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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

 

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