Operations

Panera Bread goes after city centers with digital-focused formats

A new smaller urban prototype opens in New York City, and will soon be joined by a no-dine-in Panera To Go.
Panera NYC
The new urban format has kiosk ordering in store./Photos courtesy of Panera Bread.

Buoyed by strength in digital sales, Panera Bread on Tuesday unveiled yet another urban format open in New York City as the bakery-café targets expansion in city centers and nontraditional locations.

The new urban store format is the first to combine elements of the Panera To Go unit that first debuted in Chicago earlier this year with more traditional locations. The urban unit, which is near Columbus Circle in Manhattan, is about 40% smaller than a typical Panera cafe, with limited counter seating only. Guests can order in-store on kiosks, but the format is geared mostly to those who order ahead online or through the app, as well as for delivery pickup.

Panera Pickup

The urban format is geared mostly to digital order pickup.

Panera has also honed what it calls the Rapid Pick-Up Experience, with shelving dedicated to to-go orders. There’s a digital menu and a screen for guests to track their order status. The New York unit also is the first to feature new branding elements, including art and an updated color palette.

Next month, the St. Louis-based chain is also planning to open a Panera To Go unit in New York City’s Union Square. This format is slightly different in that it has no dine-in seating. It is designed solely for pickup of digital orders or for delivery, though guests can order in store using a kiosk.

At the first To Go unit in Chicago, for example, which opened earlier this year, in-store ordering was not initially available. But now guests can order in the restaurant on kiosks. The company said more To Go locations are planned for Washington, D.C., and California.

The two formats in New York add to Panera’s portfolio of restaurant types, which also includes the traditional bakery-cafés and double-drive-thru locations that target suburbs.

“At Panera, our innovation has always been rooted in the guest and associate experience, how we can reduce friction, drive convenience and bring Panera to new places where we know the demand is high for the freshly prepared food we serve,” said Eduardo Luz, Panera’s chief brand and concept officer, in a statement. “With a flexible portfolio of café designs, we’re now able to bring Panera anywhere, from suburban cafes with double drive-thrus, to a digital-only Panera To Go, and everything in between.”

But the company also said the two New York formats are the first of several bakery-cafes planned for expansion in urban markets in the next year, along with nontraditional locations like hospitals and universities.

Here's a look at the new urban format:

Video courtesy of Panera Bread.

Panera has long been known more as a suburb-focused brand, but the company said Tuesday it sees opportunity in untapped urban markets, especially given the fast-casual chain’s ability to leverage its strength in digital sales.

Digital orders account for about 50% of Panera’s systemwide sales, the company said. That means an average of about 3 million transactions per week come via the brand’s app, website or kiosks. And that’s a higher percentage than Chipotle Mexican Grill, which saw a little more than 37% of sales from digital channels in the third quarter.

For Panera, digital sales have declined from 81% at the end of 2021, but the country was still in the grip of COVID-19 and its cruel variants at that point. Most restaurant chains have seen off-premise sales decline as consumers returned to restaurants. Now the challenge across the industry is finding the right balance between in-store and digital sales.

Earlier this year, Chris Correnti, the chain’s SVP of off-premise channels, declared that off-premise was here to stay, citing positive results from the first To Go unit in Chicago.

Panera Chicago

The first Panera To Go opened in Chicago earlier this year.

In June, Panera had 86 cafes in urban locations, and Correnti said the 2,114-unit chain could more than double that total.

And more consumer-facing technology is coming to further boost convenience, the company said. In future urban formats, Panera plans to test tap-and-go technology for Unlimited Sip Club members, for example.

The moves come amid signs that urban centers are coming alive again, after the pandemic sent workers home to the suburbs to work remote.

Reporting third-quarter earnings last week, both Shake Shack and Potbelly noted back-to-office trends in urban centers like New York, Washington, D.C., and Boston.

UPDATE: This article has been updated with new information about the New York To Go location.

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