Panera Brands includes not just its namesake fast-casual restaurant, Panera Bread, but also Einstein Bros. Bagels and Caribou Coffee. The company operates nearly 4,000 locations in 10 countries; it is owned by the privately-held German conglomerate JAB Holding Company.
Niren Chaudhary became CEO of Panera Bread in 2019, and transitioned to chairman of Panera Brands earlier this year. On Monday, he spoke at the Boston College CEO Club. Excerpts from Chaudhary’s comments and a video of the entire conversation are below.
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Making the Brand Relevant, Easier, and More Efficient
In today’s highly-volatile, uncertain world, I think we all need to innovate. But I’ll give you an important definition of innovation: I think innovation is meaningful only if it improves and strengthens the business model. Otherwise, it’s a waste of effort, a waste of time. It must improve the business model.
And therefore, at Panera, [one] desire was always to make the brand more relevant. So, food innovation… I don’t know how many of you have tried the flatbread pizza, which was launched for the dinner day part? If you think about it, that’s the only product you can share at Panera Bread…
Or, how can we make the brand easier to access? So digital technology, biometric identification, geofencing, AI-enabled drive through speakers.
So relevant, easier, and then efficient. How can we drive more efficiency in supply chain and labor productivity?
So innovation is a mindset. It’s a mindset of coming up and trying to always improve, and do everything that we’re doing much better than we did before.
The one most important and effective way as leaders we can encourage ideation, [and] psychological safety, is to encourage people to disagree. …If somebody disagrees, then we’re building a good culture that’s going to be innovative.
Test Quick, Fail Fast, Scale Big
In Panera, I think the way we encourage [innovation] is through a culture of psychological safety. And the one most important and effective way as leaders we can encourage ideation, [and] psychological safety, is to encourage people to disagree. Just say, “I’m gonna decide only if you disagree.” If somebody disagrees, then we’re building a good culture that’s going to be innovative. Innovation, we believe it has to be quick. We believe in the adage of “test quick, fail fast, scale big.”
And then we of course, have a world-class innovation system, through which we put all these ideas like the subscription [coffee] club, before we launch it.
Democratizing Coffee with a Subscription Model
On the subscription [offering], [the] consumer insight [was that if you buy coffee every day], you spend over $1,100 a year. The consumer insight was that premium coffee is just too damn expensive. And therefore, we said, we will democratize the joy of drinking coffee. And instead of $1,100, you can buy unlimited coffee for $100 a year at Panera. That was the idea.
Now, having an insight is…a strong start. But you need to know, does it really fit my brand uniquely? Am I the only one who can do this? Or can somebody copy it?
So here are the reasons why we thought only we can do it. One, we were not selling a lot of coffee… We were not Starbucks or anybody else. We were probably throwing away more coffee than we were selling. Second, we have world-class bakery products. They are absolutely phenomenal. So we had that benefit of you come in for the lure of coffee, and then you get introduced to our bread and bakery products. And then finally, we had the technological platform to execute this flawlessly. There are not many brands who can tick all those three boxes. We had the idea. It was unique to us. And it has been phenomenally successful.
A few numbers: 30 percent of the people who are coming in are absolutely new to the brand — never came before. The frequency has jumped up eight to 10 times — people are coming into the café eight to 10 times more than they ever did. And when they come in, 30 percent of the time, they’re buying some food. So it’s been hugely incremental and accretive to our business. And we’re absolutely delighted with the results.
Technology is a Means to an End
For me, technology is a means to an end. And that end is making the brand easier to access, removing friction, personalizing it. So whatever appropriate technology exists to make the experience frictionless and more personalized, we will keep chasing it, keep investing behind it…
It’s hard to really project 10 years out, given the pace at which things are moving…except to clarify the intent — that we will always be believers in technology…as a means to an end. We are always in service to our customer to make things more relevant, easier, more distinctive.