Food Business News - April 7, 2015 - (Page 28)

Company Profile Panera 2.0: In pursuit of excellence Company confident initiative will be worth major investment t Panera Bread Co., competitive strengths include more than just "great food and superior customer service," according to the company. The St. Louis-based company also is committed to creating an ambiance in its bakery-cafes and a culture within its restaurants that is "warm, inviting, and embracing." Achieving such goals is no easy task, though. The company has divided its strategy into two buckets: initiatives meant to make Panera a better competitive alternative and initiatives intended to expand Panera's growth opportunities. In a conference call in midFebruary to discuss fiscal 2014 results, Ron Shaich, chairman and chief executive officer of Panera, said the company is focused on four areas to build competitive position: Panera 2.0; operational improvements; revised positioning; and innovation in food, marketing and design. A deliver "unrestrained production demand," according to Panera. The individual elements of Panera 2.0 include web, mobile, kiosk and e-commerce ordering; new operational systems; extra labor; deliver-to-the-table service; and "the wall," a wall that was added to certain cafes to close off the back of the house to support Panera's equipment needs. "Panera 2.0 has had a consistent and sustained impact on our guest experience," Mr. Shaich said. "We've done that without adding anything different in food, marketing, or essentially design. It's really simply been about reducing friction, and that impact shows up in our customer health data, and it shows up in the retail sales increases we are experiencing. And the rate of sales Pushing the buttons on 2.0 The Panera 2.0 initiative was introduced last year as a strategic effort intended to enhance the experience for both dine-in and to-go guests. The enhanced guest experience is enabled by technology and operational improvements designed to keep up with high transaction volumes and to 28 FOODBUSINESS NEWS ® Ron Shaich growth appears to continue to get better over time. The reality is that this is happening, and it is funneling and fueling a change in our relationship with the guest. And it ultimately speaks to our ability to change that trajectory with our guest over the long term. "While the data is still relatively immature for our 2.0 cafes, and we cannot say definitively what the long-term sales impact is, we do know that Panera 2.0 has the potential to be an important element in materially changing the trajectory of our business and in preparing Panera to compete more effectively in the future, especially a future that is increasingly more digital. Indeed, we would argue that ultimately all restaurant companies will need to meet the ante that Panera 2.0 represents." Panera expects to convert approximately 300 more company cafes in 2015 to Panera 2.0, bringing it to 400, or almost half its company stores, by year-end. As optimistic as Mr. Shaich was in his comments about Panera 2.0, analysts have expressed doubts. "Required spending behind the roll-out of Panera 2.0 is expected to be substantial again in 2015 and could actually accelerate in 2016," said Alton Stump, an analyst with Longbow Research, in a March 13 research report. "As a result, Panera may face just as much of a challenge to grow earnings next year in comparison to the current year. The time frame for a material profit recovery post the 2.0 roll-out is unclear and may in fact take several years even if this program proves successful in driving higher same-store traffic. "To date, the small portion of Panera stores converted to 2.0 are generating higher revenues but seemingly not enough to justify higher associated spending. We are also concerned 2.0 will apply meaningful pressure to Panera's product mix, which was the largest single driver of higher same-store sales for the company over the last 3 to 5 years. Also, Panera's new product platform may be diminished at least in the near term as operators and in-store employees focus on implementing the 2.0 initiatives." Analysts with Zacks also expressed some concern with the program. "Given the improvement in revenues and comps, we believe that the Panera 2.0 program, menu innovation and promotional strategies have begun yielding results," Zacks said. "However, the company is incurring heavy costs related to these initiatives. Also, higher food costs, especially that of April 7, 2015

Table of Contents for the Digital Edition of Food Business News - April 7, 2015

Food Business News - April 7, 2015
Challenges ahead for ConAgra Foods
Shifting from weight management to wellness
Beverage Business News - Beyond milk: Dairy ingredient trends
Table of Contents
Web Contents
Editorial - India may soon rival China in growth
Health concerns, competitive headwinds slow U.S. chocolate sales growth
Innovation brewing at McCormick
Tyson Foods leveraging Hillshire innovation
Heinz, Kraft merger offers ample international opportunities
Kroger on the cutting edge
Packaged meats sales lift Smithfield earnings
Market Insight - Farmers’ planting intentions vary from expectations
Washington - Feinstein, Leahy introduce B.P.A. labeling bill
Company Profile - Panera 2.0: In pursuit of excellence
Ingredient Innovations - Anticipating egg alternative needs
Dairy solids assist with flavor development
New Food Products
Ingredient Market Trends - U.S.D.A. March 1 soybean, corn and wheat stocks up from year ago
Ingredient Markets
Highlights from Research Chefs Association’s Culinary Expo in New Orleans
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - April 7, 2015