My annual USA Road Trip, Part I: Panera Bread – a success story we could definitely replicate in the UK

July is the time of year when I take to the road in the USA in search of new retail concepts and brands that are doing particularly well. This time I was travelling on the East Coast and, as with any road trip, picking the right lunch venue each day is critical. A few years ago, you may recall that I went in search of the best burger on the West Coast. In-N-Out won hands down.

The winner for me in 2017 has to be Panera Bread – which as you can guess from the name, has nothing at all to do with burgers! When I discovered it in week one of the trip, I thought that I was eating in a one-off, fast food restaurant. Research has since informed me that Panera Bread has over 2,000 bakery-cafes across the US and Canada. Interestingly, the chain was acquired in April by Krispy Kreme owner JAB for an astonishing $7.5bn.

There are so many dining chains these days that it takes something special to make me sit up and take notice – but Panera did just that. In many ways the inside of the restaurant has the usual aspects of a fast food outlet: simple and comfortable with friendly and efficient service.

Our food arrived nearly as quickly as you would expect a Big Mac to be served, but Panera is no typical fast food chain. Instead all the food is healthy and nutritious, with an emphasis on responsible sourcing. I had a delicious toasted mozzarella, tomato and pesto sandwich with a low fat peach smoothie. Diners can choose from a wide range of options, including pastries, soups, salads and pasta dishes.   

We do have health-conscious, fast casual chains in the UK, of course, such as Leon or Crussh, but nothing on the scale of Panera Bread, and nothing in the service mould of a McDonald’s or Burger King. I once thought that operations of this scale were reserved exclusively for the burgers and fries specialists, but the rising demand for healthy options suggests there is now a massive opportunity for healthy eateries that get their offer right.

Following the JAB acquisition, Panera founder, chairman and CEO Ron Shaich declared that his business “has been one of the most successful restaurant companies in history”. It is not just that Panera has sales of about $5bn and expects to grow earnings by up to 14% in 2017.

Since beginning operations in 1981, the company has enjoyed consistent, long-term growth thanks to its steadfast commitment to its founding principles. Indeed Panera has been the best performing American restaurant stock of the past 20 years – rising in value over that time by an incredible 8,000%.

“The themes we have bet on – digital, wellness, loyalty, omnichannel, new formats for growth – are shaping the restaurant industry today. Indeed, the power of the plan is evident in our business results.” – Ron Shaich, founder, chairman and CEO of Panera Bread

A founder like Ron has built his business in the right way. In 2010 he launched Panera Cares, a community cafe concept where customers only pay the amount they can afford via a donations box, rather than being charged at the till.

Panera operates two such cafes in its home of St. Louis County and in Boston as part of a wider effort to raise awareness about the desperate challenge of food insecurity in America. The company notes that 16 million children in the country – or one in five – do not have enough to eat each day and lack the means to get enough nutritious food on a regular basis.

This focus on nutrition is at the heart of the Panera Bread ethos. In January the company announced that its entire US food menu had been made free from all artificial flavours, preservatives, sweeteners, and colours from artificial sources. The move marks Panera out as the first national restaurant company in the US to make such a comprehensive commitment.

But the business is not just ethical and health conscious. It has shown that it can combine these qualities with hard-headed strategic decision making. Earlier this year Panera announced that its annual digital sales had surpassed $1bn for the first time thanks to innovative service offerings like ‘rapid pickup’ and fast-lane kiosks. The business is also rolling out a big expansion of its food delivery service, ensuring that it stays ahead of consumers’ evolving demands.

Panera has been tight-lipped so far about whether it plans to expand internationally, which could include launching in the UK. I would not be surprised if it did, when you think of all the other, much smaller US fast casual chains that are launching their operations in the UK on an almost weekly basis at the moment.

Fast casual dining remains one area of the economy that is relatively buoyant, and new concepts seem to be popping up all the time. Anyone venturing into this market for the first time would be advised to take a look at the example set by Panera Bread, and understand what real, sustainable growth looks like.  

Part II of my annual USA road trip follows next week! | @MoiraBenigson | @TheMBSGroup