Panera builds on its vision

panera bread sandwich stack

By the end of 2013, it was obvious something was wrong at Panera.

A fast-casual standard bearer—the brand that initially built its reputation on guest comfort and satisfaction above all else—found from its own surveys that more than a quarter of customers had begun avoiding the chain because of slower service, less comfort and botched orders. Its comps, while still positive, were falling and had been all year. Its transaction counts were falling as well.

As Panera Bread CEO Ron Shaich explained during an all-cards-on-the-table investor call that October, the company had taken its eye off the ball. Managers were focused on efficiency and costs, and the customer was being ignored.

“Walk into our cafes at 12:30 p.m. during the lunch rush, and you’ll see the lines,” Shaich explained. “Any one of us can visit a Panera and see that, and see that many customers walk out of our cafes every day when they can’t or won’t wait in the line,” he said.

“They were reaching capacity constraints on their box,” says Sharon Zackfia, an analyst with William Blair and Company. “I’m sure they wish they had discovered the problem earlier.”

Not for the first time, Shaich found himself in need of reinvention. He already was a pioneer in the fast-casual realm, and he had shown the business world new ways to connect with customers through shared values.

But then regional upstarts were doing “Panera” better than Panera. They had conscientiously sourced menus and designed inviting stores, and were conceived with technology built into the brands, connecting with guests in ways Panera wasn’t.

“There has been a modernization of a.m. eateries that have picked away at Panera’s customer base,” says Darren Tristano, president of Chicago-based research firm Technomic. “There’s also the competition of convenience during the week. QSRs have been picking away at the fast-casual category.”

 

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