Panera taking steps to differentiate

by Eric Schroeder
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NEW YORK — Enhancing breakfast, stepping up bread and baked goods merchandising and changing the way it processes lettuce for its salads are some of the initiatives on tap at Panera Bread Co. for the remainder of 2009, said Jeff Kipp, senior vice-president and chief financial officer of Panera, at the Piper Jaffray Consumer Conference held June 10 in New York.

Mr. Kipp said one of the reasons Panera has been able to post solid results during a tough economic time has been its success at breakfast. The company has had four straight quarters of breakfast transactions up year-over-year, boosted in part by the introduction of grilled breakfast sandwiches, available in egg and cheese; bacon, egg and cheese; and sausage, egg and cheese. Panera intends to continue that trend by enhancing its breakfast menu during the remainder of 2009.

"We have in test in one of our major markets what we call a ‘power sandwich,’" Mr. Kipp said. "It’s on whole grain and has 75% the calories of the others." The sandwich is made with eggs, a slice of Vermont white cheddar cheese and ham.

Bread and baked foods marketing also will receive greater focus going forward. Whereas to-go coffee cups and salad dressings dominated front-of-store merchandising in years past, Mr. Kipp said Panera will look to capitalize on impulse sales by using more attractive merchandising of bread and baked foods.

"Empirically, the impulses work and we have seen it work," he said. "We’ve had tests showing our bread drove sales up 10% to 20%."

In 2005, Panera changed out its chicken for an antibiotic free chicken to great success. Four years later, the company is changing the way it handles lettuce.

"We haven’t felt that our lettuce has been where we want it to be," Mr. Kipp said. "We want it chopped. We want it finer. What we’re doing is we’re chopping it centrally ourselves. We are contracting directly with the fields. We are actually taking a week out of the supply chain at the same price and we are delivering. … It’s better lettuce. It’s better quality and it’s fresher. We want to do that as much as we can to continue to differentiate the concept."

In line with the change, Panera earlier this month debuted a bleu cheese chicken bacon chopped salad. In September, the company plans to launch a barbeque chopped chicken salad.

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