Panera Breaks Its Mold

Chain leads the pack with new services, markets

ST. LOUIS -- The leader of the fast-casual segment--which continues to be the bright spot of the restaurant industry--Panera Bread Co. has broad plans for growth in 2012. An expansion of table service and drive-thrus are just two ways it intends to provide service paired with convenience. It’s also expanding into more urban markets.

Currently 214 Panera stores offer table-delivery; at other stores, customers wait for their food at a pick-up counter. In an earnings call last week, company officials explained that the table service element is meant to provide one more step of service, and that it increases consumer-feedback scores on friendliness.

Meanwhile, about 50 of the nearly 120 new Panera locations slated for 2012 will include drive-thrus. Another 25 existing locations will be converted to drive-thru stores. There are currently approximately 119 stores with drive-thrus.

Another out-of-the-box move for this largely suburban chain: Panera last week opened its first store in Manhattan as part of a move into more urban locations. Panera Bread increasingly operates units in high-density metropolitan areas including Boston, Chicago, Washington, D.C., Los Angeles and Toronto.

“Having been successful in some of the country’s largest cities, we felt it was time for us to be in Manhattan,” said Ron Shaich, founder and executive chairman of the board, in a recent statement from the company. “We are excited to step onto the world’s biggest and most varied culinary stage. We think New Yorkers are in for a treat.”

A recent menu addition from Panera is the Mediterranean egg white breakfast sandwich with white cheddar, spinach and roasted tomatoes. According to Chicago-based research firm Datassential, egg whites are the fastest-growing protein within the total quick-serve segment--indicating an interest in targeting breakfast and health-minded consumers.

Last week Panera released fourth-quarter 2011 figures: Comparable bakery-cafe sales increased 5.9% at company-owned restaurants and rose 3.2% at franchise-operated locations.

The bakery-cafe segment, which accounts for $5 billion in annual sales and more than 3,600 units nationwide, has been able to successfully navigate the middle ground between quick- and-full service restaurants. A recent study from Chicago-based Technomic found that it’s outpaced industry sales and unit growth for each of the past three years. Total bakery-cafe units increased 4.2%, and bakery-cafe sales increased 12% during those three years.

Panera is the clear leader in the segment and has further strengthened its position in the arena over the past few years. About seven in 10 consumers polled (69%) visit and purchase food from the chain at least occasionally, and among Panera's visitors, 69% go at least monthly.

It made it through the recession without the deep discounting many of its quick-serve brethren succumbed to, further helped by a largely affluent customer base.


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