Skip to main content

How Panera built revenue amid COVID-19 (by Valerie Wendlandt)


Recent statistics show that over 40% of all restaurant transactions have declined since the end of March. Though delivery and takeout options have seemed to weaken the impact(s) that the COVID-19 outbreak has had on their business (i.e. sales), most food and beverage managers fear that closing their doors is their only solution. 

One restaurant chain, however, has decided to implement a strategy that may not only help in improving their sales but may also help to alleviate consumer’s concern of leaving their home to purchase groceries. Introducing the new addition to the Panera Bread franchise – Panera Grocery.

 

Panera’s CEO, Niren Chaudhary, released the news in early April. “Limited choices on grocery shelves” have caused many to become “…incredibly [stressed]…” said Chaudhary. “[W]e knew Panera could help.”The service promotes online grocery ordering and delivery – a game-changer in and of itself. Having access to key staple items like fresh produce, bread, and dairy that would have otherwise been unavailable in-store will no doubt provide many consumers with peace of mind.

 

Aside from the fact that the company believes this service can help solve consumers’ needs for groceries, Panera also hopes to somewhat recover from lost sales. In an interview with CNBC, Chaudhary mentioned that the chain lost an estimated 50% of overall sales after the outbreak. Yet despite the data and unfortunate circumstances, he is hopeful that Panera Grocery can help generate “…incremental profit and revenue…at a time when we desperately need it.”    

 


What is most impressive about this initiative is the chain’s presence and resourcefulness in e-commerce. During a time in which the pandemic has affected almost all forms of business (i.e. rapidly declining sales), it is critical that management carefully analyze their costs and expenses if they expect to stay afloat. Fortunately, conducting business online offers management many benefits including that of cost reduction.

 

In general, selling products online offers most companies the advantage of selling directly to the consumer. This helps to remove any intermediaries and, of course, added costs relating to distribution, transportation, etc. More importantly, however, is exactly how this direct channel impacts the consumer. As products are sold/delivered directly to consumers, quality control can be better managed which, in the long run, may help in building customer satisfaction and retention. This is especially important because recent customer retention statistics have shown that companies are likely to increase their profit by 25% through retained customers.

 

Interestingly, e-commerce also allows managers to make better use of their marketing campaigns. Electronic marketing, as it commonly referred to, is practical not only because it helps to reduce costs associated with physical marketing materials, but also due to its ability to communicate with consumers on a much larger scale. In most cases, this form of communication can help a company increase its overall brand awareness and may help to introduce a new product. Considering the fact that Panera Grocery is a fairly new service based on an online platform, it is possible that its marketing objectives include informing new and potential consumers of its services and/or expanding its customer base.  

 

It is also worth noting that specific e-commerce promotional campaigns may be implemented to help gain additional information about consumer behavior, demographics, and preference. Management can then use this information to assess the level(s) of demand from potential and actual consumers. Managers at Panera Grocery, for example, may find this information useful in determining what staple items need to be added or removed from their services. At the same time, they can also determine – and in some cases, predict – the specific products a consumer may purchase in the future based on the data. Not surprisingly, Panera has already linked past Panera Grocery purchases within a consumer’s MyPanera profile. This may be management’s attempt to create customized information that matches the interests and behaviors of its consumers.

 

Based on the information provided, it is safe to assume that Panera Grocery will do fairly well amid the COVID-19 pandemic. Other restaurants as reported by ABC News have quickly followed suit, offering select grocery items to their consumers.  

 

Regarding the switch from restaurant sales to grocery sales, what is your opinion? Do you believe this to be an effective strategy under the circumstances? And what impact does this have on retail grocery stores (if any)?

 

About the author

      

Valerie is a transfer student attending The Collins College of Hospitality Management at California State Polytechnic University, Pomona. Since enrolled, she has explored a variety of career choices and is working diligently to refine her baking skills in the hopes of one day sharing her passion with others on an international scale.   

Picture Source: https://money.yahoo.com/panera-launches-seeaplatefillaplate-challenge-help-110000388.html

 

Comments

Popular posts from this blog

Luxury vs. Millennials and Their Technology: The Ritz-Carlton (By Julia Shorr)

Embodying the finest luxury experience, The Ritz-Carlton Hotel Company, LLC has been established since 1983. In 1998, Marriott International purchased the brand offering it more opportunity for growth while being independently owned and operated. They are known for their enhanced service level as the motto states, “Ladies and Gentlemen serving Ladies and Gentlemen”. The luxury brand now carries 97 hotels and resorts internationally and is attempting to keep the aspects of luxury while keeping up with the trends of the technologically improving generations. The Varying Demographics of the Target Market The Ritz-Carlton’s typical target market includes: business executives, corporate, leisure travelers, typically middle-aged persons and elders, and families from the upper and upper-middle class section of society .   This infers a large range of types of travelers in which all are similar in that they are not opposed to spending extra for the luxurious ambiance. However, with

How to choose the best credit cards for travel (By David Mai)

  Traveling in a Post-Pandemic World If there was one thing the pandemic taught us, it was that everybody became hesitant and unwilling to travel. Shaver (2020) of The Washington Post shared an interesting tidbit in which Americans were actually staying home less during the pandemic, according to research that tracks users' smartphone data.  The quarantine fatigue affected nearly everyone who lived an active lifestyle or loved to be out and about in the world. It was simply not a safe time, and too many regulations were in place that deterred consumers from traveling for leisure. Consequently, the COVID-19 pandemic significantly impacted the travel and hospitality industry. Yet, there is no doubt that people will yearn to travel again when the pandemic is fully lifted. Around this same time, credit card companies have developed unique ways to retain business with consumers who look to maximize rewards and benefits for their journey. A Little Preparation Goes a Long Way      

Yammer: A Social Networking Site Exclusively for the Workplace

Effective internal communications among employees are related to some desirable organizational outcomes, such as robust morale, a clear vision, low turnover, and high employee engagement. The question is what platform can serve the purpose. This ABC News video introduces “ Yammer ,” an exclusive internal communication tool for companies. A user must use a valid company e-mail address to sign up for an account. Once an account is validated, the user will be led to the company page that is pretty much like a Facebook page. The difference is that only the users whose e-mail addresses share the same domain can see the wall and communicate with each other. I have no question about whether Yammer could be a useful internal communication tool for companies, but I just wonder: how many social networking sites do people need for communication? Why people have to “create” so many platforms or channels for “effective communications”? To many people, Facebook is only for “friends,” whe