Panera Bread has been working for the past two years to upgrade the technology at its nearly 2,000 restaurants. The endeavor, dubbed Panera 2.0, intends to improve throughput and the customer experience at the fast-casual bakery-café chain.
Blaine Hurst, the St. Louis-based chain’s executive vice president and chief transformation and growth officer, recently updated Nation’s Restaurant News on the motivation for the technology upgrade and its progress.
What is the difference between Panera 2.0 and Panera 1.0?
We started looking at the Panera guest experience. You usually had a long line at lunch, you waited in the line, you got to the cashier, who was usually pretty focused because they’re trying to get the long line taken down. Then you stand in what [CEO] Ron [Shaich] affectionately called the “mosh pit,” waiting for your food. It gets crowded. It’s not a fun place to be for anybody.
Panera 2.0 was about, how do we use technology to decrease friction? There are really four places [of friction]. One is: How do I access Panera? So we have kiosks; we have online ordering; we have mobile ordering.
Then, how do we improve our production lines for better accuracy and speed? [Thirdly,] how do we give you multiple options to pay — with Apple Pay at the front, on your mobile phone with Apple Pay in-app, with a credit card, you could hand cash over. We should make it easy to pay however you choose to pay.
Then we wanted to say, how do we make it easier to consume the food? So now we bring the food to your table instead of you standing in that mosh pit, and we ask if you need anything else. It’s a different level of service than you get from the cashier. We’re [also] testing delivery in areas.
That was the premise of 2.0.
How is it going?
In summer of 2014 we chose to nationally roll out a piece of it everywhere. So 100 percent of our domestic cafés have what we call rapid pickup, which is order online, pickup in store.
So there’s a dedicated line for that?
No, you don’t even need to do that. It’s on a shelf. You literally order online, walk in the store, grab your food and walk out. If you’ve got delayed, you just let us know and we’ll remake it. People love it.
So the idea of Panera 2.0 is using digital technology to improve operations?
Yes, but we really power everything through ops integrity. As we started rolling out Panera 2.0 we realized that the operations had to work right. So in the back of a full 2.0 café we’ve put in new technology.
What kind of technology?
If an order comes in and it’s been modified — about half of our orders have some modification to it; digitally it’s closer to 70 percent — our probability of messing that up in our old system was pretty high.
In our new way that we do things, we require people on the lines to talk and double check. We have different buttons you have to push to go to the next screen if it’s a modified order. That’s a mental cue that reduces stupid human mistakes.
Out digital [ordering] rate at the end of last year was 16 percent of sales on the company side. We’ll end up with 20 percent by the end of this year. Our leading markets are now more than a third digital.
We see an increasing number of people using our digital kiosks to order, too.
Why is that useful for Panera?
One, it is more at [customers’] pace. Some people like to browse; some people want to go faster. In addition, at a busy peak I can get more people through a busy café with the same number of cashiers. Our 2.0 cafés have a disproportionate amount of sales because we’ve freed up capacity at lunch.
How does it affect labor?
People ask me all the time, aren’t you taking jobs away from people? In fact, in a 2.0 café we over-invest in labor. In fact, we run higher labor as a percentage of sales in a 2.0 café. We have people out here talking to guests about how to use kiosks and things like that. Then we have people bringing your food to you, and we typically have an extra person in the back of the house around quality. Our prayer, and the good news is that it’s happening, is that the sales increase ultimately pays for that labor.
So even if the per-ticket margin isn’t as high, you have more tickets.
Correct, and what I’m hoping is that the margin does leverage that labor at some point so we get back down to that labor percentage [of Panera 1.0 levels]. But it’s not about taking labor away.
So it improves customer experience and throughput?
And this kind of blew me away: We have 21 million MyPanera [loyalty program] users. We have 12.1 million email-able users, and active users is somewhere in between — 16-17 million. Think about the power that that ultimately gives us. For nearly 50 percent of our transactions, we know who ordered it because they used their MyPanera loyalty ID.
We reach out to customers saying, “You ordered this, how was your experience?”
We get somewhere between 100,000 and 150,000 responses a month. So we can measure how they are feeling about that experience, and we can also measure increase in frequency at the individual level. For kiosk users, we see average frequency up 10 percent, and for rapid pickup customers, average frequency is up 28 percent, so we know that once customers try it, they love it.
You rolled out rapid pickup nationwide a year and a half ago. How is the rest of Panera 2.0 progressing?
We ended [2015] at slightly more than 400 cafés with kiosks (out of just under 2,000) and this year we’ll continue to aggressively roll out at company stores, and franchisees will [roll it out] as well.
So what’s next?
Are there things we can do in cognitive computing? In other words, can I learn based on what you’re ordering how to fine-tune [your order] not only in terms of calories, but in terms of flavors [that you like]?
I hate raw tomatoes. Could the Panera system learn that and remove them from anything I order?
That one would be easy. The challenge is, how do we design that in a way that it doesn’t feel clunky? How do we begin to build our system so that it’s about understanding and comprehending [our guests]?
Contact Bret Thorn at [email protected].
Follow him on Twitter: @foodwriterdiary
