The CEO of US casual dining chain Panera Bread believes the company’s major tech investment over the last eight years is paying off – with higher frequency customer visits from those who use it in cafes, and the foundations of a successful personalised marketing strategy.
Talking at NRF’s Big Show in New York, Blaine Hurst – who assumed the CEO role from founder Rod Shaich on 1 January 2018 – said the company spent the last few years going digital to help change a customer experience that “sucked” at peak times.
It has involved investing significantly in its mobile app, which includes innovative ordering features such as rapid pickup, and iPad kiosks in many of the chain’s cafes to ramp up self-service opportunities. The move has helped reduce queues at peak times and contributed to Panera’s reputation in the US as a digital leader.
“If you use our kiosk your [purchasing] frequency is up 12% after 12 months, so we know it makes a difference because [a customer’s] frequency goes up,” noted Hurst.
“If you use rapid pickup your frequency increases about 30% – we know that it works.”
He added: “If you use both, 12 months later your frequency is up more than 45%. You want to know how we paid for all this technology? Drive customer frequency up 45% – it’s pretty easy maths at that point.”
The CEO said Panera is a $5.2 billion company and around the eighth largest restaurant business in the US. The digital services were only launched in 2014 but they now process more than 1.3 million order per week, and last year digital sales were worth just over 1.25 billion or nearly 30% of our total sales.
Panera 2.0 project – the story so far
Hurst is an example of a technologist that has worked his way up to CEO – a pattern that many analysts expect will happen as the digital era unfolds.
When joining Panera in 2010 he was given the task of implementing the Panera 2.0 project – an initiative to enhance the customer experience (CX) at the restaurant chain using technology.
He launched a delivery initiative and a rapid pickup service, which has grown to become 10% of sales and the majority of which is conducted on mobile.
But it is not just technology for technology’s sake. Hurst said his aim has been to create a “digital flywheel”, whereby all systems and consumer touchpoints – point of sale (PoS), back of house, integrated customer data, big customer data, one-to-one marketing – are interconnected for operational gain.
Every digital transaction on mobile is accompanied by a customer’s loyalty number identifier, and over half of all transactions are logged using that ID. And as new fulfilment services are rolled out they are being kept digital where possible so that customer behaviour can be tracked and used for personalised communications.
“We now have delivery in around 54% of our cafes and we’re rolling it out aggressively these days – and that is 100% digital. We do not take phone calls.”
Apple of Panera's eye
Hurst said that he knew from the start of 'Panera 2.0' that the company would be using Apple technology for much of its tech-enabled change, and from monitoring Wi-Wi stats it knows that over 70% of its café customers use Apple devices.
An even greater percentage of mobile orders are placed on Apple devices, he noted, adding that the tech company is set to be even more influential in the design of Panera’s future tech-enabled cafes.
The close partnership with Apple, which saw Hurst presenting on stage at NRF as part of a session led by the tech business’s Jennifer Bailey, was illustrated by Panera being an Apple Pay launch partner three years ago. The CEO said the partnership is a component of boosting CX in cafes.
“How many of you come to Panera just to pay with Apple Pay? Probably none – it’s the food, the total integrated experience that makes the difference. But I guarantee if the tech fails on you, you won’t hang around long, you won’t use it, [and] it won’t be so convenient.
“Our mission from day one was to transform the guest experience using technology.”
What now for Panera?
The digital sales growth at Panera has been rapid. Hurst said that three years ago “we just watched” as other businesses interacted digitally with their customers, but it is now nearly a third of all sales at the chain.
Attention now turns to what to do with the data it has garnered and how best to leverage its growing reputation as a friction-light hospitality organisation.
“Others have really struggled with that integrating of online ordering with physical units – we’re now integrating the tech in the café,” Hurst explained.
“The same app services that run the services for mobile customers in the cloud run our PoS terminals in the newer cafes. It’s phenomenal, it’s one set of code. We run everything and it all ties together into a digital ecosystem based on that customer.”
Knowing over 50% of its customers transaction history is powerful for future marketing potential, he added – particularly via the mobile channel.
“In our early tests of our one-to-one, personalisation, engagement and relevance systems, we’re just blown away. We don’t even quote numbers because I’m not sure I believe them.”
The innovation at Panera is not set to stop any time soon, it would seem.
Hurst commented: “We’ve done great work today, I’m proud of the numbers, I’m proud of what the team has accomplished, but the future for us and the future of competitive differentiation isn’t doing what we’ve always done.”