Niren Chaudhary, CEO of Panera, discusses how the company has focused on ecommerce and the “off-premise channel” to drive dramatic growth:

Panera’s Ecommerce Pivot Sparks Dramatic Growth

Panera is actually emerging quite strongly through the pandemic because we’ve been completely focused on what we have control over. By focusing on servicing customers through our off-premise channels, leveraging e-commerce, and then rapidly innovating we’ve seen a very smart recovery on our brand and also a stronger business model emerging from the pandemic. What’s clearly playing out is the off-premise channel is seeing dramatic growth.

To give you a sense, our delivery is growing by over 100 percent, drive-throughs are growing by over 60-70 percent, and rapid pickup is seeing strong growth. The off-premise channels are growing very strongly and in some ways compensating for the decline in business on-premise. Pre-pandemic we were probably about 60-40 in terms of off-premise versus on-premise. Now it is predominantly off-premise convenience for our customers as we’re moving in that direction.

Close to 60 percent of our sales are coming from e-commerce. Brands that are able to leverage their e-commerce strength and pivot very sharply on providing convenience and off-premise are beginning to see a smart recovery.

It’s All About Convenience, Ecommerce, and Innovation

There are three levers that we’re working on to get our business back on track: convenience, e-commerce, and then meaningful innovation. Included in that are cool foods, a coffee subscription program, and most recently the flatbread pizza launch. We’re very excited about this because it’s the launch of a new food category at Panera, one that we haven’t had before. It’s a bullseye innovation in terms of what the customer is looking for at this time. Customers are looking for a warm shareable at-home meal solution for their families. The flatbread pizza fits perfectly for that.

We’re doing it in a uniquely Panera way as you would expect. We’re leveraging the credibility of our breads. We have unique ingredients that are all clean, they’re fresh, we have double blend cheese, bold flavors of our sauces, and it’s stone-baked. Think of this as a pizza that customers love but done in a very unique Panera way. That’s why we’re so excited.

Niren Chaudhary, CEO of Panera, discusses how the company has focused on ecommerce and the “off-premise channel” to drive dramatic growth:

Panera’s Ecommerce Pivot Sparks Dramatic Growth

Panera is actually emerging quite strongly through the pandemic because we’ve been completely focused on what we have control over. By focusing on servicing customers through our off-premise channels, leveraging e-commerce, and then rapidly innovating we’ve seen a very smart recovery on our brand and also a stronger business model emerging from the pandemic. What’s clearly playing out is the off-premise channel is seeing dramatic growth.

To give you a sense, our delivery is growing by over 100 percent, drive-throughs are growing by over 60-70 percent, and rapid pickup is seeing strong growth. The off-premise channels are growing very strongly and in some ways compensating for the decline in business on-premise. Pre-pandemic we were probably about 60-40 in terms of off-premise versus on-premise. Now it is predominantly off-premise convenience for our customers as we’re moving in that direction.

Close to 60 percent of our sales are coming from e-commerce. Brands that are able to leverage their e-commerce strength and pivot very sharply on providing convenience and off-premise are beginning to see a smart recovery.

It’s All About Convenience, Ecommerce, and Innovation

There are three levers that we’re working on to get our business back on track: convenience, e-commerce, and then meaningful innovation. Included in that are cool foods, a coffee subscription program, and most recently the flatbread pizza launch. We’re very excited about this because it’s the launch of a new food category at Panera, one that we haven’t had before. It’s a bullseye innovation in terms of what the customer is looking for at this time. Customers are looking for a warm shareable at-home meal solution for their families. The flatbread pizza fits perfectly for that.

We’re doing it in a uniquely Panera way as you would expect. We’re leveraging the credibility of our breads. We have unique ingredients that are all clean, they’re fresh, we have double blend cheese, bold flavors of our sauces, and it’s stone-baked. Think of this as a pizza that customers love but done in a very unique Panera way. That’s why we’re so excited.

The lesson is to stand up against the pressure when you know your decision is right. Ultimately, Shaich says, even though there was “blood on the floor” initially, the stock is up a hundredfold.

Ron Shaich, founder and former CEO of Panera Bread, tells the inside story of Panera’s amazing success in an Inc. profile:

The Moment of Truth and Self-Reflection

Along the way, I had many moments of truth and many moments of self-reflection. But one of the most powerful moments was the moment when I made the decision to ultimately sell all of our original businesses. It was 1998 and I was in the Caribbean. It was Christmas time and I was kind of bummed.

We had four divisions in a large public company. I was looking at those four divisions and I understood that one of those divisions, the Panera division, had the potential to be a nationally dominant company. But it was the third largest of our divisions and it was really buried. This gem was buried under our three other divisions, Au Bon Pain, Au Bon Pain International, and Au Bon Pain manufacturing.

There I was on the beach in the Caribbean and I thought about it for a second. If I had any guts, if I had any strength, I would monetize every other asset in the company so we could take the financial resources and put it against growing Panera the way it needed to be growing. I would take our limited human resources, most importantly myself, and make that Panera business grow into what it was meant to be, and what it had the destiny to be.

Frankly, There Was Blood on the Floor

What that led to is over the next year and a half, the worst year and a half of my life. I had a Board that was disagreeing with me. My Board said we invested in Au Bon Pain, why are you selling the old Au Bon Pain divisions to bet on Panera? There was a real challenge whether I would lose my job.

One of our Board members looked at me and said, Ron, I think you’re crazy. I think you’re washed up. I think probably the problem is you and not what you perceive it to be. I had team members all of whom saw their careers affected. Frankly, there was blood on the floor in our corporate headquarters. Everybody was trying to figure out how it would affect them.

You Must Have the Fortitude to Go Through With It

That year and a half was the most stressful year and a half I’ve ever experienced. It was a stress in every sense of what stress meant. It was with me while I was sleeping. It was with me while I was driving. If I were honest with you, I would tell you there wasn’t a day I didn’t go in and say to myself is this really the right thing?

The truth of the matter is nothing is proven until it’s done. But you need to have the fortitude to go through it. You need to have the strength to make those bold leadership decisions. You need to have the wisdom to be right about 80 percent of the time on those decisions.

Ultimately, the Stock is Up a Hundredfold

The result, in the end, was all good. Everybody who was on the Board ultimately saw this as a very positive thing. I didn’t lose my job. We completed the transactions. Ultimately, the stock is up in the range of a hundredfold since that time. The people that were sold with these Au Bon Pain divisions, many of them ultimately came back to Panera when their non-competes were over.

I will tell you that in retrospect this may look brilliant. But when you’re going through it it’s so powerfully difficult and it’s so powerfully rooted in uncertainty. So much of it is about making the decision to go forward and to stick with it and to bring your organization along with it despite the uncertainty you may feel within you.

Blaine also announced that Panera is about to begin “the most extensive renovation and remodeling of Panera Cafes that’s ever been undertaken in our brand.” This is a back to basics strategy that is following years of tremendous investment in technology by Panera.

Blaine Hurst, CEO of Panera, discussed the company’s strategy in a recent interview on CNBC:

Panera is in a Pretty Good Place Going Forward

We did see a slight slowdown versus expectation in September, but what’s been amazing to me, as we look at our two-year comp which is our two-year trended sales, we have actually seen a real pickup actually in the last few weeks. Some of this may have been that our volumes are so high in September that we may have been challenged just to handle the volume.

We don’t see this as a long-term downturn in the consumer, at least not Panera’s consumer. We also compare our sales to the black box all composite industry comps and we continue to dramatically outperform the trends that we’re seeing from other folks. I think Panera is actually in a pretty good place going forward.

Tougher to Find Great People than it’s Ever Been

Finding employees is a challenge for everybody in our industry without a question. The good news for Panera is because of who Panera is, what we stand for, what our brand stands for, and what we’ve done over the years, I think we’re in a better place than most.

That being said, our turnover levels are well below the industry and it is tougher out there to find the great people that we’re looking for at Panera than it’s ever been. I do think that’s an overall trend and we are not completely immune to that trend. With our new channels that we’ve launched, the new product categories that we’ve launched, we seem to at least be on the positive side of that trend.

We Spent a Lot of Time, Treasure, and Talent on Technology

We spent a lot of time, treasure, and talent on technology and the differentiation of Panera across the channels. Then our clean initiative, which frankly was not quite as inexpensive when we look at the total system costs as we had all hoped it would be, but it was the right thing to do. That was pretty much all we could do as a public company.

Beginning the Most Extensive Renovation of Panera Cafes Ever

As a private company, we actually are now able to talk about making investments around a longer-term strategy. For example, in 2019 we will begin the most extensive renovation and remodeling of Panera Cafes that’s ever been undertaken in our brand. I’m not sure as a public company we probably could have done that, but as a private company, it’s like that makes sense, we’ve got to do it, it’s not an option.

Panera Can Never be the Food Police

Panera can never be the food police. That is not even our mantra. We have got to be the brand that is relentlessly pursuing better eating. I think a part of that is options, which clearly we have delivered through our apps and other things, but also through transparency.

What we started talking about earlier this week was the amount of whole-grain in our breads. It’s only six of our products, but we think it’s important to talk about that and give people that insight as they make their choices.

Further with our launch of Food Interrupted, which is a video series delivered through Facebook Watch, we think that is just simply helping our consumers to make better choices with better information. In no way will we say do this, don’t do that. Literally, this entire video series has very little mention of Panera. We are specifically communicating through storytelling what better eating could be in America of the future.