Panera Bread’s sales thrive, thanks to digital

In a letter to employees, now-former CEO Ron Shaich details strong improvement.

This has been a difficult year for many fast-casual chains, as competition led to concerns about oversaturation, forcing some companies to slow development and others to close units.

Not so Panera Bread, which has apparently thrived since its $7.5 billion sale to the investment firm JAB Holdings.

In a letter to employees, now-former CEO Ron Shaich—who ceded control of the chain to Company President Blaine Hurst on Jan. 1—detailed a chain that used a strong digital presence to improve sales last year.

Shaich said Panera’s same-store sales for the year increased 6% at company locations. That number would easily outdistance most other fast-casual chains, at least the publicly traded concepts.

The results, Shaich said, outpaced the broader restaurant industry by 720 basis points, based on Black Box Intelligence data.

Yet that gap is even wider when you simply compare Panera with other fast-casual chains. While fourth quarter numbers are not yet available, same-store sales at those concepts, other than Chipotle, averaged a decline of 3.4% in the first three quarters of the year.

Shaich in his letter suggests digital efforts have much to do with it. Digital sales now represent $1.2 billion, or 29% of company sales, and the company’s MyPanera loyalty program now has 28 million members, or more than half of its customers.

Panera is also going big into delivery, with plans to employ its own drivers rather than use third-party services.

Delivery is now available in 56% of the chain’s locations.

The digital efforts—the company’s smartphone app and self-order kiosks installed in company locations, as well as the technology underpinning it all—are known as “Panera 2.0.”

“Moving Panera forward took a willingness to share in a dream,” Shaich wrote. “And it took countless hours of assessing, reassessing, iteration and tough decisions.”

Panera operates more than 2,000 locations and is the largest fast-casual chain in the country, based on information from Technomic's Top 500 Chain Restaurant Report.

The chain’s 2.0 initiative has helped usher in an era of increasing use of kiosks inside of restaurants. Major fast-food chains McDonald’s and Wendy’s are currently adding kiosks inside their own stores.

The company’s self-delivery model, however, runs counter to the use of third-party services McDonald’s and other chains are employing. Yet by employing the drivers itself, Panera and the company’s franchisees can control the costs of the service while having the drivers perform tasks inside the restaurants when service is slower.

Shaich was an owner of Au Bon Pain in 1993 when it acquired St. Louis Bread Co. and renamed it Panera Bread. Panera ultimately sold Au Bon Pain and in the subsequent years became a pioneering fast-casual chain. Panera bought Au Bon Pain last year, announcing the deal when Shaich announced he was stepping down in November.

In his letter, Shaich said he is leaving the company in good hands.

“With JAB as our lead investors and Blaine at the helm of the best leadership team we have ever had, I am confident that our future will be as bright as our past,” Shaich said. “As chairman and one of Panera’s largest individual investors, I promise you that I will do whatever is requested by Blaine and the team in the future.”

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