Panera focuses on growth
Oct. 27, 2016
by Eric Schroeder
Panera's eat-in-channel has evolved with the addition of kiosks and the ability for customers to place orders digitally from the table.
ST. LOUIS — Panera Bread Co. has made a commitment to operating in an increasingly omni-channel world. The bakery cafe’s actions over the past 15 years have evolved to a point that the company now competes in four distinct channels as part of that omni-channel world, said Ron Shaich, founder, chairman and CEO.
The first channel is the eat-in channel. Shaich said the eat-in channel was the original channel upon which Panera was built. Today, the channel has evolved with the addition of kiosks and the ability for customers to place orders digitally from the table.
The to-go channel was the next channel to be added. It began as counter-based take-out in Panera bakery cafes, expanded to drive-thrus, which are available at about 75 percent of the restaurant chain’s locations, and now includes rapid pick up.
Panera's to-go channel now includes rapid pick up.
“We bulked up on our rapid pick up program in the last 18 months, and it is now one of the largest digitally enabled to-go programs we know of in the industry,” Shaich said during an Oct. 26 conference call with analysts.
The third channel is the delivery channel. Delivery began several years ago as the delivery of larger order business-to-business food for meeting and training sessions, Shaich said, but has taken on a new form in recent years as Panera has built out catering hubs, professionalized its catering operations and moved into direct-to-consumer small order delivery.
Shaich said he believes direct-to-consumer small order delivery “will ultimately be one of the most powerful channels in Panera’s arsenal.”
Panera's delivery channel has moved into direct-to-consumer small order delivery.
The fourth and final channel is Panera at Home, the bakery cafe’s consumer packaged goods business. Shaich said Panera at Home is generating market share gains in categories such as refrigerated soup and is the channel the company sees as a material opportunity going forward.
“These four channels, especially our digitally-enabled channels, are working and fundamentally changing our business,” he said. “Indeed, we are increasingly selling more food and serving more customers through new channels than ever before. And we expect this will only accelerate as our initiatives mature.
“To put it in perspective, I will share with you this. At one time Panera was over 60 percent eat-in, but we can foresee a world in the not-too-distant future in which eat-in, while continuing to generate relatively stable sales volumes per cafe, will be about 40 percent of our total sales with the other three channels representing 60 percent or so of our sales. Ultimately we’ve shifted our thinking from a paradigm that used to ask how many new cafes can we open, to a new paradigm that is asking how many high ROI (return on investment) dollars can we vacuum out of a given zip code.”
Panera at Home is the channel the company sees as a material opportunity going forward.
In the third quarter ended Sept. 27, net income at Panera Bread was $31,975,000, equal to $1.37 per share on the common stock, down 1.3 percent from $32,393,000, or $1.28 per share, in the same period a year ago. Revenues increased 3% to $684,206,000 from $664,654,000.
Company-owned comparable bakery cafe sales increased 3.4 percent during the third quarter, while franchise-operated comparable bakery cafe sales increased 0.2 percent, and system-wide comparable bakery cafe sales increased 1.7 percent.
The company opened 11 new bakery cafes during the third quarter while its franchisees opened nine. As a result, the company operated 2,024 bakery cafes systemwide as of Sept. 27.