How Panera Bread Is Turning ‘Fast Casual’ Into ‘Rapid Casual’

“We now have delivery at about 54 percent of our cafes,” says Panera Bread CEO Blaine Hurst. “And we’re rolling it out aggressively — all without taking phone calls.”

In deciding how and what technologies to adopt, fast casual dining chain Panera Bread has sought to manage the “identity issue” that it and all other marketers face: how to put tech in service to the main business and not the other way around.

Panera Bread President and CEO Blaine Hurst sought to provide a glimpse into the brand’s collective thinking about tech adoption during Apple VP Jennifer Bailey’s presentation at the NRF Big Show this week.

In setting up Panera’s premise, Hurst noted that over 70 percent of the brand’s customers who visit its 2,000-plus locations are using Apple devices. So it made sense to become an Apple Pay launch partner three years ago, just as the rise of voice activation made sense for Panera to begin accepting orders from Google Assistant last fall.

That requires a certain familiarity with the tech that’s available and even a bit of clairvoyance when it comes to where to put resources in order to adopt new digital platforms for a brand like Panera. At the same time, Hurst is clear about striving to maintain the balance and focus on the business and not just on the newest tech.

He sought to draw a distinction between Panera’s approach and more tech-centric retail startups like Wayfair, where the tech is such an essential part of its DNA, as explained by Ed Macri, Chief Product & Marketing Officer at Wayfair, who took the NRF stage just before Hurst.

“I heard a lot of people talk about restaurants companies, and they say, ‘Well that’s a tech company that actually does serve pizza,’ Or, ‘That’s a tech company that happens to serve sandwiches,’” Hurst said. “Is that what Panera is? I don’t think so. Unlike my esteemed colleague from Wayfair, how many of you come to Panera just to pay with Apple Pay? Probably not. It’s the food. It’s the experience. It’s that total integrated experience that makes the difference. However, I can guarantee you if the tech fails on you, you won’t hang around long. You won’t use it. It won’t be as convenient.”

Desire-To-Friction Ratio

Panera’s mission, then, involves adapting to the new guest experience using that technology. Citing a phrase used by current Panera Chairman and previous CEO Ron Shaich, Hurst pointed to “the desire-to-friction ratio.” That equation recognizes how good the food is, the design of the restaurants both from a cosmetic perspective as well as from an efficiency view, such as whether wait times were managed well.

“So technology was the breakthrough for us,” Hurst said. “We had great desire, but we discovered we had a lot of friction. The overall experience sucked. Great food, lots of friction. Technology was the opportunity for us to transform that so that we had lots of desire and a whole lot less friction.”

How has that realization worked out for Panera?

Hurst offered a set of numbers that suggest its success since launching the Panera 2.0 tech solutions program in 2014: “We’re $5.3 billion  restaurant company in the United States. We’re the eighth largest restaurant company in the U.S. We now process more than 1.3 million orders a week using our digital platform. We did last year, we did just north of $1.25 billion dollars in digital sale, and yet, we just launched three years ago. That represents now nearly 30 percent of our total sales.”

Loyalty Matters And Mobile

A large part of those digital sales a tied to Panera’s loyalty program, which has roughly 30 million members.

“It represents the largest restaurant loyalty program that I am aware of today,” Hurst said. “And over half of our transactions are logged using a digital identifier, using their loyalty ID. If that order is placed digitally, we see a 75 percent of those orders placed on mobile apps, particularly mobile, on mobile apps include the loyalty ID. That’s huge for us. If you think about the amount of data that we could mine from that.”

Loyalty/rewards has been viewed as a key value of brands seeking to compete with all the various on-demand choices consumers have access to via apps. In an interview we did last year with Bloomin’ Brands Chief Brand Officer Chris Brandt, the executive specifically cited delivery apps as containing the primary challenge his company needed to meet.

To match loyalty with efficiency, Panera’s Rapid Pick-up featuring was one of the key programs to emerge from the company’s 2014 tech upgrade. While “order online, pick up in store” is one of the table stakes concepts of omnichannel marketing, it wasn’t always an obvious tool.

But in a relatively short amount of time, Rapid Pick-up now accounts for more than 10 percent of our sales at Panera, Hurst said. And a majority of that, obviously, is mobile. And rather than strictly being an “on-the-go” offering, Rapid Pick-up is changing the nature of in-store ordering as well.

“You can order also directly from the table [using Rapid Pick-up],” Hurst said. “This is a crazy idea, that you can just walk in, sit down, using your mobile device, place an order, and we bring you your food. How simple is that? Talk about changing that guest experience.”

Apple’s Influence

Hurst credited Apple’s own approach to customer experience as having a distinct impact on how Panera views its own outlets. Panera is currently working with a digital team in New York to incorporate in-store kiosks in a store design format.

“We’ve got a very clean design because that speaks to who we are, that’s an integrated voice, with the voice of who we eat our food as it should be,” Hurst said. “It’s clean, no artificial ingredients, et cetera. We know that this clean design, where food is a hero, a more intuitive, realtime adaptive, context-sensitive, user experience, has phenomenal upside for us.”

One of Panera’s newest cafes is in Downers Grove, Illinois, and Hurst offered it as an example of what it will be soon rolling out across the country. But he again emphasized that balance between maintaining a clear brand identify and adopting new ways of getting customers what they want.

“The message to the team hasn’t changed,” Hurst said. “Our mission is to complete the job the guests hired us to do in a compelling and unique way that makes a difference, that makes them want to cross the street for us, or use our app to have their food delivered, while tracking their driver to the door. That’s not going to change either.”