Panera: Artisan to the Masses

“Like COBS Bread, Panera raises the level in terms of service, quality and most of all, marketing. It will put pressure on well-established fast food chains,”

Panera Bread, the American bakery-café giant with a name derived from the Latin words “panis” (bread) and “era” (time), expects to open its first Canadian outlets in the Greater Toronto Area by late 2007. Panera’s formidable size, marketing muscle and well-crafted PR ensure that its arrival will not go unnoticed. Describing itself as a “leader in the specialty bread/café category due to its unique bread combined with a quick, casual dining experience,” Panera announced its plans to enter Canada this past June.

For the past three years, Panera has opened an average of almost one café every other day. In October 2006, the company based in Richmond Heights, Missouri, celebrated its success as a publicly traded company — and the imminent opening of its 1,000th outlet — with Chairman and CEO Ron Shaich ringing the NASDAQ stock market opening bell.

Entering Canada
In Toronto, Panera engaged Northwest Atlantic to seek 4,200 to 4,800-square-foot locations in retail centres with high daytime populations. Toronto-based Chris Tarrant became Panera’s first Canadian executive in June 2006, as senior real estate manager. “The landlords I have spoken to are very excited about Panera,” Tarrant says. “They say that the timing is good for this type of concept in Canada.”

Panera’s spokesperson, Mark Crowley, further explains their thinking. “Panera’s decision to expand into Canada was less about saying ‘we need to expand into an international market,’ and more about the realization that the Canadian marketplace, and Toronto specifically, is well suited to the concept we have.” Clearly, the Panera concept has translated well across geographical boundaries in the U.S., where it has locations in 37 states.

According to Crowley, it is too early to say whether the first Canadian locations will be corporate or franchised. Currently, about 350 of Panera’s outlets are corporate, and the rest franchised. In the U.S., Panera does not grant single-unit franchises. It typically sells area rights to develop 15 outlets in six years. Many Panera franchisees operate, or have the right to open, more than 50 cafés. Net worth of $7.5 million US, and liquid assets of $3 million US, are the initial financial requirements.

Competitors
Braeden Lord, president of the 37-outlet COBS Bread Canada, which in turn is hoping to enter the U.S. in 2007, does not see Panera as direct competition — although Panera may not agree. “They seem to have a different view,” he says. “When they look for sites, they preclude us from the same centres and that means fewer sites for us.” The quality of Panera’s offering is “better than most in the market,” and a good thing, says Lord. “It is good for everyone that they are improving the perception of good bread,” he says. Lord sees Panera competing for the quick-but-nice breakfast, lunch and dinner market with such operators as Tim Hortons, Subway, Quiznos and even Earl’s, Kelsey’s, noodle houses, and pizza places, such as Boston Pizza.

Ralf Tschenscher, sales manager, Pacific Northwest, of Lesaffre Yeast, agrees. “Like COBS Bread, Panera raises the level in terms of service, quality and most of all, marketing,” he says. “It will put pressure on well-established fast food chains, and I am certain they will do very well in Canada.” Tschenscher says that the Canadian in-store baking industry will be watching successful organizations like Panera and COBS Bread very closely and react accordingly. “This will translate to better service, product presentation, variety and quality.”

The concept
A typical Panera is a large, casual, sit-down bakery-café offering breakfasts, lunches, and dinners. “Our menu is really rooted in handcrafted artisan bread, baked from fresh dough daily, in every one of our bakery-cafes by trained bakers,” Crowley says. “Our bread heritage translates across the entire menu, from our bakery selection to our café menu.”

Panera’s bakery menu includes artisan breads, bagels, baked egg soufflés, pastries and sweets. The café menu offers soups, salads, sandwiches, Crispani®, drinks and the kids’ menu. The pantry menu includes dipping sauces, oils, dressings and whole-bean coffees. The Via Panera catering service delivers special Via menu items from each location. Panera CEO Shaich speaks of “consumer solutions” — for various meal occasions including the extensive gathering place and take-home, and now, the newest “evening solution” with the introduction of pizzas.

Antibiotic-free chicken, whole grain bread, organic and all-natural ingredients, and no manmade trans fat are standard features. According to Panera President, Neal Yanofsky, this may help Panera in Canada. “The Canadian consumer is ahead of the U.S. consumer in concern about the food chain and organic origins of food, such as real cheese as opposed to some processed product, and all-natural chicken,” he said.

In addition to good food and fast and friendly service, Panera is known for its great neighbourhood “gathering place” atmosphere, and is often compared to Starbucks in this regard. While Starbucks calls itself the “third place” — after home and work — Panera talks about “Panera Warmth.”

Panera’s marketing savvy is evident in everything it does, not just in its well-rehearsed public relations, packaging and advertising. Its friendly website, www.panerabread.com, offers useful information to visitors, including daily menus, nutritional analyses and recipes. Panera’s e-newsletter to customers includes menus, recipes, nutrition information, news and surveys, and reinforces the “neighbourhood” connection with each consumer.

In its commitment to serve the communities in which it operates, Panera also supports charitable causes through its Operation Dough-Nation® program. For the past 13 years, the program has contributed both monetary and bread donations to local food pantries and hunger relief agencies. During October 2006, all Panera outlets offered a special pink ribbon-shaped bagel. Panera donated a portion of the proceeds from each bagel sold to a variety of breast cancer causes.

From what Panera is consistently doing in the U.S., it is safe to predict that by the end of 2007, not only will the first Paneras be open and operating, Canadians will also know more about Panera than they do now.

Tuija Seipell is a writer who follows the commercial baking industry.