“These four channels, especially our digitally-enabled channels, are working and fundamentally changing our business,” says Panera CEO Ron Shaich.
“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,” he says, “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 return on investment dollars can we vacuum out of a given zip code.”
Shaich believes direct-to-consumer small order delivery “will ultimately be one of the most powerful channels in Panera’s arsenal.”
The first channel is the eat-in channel. 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. “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 says.
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 says, 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.
The fourth and final channel is Panera at Home, the bakery cafe’s consumer packaged goods business. Shaich says 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 says. “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.
Panera opened 11 new bakery cafes during the third quarter while its franchisees opened nine. As a result, the company operates 2,024 bakery cafes systemwide.