Paradise Bakery & Cafe: The Challenge of Success

By Joel Peterson, Mark George
2017 | Case No. SM285 | Length 10 pgs.

Paradise Bakery and Café: The Challenges of Success traces the journey of entrepreneur Daniel Patterson from the founding of his bakery in Southern California, through the challenges of growth, to an eventual sale, and a post-acquisition crisis. The case focuses on three key decision points for Patterson. The first centers on his decision to hire an experienced outside chief financial officer with strategic vision, succeeding the longtime and well-liked accountant the company has used for years. Patterson must figure out how to communicate this decision to his senior leadership team, addressing their concerns about her compensation and whether she will fit into the company. The second challenge focuses on how Patterson should break the news to employees (and the rest of the world) that the founders have decided to sell the company to Panera Bread, a bigger competitor with whom Patterson had stoked a vibrant rivalry. Finally, once the deal with Panera is concluded, Patterson is faced with a decision of how to steer the business just as the 2008 financial crisis is snowballing, given that he promised Panera that Paradise would open 35 new stores in two years.

Learning Objective

The case highlights the challenges a founder faces in communicating tough decisions to his senior management team amid uncertainty, and communicating to the broader company as the business grows, hires outsiders into the C-suite, and is eventually sold to a larger competitor. The case also covers how the founder must work, post-acquisition, to fulfill the deal terms and protect his earn-out amid a serious financial crisis while maintaining company culture and his reputation. A prime teaching objective of the case is to challenge students to think about how to communicate, evaluating their audience(s), the means/mode of communication, and the relevant talking points. Students are challenged to think strategically about whom to talk to, and in what sequence, in order to achieve the desired outcomes.
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