Employee Position Specialization

1

• Group Members
• Gina Pugliano
• Jessica Hicks
• Jessica Falvo
• Lakia Gordon

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Speaker Topics

• Jessica Falvo
• Price Discrimination
• Demand for Labor
• Wage Differentiation
• Lakia Gordon
• Price Elasticity
• Budget Line

• Gina Pugliano
• Company Overview
• Profit Maximaztion
• Costs of Production
• The Stock Market
• Jessica Hicks
• Specialization
• Tastes

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Our MissionA Loaf of Bread in Every Arm

• Company Overview
• Est. in 1981 as Au Bon Pain Co., Inc.
• C.E.O. Ronald M. Shaich
• 1999 company renamed Panera Bread
• Today, 602 bakery-cafes in 35 states
• 145 new stores targeted to open in 2004

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Fresh Bread Makes Friends

• Panera freshly bakes more bread each day than
  any bakery-café concept in the country

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Asiago Cheese

• Panera was the first bakery to use Asaigo cheese
  in their bagels and breads
• Why is this so important?

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Great Bread Great Meals
Made-to-order sandwiches
Tossed-to-order salads
Soup served in bread bowls
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Bread is only the beginning

• Cinnamon Rolls
• Bear Claws
• Cobblestone
• Croissants
• Danishes
• Strudels
• Cookies
• Brownies
• Muffins Muffies

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What is Panera Bread Company?

• Panera Bread is a firm in the retail foods
  industry

What is the goal of Panera Bread?

• Goal of any firm is Profit Maximization

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2 Definitions of Profit
Profit Sales Revenue- Costs of Production

• Accounting Profit Total revenue Accounting
  Costs
• Accounts consider only explicit costs

• Economic Profit Total revenue All Costs of
  Production
• Economists consider both explicit
  and implicit costs

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A Firms Costs
Total Costs
Total Fixed Costs
Total Variable Costs

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Panera Bread CompanyConsolidated Statements of
OperationsFor the 52 weeks ended December 27,
2003 (In thousands)

• Revenues
• Bakery-café sales. 265,993
• Franchise royalties and fees. 36,245
• Fresh dough sales to franchisees.. 53,708
• Total Revenue.. 355,886

• Costs and Expenses
• Bakery-café expenses
• Cost of food and paper. 73,727
• Labor 81,152
• Occupancy 17,990
• Other operating expenses. 36,804
• Total bakery-café expenses 209,673
• Fresh dough cost of sales
• to franchisees 47,151
• Depreciation and amortization. 19,487
• Administrative expenses.. 28,140
• Pre-opening expense 1,531
• Total costs and expenses... 305,982

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Paneras Operations 2003
PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands)
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The Stock Market
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The Market for Existing Shares of Panera Bread
Company
Price per Share
S
47.79
A
40.47
32.10
D
355.89 million
Shares in Panera
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PNRA- Panera on the Market

• Price Per Share of Panera Bread Company Stock
  from 4/12/03-4/12/04

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Specialization

• Ways to specialize
• 1. human capabilities
• 2. minimizing downtime
• Result Increase in production

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• Employee Position Specialization

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Front Line Bakery-Café Cashier

• Duties include
• Maintenance of the bakery display case
• Creation of specialty coffee drinks
• Customer service and sales
• Providing customers with fresh baked goods and
  pastries

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Sandwich Makers

• Duties Include
• Preparation of specialty sandwiches and salads
• Customization for customer satisfaction
• Maintenance of the sandwich line and stock of
  the finest ingredients

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Specialization of Jobs

• Job positions
• Retail baker
• Customer service associate
• Shift supervisor
• Assistant manager
• General manager
• District manager

• Support Center positions
• Accounting/Finance
• Administration
• Design/Construction
• Information technology
• Marketing
• Real estate
• Training

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Tastes and Preferences

• Because Panera Bread has become more popular
  recently, their demand curve has shifted to the
  right.
• Increase in Price
• Increase in Quantity

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Low-Carb Diet Craze

• With an increasing demand for low carbohydrate
  foods, Paneras menu changes in response to
  peoples preferences
• They are supplying more low-carb foods to match
  the demand for the good

• Introduction of the new Bistro Steak Salad with
  only 6 net carbs per serving

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Gimme A Burger And Hold The Bun

• Nearly 1 in 4 Americans are at least testing
  low-carb diets.
• Panera
• Panera Bread has announced plans for low-carb
  bread. There are now 3 breads with 5 grams per
  slice. They will be part of a 16 carbs-or-fewer
  sandwich menu.

• Hardees
• Hardees is introducinig the fast-food burger
  that will reduce carbs from 61 to 6 grams.
• They will serve bunless burgers one-third to
  half a pound each that will come wrapped in
  large leaves of iceberg lettuce.

Hardees Thickburger
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The Good and The Bad

• Pros
• Good selection
• Clean friendly atmosphere
• High-quality food at a fast speed
• Great service
• Fresh

• Cons
• Overpriced
• Not enough locations
• Not all breads are available each day
• No childrens menu
• Long lines, especially at lunchtime

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PRICE DISCRIMINATION
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Why the different prices?

• Location Costs of shipping
• PRICE DISCRIMINATION

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Price Discrimination

• Downward-sloping demand curve for firms output
• Identify consumers willing to pay more
• Prevent resale

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Houston, TX v.s. Omaha, NE

• Sierra Turkey
• 5.85
• Tuscan Chicken
• 5.85
• Party Sandwich
• 26.95

Sierra Turkey 5.99 Tuscan Chicken 5.99 Party
Sandwich 27.99
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Discounts

• Example of targeting customers

Panera Bread in Morgantown, WV
Wednesdays-Senior Citizen 10 discount
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Demand for Labor
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Constraints

• Technology
• Price of output
• Price of Labor

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• MRP W hire more workers
• MRP
• MRP W profit max

Dollars
Wage
MRP
Number of Workers
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Whats the Reason for Different Wages?
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• Compensating Differentials the difference in
  wage rates that make two jobs equally attractive.
• Cost-of-Living Differences
• Difference in Human Capital
• Differences in Ability
• Barriers to Entry
• Non-monetary Job Characteristics

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Price Elasticity

• Elasticity of Paneras goods
• Menu Price Change
• Panera vs. Competitors

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Price Elasticity

• Determinants
• Availability of Substitutes
• Buyers Budget
• Time Period

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Top Competitors

• (Direct Market)
• Atlanta Bread Company
• New World Restaurant
• Noahs Bagels
• Einstein Bros Bagels
• Manhattan Bagels
• (By Sales)
• McDonalds
• YUM! Brands Inc.

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Budget Line

• Changes in the Budget Line
• Income
• Price
• The Individuals Demand Curve

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Changes in the Budget Line
Effects of Price and Income
Price
P2

P1
Quantity Demanded
5
10
a
a
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Individual Demand Curve

• Quantity of a good one demands at each different
  price

Individual demand schedule
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Normal vs. Inferior
Rational preferences
Has nothing to do with quality, but with choices
based on income Normal goods goods that people
demand as their income rises chosen when the
marginal utilities per dollar are equal after an
increase in income Inferior goods goods that
people demand less of as their income rises
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Substitution Effect

• Price of a good falls, the consumer substitutes
  that good in place of other goods whose prices
  have not changed
• Income Effect
• Price of a good decreases, the consumers
  purchasing power increases, causing a change

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Combining Substitution and Income Effects
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Questions