 23 page(s) long and it was first published on : Apr 17, 1986
At Fern Fort University, we recommend that Au Bon Pain (ABP) pursue a multi-pronged growth strategy focused on business model innovation and strategic partnerships to address the challenges of a changing market landscape. This strategy should leverage ABP?s existing strengths in product development, branding, and operations while embracing technology and analytics to enhance customer experience and drive revenue growth.
2. Background
Au Bon Pain, a Boston-based bakery-caf? chain, faced significant challenges in the late 2000s. The company?s traditional business model, focused on offering freshly baked goods and sandwiches in a fast-casual setting, was being disrupted by new competitors like Panera Bread and Starbucks, who offered a wider variety of menu options and a more modern, comfortable atmosphere.
The case study focuses on the company?s efforts to adapt to these changing market conditions. The main protagonists are Ron Shaich, the founder and CEO of ABP, and Steve Feinstein, the company?s president.
3. Analysis of the Case Study
This case study can be analyzed through the lens of Porter?s Five Forces Framework:
- Threat of new entrants: High, due to the low barriers to entry in the fast-casual dining market.
- Bargaining power of buyers: Moderate, as customers have many alternative options for quick meals.
- Bargaining power of suppliers: Low, as ABP sources ingredients from numerous suppliers.
- Threat of substitute products: High, due to the wide range of food and beverage options available.
- Competitive rivalry: High, as the fast-casual market is crowded with established players and new entrants.
Key challenges for ABP:
- Declining sales and profitability: The company faced declining sales and profitability due to increased competition and changing consumer preferences.
- Limited menu offerings: ABP?s menu was perceived as limited compared to competitors.
- Aging store infrastructure: Many of ABP?s stores were outdated and lacked the modern ambiance desired by customers.
- Lack of a clear growth strategy: ABP was struggling to define a clear growth strategy to address the changing market dynamics.
Strengths of ABP:
- Strong brand recognition: ABP had a strong brand reputation for quality baked goods and fresh ingredients.
- Experienced management team: The company had a seasoned management team with expertise in the food service industry.
- Established supply chain: ABP had a well-established supply chain for sourcing ingredients and managing distribution.
- Loyal customer base: ABP had a loyal customer base that appreciated its products and services.
4. Recommendations
1. Business Model Innovation:
- Expand menu offerings: Introduce new menu items, including healthier options, seasonal specials, and more diverse cuisines.
- Enhance customer experience: Invest in technology and analytics to personalize customer interactions, offer loyalty programs, and improve online ordering and delivery services.
- Reimagine store design: Modernize store interiors, create inviting spaces for work and socializing, and incorporate digital signage and interactive elements.
- Embrace mobile ordering and delivery: Partner with third-party delivery services and develop a robust mobile ordering app to cater to the growing demand for convenience.
2. Strategic Partnerships:
- Collaborate with other brands: Partner with complementary businesses like coffee shops, juice bars, or fitness centers to offer bundled services and attract a wider customer base.
- Explore acquisitions: Consider acquiring smaller, niche brands to expand product offerings and enter new market segments.
- Leverage technology partnerships: Partner with technology companies to develop innovative solutions for online ordering, customer engagement, and data analytics.
3. Growth Strategy:
- Focus on international expansion: Explore opportunities in emerging markets with high growth potential for the fast-casual dining sector.
- Develop a franchise model: Consider franchising to accelerate expansion and leverage the expertise of local entrepreneurs.
- Invest in R&D: Continuously innovate and develop new products and services to stay ahead of the competition.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: ABP?s core competencies in product development, branding, and operations can be leveraged to implement these recommendations. The strategy aligns with the company?s mission to provide high-quality food and beverages in a convenient and welcoming environment.
- External customers and internal clients: The recommendations address the evolving needs of customers seeking convenience, variety, and a modern experience. They also empower employees by providing them with the tools and resources to deliver exceptional customer service.
- Competitors: The recommendations aim to differentiate ABP from competitors by offering a more diverse and appealing menu, enhancing the customer experience, and expanding into new markets.
- Attractiveness: The recommendations are expected to improve sales, profitability, and brand value. They are also aligned with the long-term growth potential of the fast-casual dining market.
6. Conclusion
By embracing business model innovation, strategic partnerships, and technology and analytics, Au Bon Pain can successfully navigate the challenges of a changing market landscape and achieve sustainable growth. The company?s strong brand reputation, experienced management team, and established supply chain provide a solid foundation for implementing these recommendations.
7. Discussion
Alternatives not selected:
- Focusing solely on cost-cutting: While cost-cutting measures might provide short-term relief, they are unlikely to address the underlying challenges of declining sales and market share.
- Merging with a competitor: A merger could create a larger entity with more market power, but it also carries significant risks, such as potential integration challenges and cultural clashes.
Risks and key assumptions:
- Execution risk: Successfully implementing the recommendations requires effective leadership, strong teamwork, and a commitment to change management.
- Market uncertainty: The fast-casual dining market is dynamic and unpredictable. Changes in consumer preferences, economic conditions, and competitive landscape could impact the effectiveness of the recommendations.
- Financial resources: Implementing the recommendations will require significant financial resources. ABP needs to secure funding through a combination of internal resources, debt financing, and equity investment.
8. Next Steps
- Develop a detailed implementation plan: Outline specific actions, timelines, and resource requirements for each recommendation.
- Secure funding: Identify potential sources of funding and develop a financial plan to support the implementation.
- Build a strong team: Assemble a cross-functional team with expertise in product development, marketing, operations, and technology.
- Communicate effectively: Clearly communicate the strategy to employees, customers, and investors to ensure buy-in and support.
- Monitor progress and adjust as needed: Regularly track key performance indicators and make adjustments to the strategy based on market feedback and performance data.
By taking these steps, Au Bon Pain can position itself for future success in the competitive fast-casual dining market.
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Case Description
An eight-year-old company is in the midst of growth. This case follows the company from its inception through its growth stages. Teaching objectives are to understand the problems of growth, partnership, and operations-driven companies.
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