In this episode, we wanted to know, “What can we expect from the future of fast food?” To get best practices, Innovation Leader’s Kaitlin Milliken sat down with Jessica Anselmi, Director of Innovation and Category Growth at Panera. Read the transcript and see additional information below.
- Look inside Chick-fil-A’s Hatch Innovation Center and see what ideas leave the nest.
- Learn how TGI Friday’s tests AI initiatives.
- Find out more about digital strategy at Dominos.
This episode is brought to you by Innosight. Innosight helps forward thinking companies navigate disruptive change and own the future. Their team can help your company develop new growth strategies and build innovation capabilities. Find out more at innosight.com where you can also read their new Harvard Business Review article, “Breaking Down the Barriers to Innovation.”
Michael McCathren: How do you continue to elevate yourself above the competition?
Jessica Anselmi: Those who are winning right now or those who are not afraid to disrupt themselves?
Dennis McGrath: How do you create a unique, personalized service experience?
Kaitlin Milliken: Hey, you’re listening to Innovation Answered, the podcast for corporate innovators. In each episode, we ask a central question about the things that make change hard at large companies. Then we get answers from experts about how businesses can overcome these challenges and make an impact. I’m Kaitlin Milliken, from Innovation Leader.
Today’s big question: What can we expect from the future of fast food?
Quick service restaurants are designed to be just that — fast. QSRs are inexpensive and readily available for customers. However, because fast food has become so widely available, companies face more competition than ever.
Michael McCathren: So some of the challenges that the fast food industry is facing — and particularly I think with Chick-fil-A — is that sameness. How do I stand out and continue to differentiate my brand and so on, if the products are sort of looking and starting to taste relatively similar? Well, then how do you continue to elevate yourself above the competition?
Kaitlin Milliken: That was Michael McCathren who leads enterprise innovation at Chick-fil-A. According to Michael, it’s become difficult to stand out as a QSR between digital advancements new menu items and competitive deals. That’s where the innovation team comes in.
Chick-fil-A develops and tests new ideas at their Hatch Innovation Center in Atlanta. The space follows a company’s version of the design thinking model with different areas in the Center dedicated to understanding problems and imagining solutions. Prototyping takes up the largest portion of the room. When we visited in December 2018, the team built a full scale restaurant out of foam core to simulate the ordering experience. Their team also brings customers into the prototyping process. Woody Faulk Chick-fil-A’s Vice President of Innovation and New Ventures Explains
Woody Faulk: We invite guest in. Customers of Chick-fil-A, team members of Chick-fil-A, Chick-fil-A operators, people that were pursuing in a different market to literally come and engage with the prototype. We videotape we simulate the people who are leading the project are in the back room watching what happens. We don’t want to interfere with the test. So we’re using the prototypes just like they were fully-built, high-resolution final products.
Kaitlin Milliken: Ideas from hatch seek to keep customers engaged and loyal to the brand. One unique initiative that left the nest: meal kits. Here’s Woody again.
Woody Faulk: I have an example right here of one of our recipes. This is the pan roasted chicken from scratch. We spent a lot of time understanding why people do and do not like meal kits and designed but we believe is an elegant solution that makes us unique. We are the first fast food chain — out of over 500 chains — to even offer this option.
Kaitlin Milliken: Whether people enjoy their chicken at the restaurant or in their homes, innovation allows Chick-fil-A to stay close to their consumers. But they’re not the only company focused on keeping up with industry growth. Panera has also made strides through digital ordering and new menu concepts. To find out more I spoke with Jess Anselmi, Director of Innovation and Category Growth. We’ll be back with Jess after this break.
Impact, Innovation Leader’s biggest conference of the year, wrapped up a few weeks ago, and it was amazing. Truly. There were laughs. There were problems solved. There were free t-shirts. Leaders from Uber, IBM, Bose, Intel, and more shared best practices for creating change at large organizations.
Photos from the event are now live on our website. To check them out, visit innovationleader.com/impactphotos. And don’t worry, if you didn’t make it and feel like you’re missing out, you can already get a ticket for our next Impact conference. It’ll be in Boston on October 19 through the 21 of 2020. Plus, if you reserve your spot before the end of the year, you’ll get a $700 discount. For more information visit impact2020.innovationleader.com.
Kaitlin Milliken: And we’re Back with Jess Anselmi. Jess is Panera’s Director of Innovation and Category Growth. Before moving to Panera, Jess spent four years at Dunkin’ brands.
First, can you tell us a little bit about your role at Panera and what category growth means?
Jessica Anselmi: Absolutely. So I’ve been at Panera for about a year, since April 2018. And in my role as director of innovation and category growth, I’m really focused on driving sales across three key categories: sandwiches, salads and beverages. I have two peers who work on the other categories. So for us, that really means menu management. We’re responsible for the front end innovation process, of what should the Panera menu look like today and in the future.
Kaitlin Milliken: Can you talk about some challenges the industry as a whole is facing?
Jessica Anselmi: Definitely I would really distill it down to four key challenges. I was thinking about this on the way over. There are certainly more than four, but four probably capture the key buckets, the first really being competition. So Panera was really the first fast casual focused on healthy. Healthy food today that has changed. It’s a saturated market place, not just in terms of place where people can go but also product. The variety of menu items is unparalleled. It’s broader than it’s ever been before. So we’re constantly competing for attention.
The second would really be the fact that consumers are more health conscious today than they’ve ever been. They’re really cognizant of what what they’re putting into their bodies. And for us, that means our menu needs to be about balance. There’s always a place for what I like to call permissible indulgence. But we need to make sure we balance that out and are giving consumers a variety of choices. The third would really be the pace of trends. So with social media and globalization, something can pop up on a food Instagram account in Rome and before you know it pop up at a variety of mom and pop shops that are independent into New York just a couple weeks later. So that really means for us, when is it a trend that we need to hop on? Or maybe wait and be a fast follower.
And then lastly, really the blurring of the line of lines when it comes to day parts. So Panera historically has succeeded at lunch. But with the rise of delivery, aggregators and consumers eating what they want, where they want it, we really are competing in a full day part business.
Kaitlin Milliken: So you mentioned a lot of different things, including competing for attention and that variety, what role does innovation play in getting you to that point?
Jessica Anselmi: It’s a great question. So specifically, when it comes to the menu, we have to be cognizant of all of those things, but really stay true to the core of what we want our menu to be. So at Panera that’s really food as it should be. And that will always be our key tenant, it might evolve change over time. We’re very open to disrupting ourselves. I think we’ve done that well in the digital space leader in digital 30% of our sales are digital but for the menu. That’s our core tenant. But we need to make sure that definition is flexible.
Kaitlin Milliken: So when it comes to getting ideas to pursue, where do they come from? And how do you decide what to work on?
Jessica Anselmi: So first ideas come from our team of very talented chefs. They’ve worked at a variety of fine dining restaurants throughout their careers other fast casuals, QSRs. Ours, they’re constantly out in the marketplace, looking at different concepts and bringing inspiration from everywhere. The second would really be throughout the organization. Panera certainly is a company that innovates more broadly than just on the innovation team. It’s really part of the culture. We’re always open to ideas from franchisees from other other teams. And then the third would really be out in the marketplace. We are certainly looking at what everyone else is doing. It’s not necessarily informing what we do, but we are seeking inspiration or maybe seeing, “Oh, you know, that’s something we don’t want to do.” And keeping that in mind as we’re creating and consumers as well. We’re constantly looking at consumer survey data. Why did this menu item Go away. Can you bring XYZ back? So we’re very in tune with that as well.
Kaitlin Milliken: So we’re going to talk about each of those areas that ideas come from. Starting with folks across the organization, how do you build that culture that’s receptive to innovative ideas and get your colleagues who may not be on the innovation team excited about contributing?
Jessica Anselmi: Innovation really is part of everyone’s key benchmarks, I would say, even if it’s not in their title. So at its core, the definition of innovation I was refreshing myself earlier, is really just defined as a new method, product or idea. And the main synonym really is change.
So that is part of everyone’s function, everyone’s role. So we’re focused on the sexy new innovation, if you will, menu management people can get excited get behind that and the marketing that brings it to life in the cafes, but we’re just as focused on bringing our operations team into the process, asking, “Hey, is there a way we can shave a few seconds off this process of making this salad this sandwich” that also contributes to their teams KPIs. Their team’s performance. So it really is a collaborative process on the digital side, working with the team there to really say, “Okay, you know, what is this product placed in the right spot on the customer journey on the app? Or could we look to move it around?” So it’s a really, really collaborative effort. And I think that’s part of the culture.
Kaitlin Milliken: And you also mentioned chefs. Of course, when you’re innovating the menu, those folks are super important. How is your team working with the chefs at Panera?
Jessica Anselmi: The people I work most closely with are probably the chefs. So we are partnered by category so I work with a certain chef on sandwiches, a different strap on salads, and a different chef and beverages and we spend a lot of time together. Our team is very remote. A lot of it is over video chat or flying to where they are based either out of their home home office or one of our lab cafes. We do a lot of work on the line in cafes, so we can look at it in a real cafe environment. But our time is really spent visiting Panera cafes, looking at consumer research and consumer insights together and trying to formulate what we call a rendering of what we want the category to look like.
Our vision, really our 32 second elevator pitch of what we want sandwiches to look like in one year, two years, three years and working on that journey together.
Kaitlin Milliken: There’s a new recipe or something to add to the menu that comes up. How do you take that from, “here’s the new type of thing we want to do,” to it actually being in front of the customer?
Jessica Anselmi: So the ask might be not something as prescriptive as “We want a new — what’s a new sandwich we just came out with — toasted Tuscan grilled chicken sandwich.” It’s, “we think we might have a menu gap in terms of a hardier sandwich that appeals to the male audience.” Okay, that’s an insight we can go to our chefs with and work to develop against.
So once we have a working recipe, we would go into sensory testing, which is bringing in consumers in our really are valuable customer base. From my opinion. Which is our loyalty program recruiting them to taste a couple of the different iterations of the product, then we can tweak it. Does it need more arugula? Does it need more cheese, less meat, etc.? Usually, it’s always more meat, not less meat. And that is how we finalize the recipe will bring it into a lab cafe where we work through the build order, which for us is really the order of ingredients and the components and figuring out if there’s any tweaks we need to make before we expand it into a broader market test.
So that might be one market, where to the consumer, you would not know it’s a test item necessarily, unless we tell you or promote it as such in one of our test markets. It would be promoted as any other item on the menu. And in that test, we’re really monitoring how our associates executing on it at a cafe level is the marketing working for us, or the generic emails we’re sending getting the open rate we want or generating the traffic we want and really monitoring those sales metrics to determine if it’s a product we want to bring forward for launch.
Kaitlin Milliken: So you mentioned some metrics and data throughout, you’re talking about open rates on emails, and seeing how interested people are in things. When it comes to measuring what a success is, what are the data points that you’re looking for?
Jessica Anselmi: They’re pretty standard throughout the food industry. So we’re looking at average weekly sales, average weekly units, transactions, certain lifts to the category. So it needs to meet a certain hurdle that we’ve set for those metrics to see if it earns a place on the menu and would replace one of the items that we have today. Also, if it doesn’t succeed, that’s just as valuable for us. And I mean, you are probably failing many more times than you succeed in innovation. But it’s important that that failure is centered towards the front end of the process. So we are okay, if that is happening. It’s just how do we control that trying to minimize that and learn from it each time?
Kaitlin Milliken: One of the things I know you’re working on is sort of that bridge between the more traditional culinary process that just may be used to and the digital world. Can you share a little bit about that?
Jessica Anselmi: Sure. We’re always looking at how we can maximize speed and efficiency in the process. And one of the ways we’re looking at right now is how we do recipes. So we really want to free up time for chefs to spend time in the kitchen out in cafes, less time behind a computer. So we’re working right now with all the tools available to us in the cloud shared systems, shared collaboration systems, how can we make this recipe process just an automated process where at the click of a button, they have access to the latest costs weighted volumes at their fingertips, so we can just spend more time doing the innovation work we want to do?
Kaitlin Milliken: So I always like to ask about any success stories that people want to highlight. Are there any successes you’d like to share?
Jessica Anselmi: Sure. So I’ve been at Panera for about a year and I think the biggest accomplishment we’ve had to date is really our relaunch of breakfast. So it’s been pretty well covered in the news and it’s really in the context of Panera as I mentioned earlier is a lunch heavy business. So when we were looking at day-part proofing the business, breakfast is an opportunity. It’s a ritualistic occasion. And that was really the task from leadership. Go after breakfast.
So our team sat down and really looked at, “Okay, we have breakfast today. It’s known that we have it. What is an opportunity here?” And it was really refreshing our coffee and portability of our breakfast sandwiches.
So coffee, the coffee piece, which I lead was refreshing or hot drip coffees. We hadn’t touched them for a number of years. Consumer palates have changed. If you think back even as recently as 15, you know, 20 years ago, people were drinking instant coffee at home. It really has evolved rapidly and continues to evolve with all the third wave competitors we see in the marketplace. So we started with the product and refreshed our hot coffee, or lightened dark roast, it’s now freshly ground in cafes.
The other piece was the cafe experience. So we’re one of the only fast casuals to offer self serve hot coffee. We completely redesigned the station. It’s much more craft. It Feels like a more upscale coffee player, if you will. And it’s something we’re really proud of.
On the food front, we launched three breakfast wraps, toasted, warm, portable on the go. And together, this relaunch of the breakfast menu has really garnered some momentum for us throughout the year. And it’s continuing. We launched cold brew coffee in the spring. We launched a new frozen cold brew over the summer, and the news will just continue to come.
Kaitlin Milliken: Great. So now we’re into that advice portion of the show. Do you have any tips about getting innovation started for teams that are looking to pursue these new ideas?
Jessica Anselmi: Yes, so I really abide by three principles when it comes to my innovation philosophy, if you will. The first is really that innovation can come from anywhere. And I alluded to this earlier, but you need the people process and precision to make it happen. And that’s a phrase I borrow from a friend Matt Byfield, who used to be a McDonald’s and I love that phrase, people, process, and precision. And what I mean by that is you really need whole brain thinkers on an innovation team. You can’t just have creative folks. And then folks who execute you need that. That whole brain thinker.
The second would be, and I apply this to all areas of my life, is perfect is the enemy of good. That is definitely true in innovation. You are constantly iterating, evolving, needing to take two steps forward to only take three steps back, and you fail a lot. But if you fail fast, and you fail forward, and learn from that, that is what innovation really is all about.
The third would really be learning to paint over your masterpieces. In the food space, that means we’ve all been so lucky at some point in our career, perhaps to launch a product that really has changed the trajectory of a business and its really driven outcomes for a couple of years. And then five years down the line, let’s say, you need to take a hard look at it and you need to be okay, recognizing this product served its purpose. Its time has come and gone. It’s time to paint over this masterpiece. It’s extended past its shelf life.
Kaitlin Milliken: Are there any closing pieces of advice you have for folks in the QSR? space?
Jessica Anselmi: Yes, so the fast casual and the QSR world certainly moves very quickly. And those who are winning right now are those who are not afraid to disrupt themselves. So we’re always willing to disrupt ourselves but we also are very strict about sticking to our core principle of food as it should be. So I mentioned earlier that definition might flux or change but everything we do, in terms of the menu will always abide by food as it should be. And we have to be bias for action to make sure that our products are meeting that definition. We’re changing to meet the definition as it seen in the in the market.
Kaitlin Milliken: Quick service restaurants should embrace disruption to spark growth, even if some ideas fail.
So we know how Panera is creating versatile experiences for customers. But how should other companies prepare for the future? We called Dennis McGrath to debunk this challenge. Dennis is the former Vice President of Innovate for Starbucks. He’s also a current member of Innovation Leader’s editorial advisory board.
So to get us started what challenges are shaping the fast food industry?
Dennis McGrath: In the fast food industry? The challenges haven’t changed, but they have evolved over the years. And today it is: How do you create a unique personalized service experience? Customers today want more of a come to me type model than it has traditionally been for fast food where it was “go to” if I wanted McDonald’s or Chick-fil-A or whatever it may be, I would have to go to them, but today through technology, I can experience through delivery, through drive through, through in-store, or through a mobile app right order ahead and pick it up. So, how do you make that experience unique to you and personalize it to your brand?
Kaitlin Milliken: Competition is something that’s huge being able to stand out when there are so many brands that are trying to be the fastest, the cheapest, the freshest. Who’s doing a good job at that differentiation in the space?
Dennis McGrath: Chick-fil-A is doing a good job in that space. In terms of you know, they’ve always been known for product quality for consistency. But their mobile app is one of the best in class that’s out there also, and they have been able to increase capacity within their stores by enabling customers to order in advance. And a newcomer is Cava. It’ll be interesting to see what they begin to do as they begin to scale.
Kaitlin Milliken: So mobile can play into that too. I know that you worked at Starbucks and mobile ordering is a huge aspect. How can companies keep up with the changing mobile landscape?
Dennis McGrath: That is a big question there. But keeping up with the mobile landscape is actually trying to get ahead of the mobile landscape, and it’s obviously, it’s delivery is where the future is. But it’s not just delivery in terms of, delivering to those traditional things that I’m at home or at my office, but I want to be delivered my food while I’m at the park, things like that. So really being able to use that geolocation as well as taking the mobile in terms of the, the pickup you know, the order online and pick up in store.
The the non-value-added activity is in placing the order and actually going into the store to get it. So how do you make that experience unique to your brand and to your business? How do we make it so that customers can come into the store and not necessarily get in another line to go wait for their food, but have stores that are designed where it’s intuitive of where to go, when to go, and I can pick up my food as quickly as the mobile order customer expects it to be picked up.
Kaitlin Milliken: So there are a lot of different approaches to innovation from tech scouting, to streamlining stuff to looking for new menu innovations. What are the most common types of innovation initiatives at these companies?
Dennis McGrath: I think a lot of innovation, I would put it I probably put it into three buckets. One is innovation that increases capacity and capability of the stores. You know many stores that are out there today that are 10 or 15 years old. They were not designed to do what they’re doing today. They were not designed for mobile orders. You know the internet was not where it is, is today. And as menus continue to expand and customer demand for fresher food begins to expand, how do you innovate within the physical limitations of the space that you have? How do you increase capacity and increase capability of the teams that are in those stores? To be able to introduce the new offerings, as well as do it in a way that’s engaging for the people that are doing the work as well as engaging for the customer.
So the second is innovating around what used to be what we would call loyalty. I think loyalty now is needs to make a transition to personalization. An example of loyalty before was it you know, we will reward you if you and purchase this item or and everyone got the same reward? Well, personalization is going to be offering promotional things that are specific and unique to me.
And then the final is menu innovation. Calories, health, packaging in terms of waste. You know, if QSRs don’t innovate in the packaging space. municipalities will do it for them through legislation. So, getting ahead of that. Not just banning straws, but inventing new ways to deliver experiences outside of when their straws are not there or other packaging.
Kaitlin Milliken: So when it comes to three buckets that can be a tall order to innovate across all of them. What advice do you have for other innovators in this space from your experience?
Dennis McGrath: You know, in order to drive innovation within larger complex organizations, you need to have a process and usually process and innovation don’t go well together, right? The innovator just wants to go out there and do things and and kind of put products out there, and they see processes something that’s going to slow them down or something that’s going to put requirements on.
But the important thing about process is one, it should be invisible for the innovator so that they don’t feel burdened by the process. But one of the key things that the process will help you do is identify and begin to classify innovation. Not in terms of what I just said about menu and capacity and personalization. But in terms of what type of innovation is this. Is this innovation that is breakthrough innovation that’s going to drive new growth? Is it a capacity or capability we already have? Or is it incremental innovation? That’s innovation where we already have skills, and we have a proven track record that we can do this. And this is innovation we need to do to grow. We’re going to grow to 3% by this. This is really where a bulk of innovation happens, for most, is driving incremental innovation. And then the other bucket is, it’s really not innovation. It’s more of continuous improvement. And by simply having a filter of where you can classify where these innovations live, that’s how you can begin to determine which ones we should be working on.
Kaitlin Milliken: A lot of fast food restaurants, they’re franchised. How do you innovate when there’s so many locations and different ownership as well?
Dennis McGrath: You have places where innovation is incubated, and you’re incubating it out in the real world in stores. So you might want to do that some company owned stores, or through a smaller group of franchise stores. Because for the franchisee, they need to see it, feel it, touch it, and believe it, before they buy off on it, before they’re asked to make that investment. And seeing it within the lab or within a corporate environment is one thing, but actually seeing it in a store and hearing another owner talk about it, that’s really what what’s meaningful. And so this is where rapid testing and rapid innovation can happen. It doesn’t need to be a large number of stores, it could be as little as four or five stores. But it’s a place where innovation becomes real, where people can see it, feel it, touch it, and understand it, and then go back to their stores and envision how it would fit in there.
Kaitlin Milliken: Great. And this is my final question. What can we expect in the future from quick service restaurants?
Dennis McGrath: Venues that continue to be driven towards fresh and healthy. Packaging innovation will be legislated if it’s not innovated on. And finally, personalization, not just a menu that’s available for everyone. It could be unique menus for me or a unique promotion that’s tailored to my personal needs.
Kaitlin Milliken: So expect a more personalized experience aligned with customer values — like sustainability and health — as the fast food industry moves into the future.
You’ve been listening to Innovation Answered. This episode was written by Molly DeRosa and produced by me, Kaitlin Milliken. Special thanks to Woody, Michael, Jess, and Dennis for chatting with us. To join the Innovation Leader community, sign up for a membership on our website. You can also listen to all episodes of our show at innovationleader.com/podcast. If you love our content, rate and review us on your streaming platform of choice. That helps other innovators find our show. Thanks for listening and see you next time.
Special thanks to Innosight for sponsoring this podcast. Disruptive change is accelerating and companies today face more ambiguity than ever before. But with ambiguity comes opportunity. Innosight, the strategy and innovation practice at Heron Consulting Group, is the leading expert on disruptive innovation and dual transformation. Co-founded by Harvard Business School’s Professor Clayton Christensen, their team helps Global 2000 companies strengthen today’s business, while creating the new growth engines of tomorrow. Their approach to strategy and innovation consulting is collaborative. Clients say that Innosight has changed the way they think about and see the world, enabling them to do things they could never do before. Learn more at innosight.com.