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How Panera Pioneered Fast-Casual Dining

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Behind the restaurant’s rise from small-town bakery to multibillion-dollar chain

Jordan Batty/Flickr

The Panera Bread in suburban Edgewater, New Jersey (population: 12,000), is a sprawling casual counter and dining area with a stone fireplace, soft music, and dim lighting. One weekday afternoon, in a booth near the large street-facing windows, a woman works alone, peering over papers and a binder, a cellphone in one hand and a pen in the other. Toward the back of the room, in front of half-empty plates of food, a small family watches their toddler play, a man and a woman examine a pile of spreadsheets together, and a group of college students chat about not being 21 yet.

According to Anthony Coleman, the designer and branding expert behind the Panera aesthetic we know today, “the original concept was designed to give the customer a feeling as though they were at home.” In many towns across the country, this is exactly what Panera, founded 36 years ago, has become: a place to linger, gather, and break bread with others.

Mark Goebel/Flickr

But changes in technology and consumer behavior have propelled the company, now the leading fast-casual chain in the U.S., beyond its traditional, cozy atmosphere. Today, Panera is seeing faster growth in its digital and to-go sales. In response, the brand is pivoting by beefing up options for take-out, delivery, and digital ordering, and it seems to be working — so far. Earlier this year, the company put itself up for sale and a bidding war ensued; it eventually sold to German conglomerate JAB for $7.5 billion (the deal was approved in July). A month prior, Panera announced plans to end the year with at least $1 billion in digital sales.

Today, Panera is among the top 10 quick-service and fast-casual restaurants in America — a ranking it first earned in 2015 — a list traditionally dominated by fast-food chains like McDonald's, Starbucks, and Subway. But of the bunch, only Panera Bread can be labeled fast casual, a type of restaurant that forgoes bright florescent lighting, paper wrappings, and assembly lines for more refined touches. In Panera’s case, it’s always been fireplaces in the dining areas, metal silverware, and rustic bread displays that set it apart from the Golden Arches and company — testaments to its roots as a wholesome small-town bakery.

So how did a small Midwestern cafe become America’s most successful fast-casual chain restaurant? And can it maintain the image of an artisanal bakery gathering spot in a world of online ordering, delivery, and apps?

The Beginning

In the early 1990s, Ron Shaich — who at the time owned Au Bon Pain Co. — bought a small chain of bakeries called St. Louis Bread Company. Coleman, the designer, recalls the moment he and Shaich walked into one of the new shops together.

“Tony, what could you do for $5,000 to make this store look better?” Coleman remembers Shaich asking.

“Well, if you give me about $200,000, I might be able to do something,” Coleman replied. It was a massive gamble, but Shaich let the design expert rebuild the company image “from scratch,” and Panera (which means “bread basket” or “time of bread” in Latin) was born. From the beginning, artisanal bread was a key element and the ultimate inspiration for the company’s branding. “We are really committed to doing bread right,” Shaich said in a 2003 CNN profile. “We do it based on the traditions of bakers who have been baking for hundreds of years [with] stone deck ovens that cost $50,000. We use no chemicals, no preservatives.”

Building off the bread concept, Shaich and Coleman wanted each location to feel inviting and comforting. “Warm colors evoke thoughts of home and gathering,” Coleman wrote in descriptions of early designs, posted on his website.

“We also recognized the customer was being challenged with a whole bunch of dynamics in the world: their job, politics, war, lots of things hitting them,” Coleman says, “and we wanted to come up with an environment that was a way of giving them a retreat.” Most locations still feature fireplaces and sepia hues, tying together the ideas of warmth, bread, and baking.

Coleman’s early designs were a textbook example of the fast-but-casual concept, before that jargon existed. In the main dining room, the heart of most Panera stores even today, there are community-style dining tables and intimate booths designed to encourage large groups and meetings.

Panera was becoming a “gathering place” just as Starbucks was working to perfect its “third place” concept in the early 2000s. “We were very aware that Starbucks in the national eye was the gathering place for the customer that we were trying to reach in [that] demographic and financial category,” Coleman says. That group included young-to-middle-aged suburban women who gathered at coffee shops. “We called them the ‘Stroller Moms,’ women who would go out with their strollers to Starbucks to gather, and we wanted to get that business.”

Tony Coleman

In one interview, with Fast Company, Shaich described the tactic: “In many ways, we’re renting space to people and the food is the price of admission.” But unlike Starbucks, Panera offered things the coffee chain didn’t (at least at that time), namely: free Wi-Fi and warm meals. It’s still not uncommon to find student groups, bible studies, business meetings, and job interviews occurring simultaneously in Panera dining rooms. Panera became a place for baking bread and breaking bread.

But changing demands, occurring near the time Coleman left the company around 2012, would eventually force an even stronger focus on food quality. As branding and marketing experts like Allen Adamson see it, people wanted more. “It used to be simpler: all you had to do is say, ‘Look, we've got great-tasting food and great coffee, come visit us.’ Now you need to go beyond that,” Adamson says. “You could have the best coffee and baked goods possible, but many young consumers [today] want to know more about your company. What your beliefs are. Where you source your products.”

The “gathering place” label alone wasn’t enough anymore.

Panera 2.0

The word “artisan” isn’t seen as much in Panera branding these days. It’s been replaced with sexier buzzwords such as “clean,” “nutrient-rich,” and “responsible.” In the summer of 2015, the chain kicked off its “Food As It Should Be” campaign, featuring a written manifesto promoting wellness and health, and a “No-No List” of banned ingredients, including maltodextrin, sucralose, and vanillin. In January, Blaine Hurst, who took over as president of the company in early 2017, announced the chain’s menu was “100 percent clean,” which means, according to the company: “no artificial preservatives, sweeteners, flavors, and no colors from artificial sources” — similar to how Panera described itself in the early 2000s.

Broccoli cheese soup, sandwich, and bread at Panera. dasjabbadas/Flickr

The new menu and marketing push helped reinforce the idea that Panera had always been “wholesome,” but, as Adamson says, by today’s standards, that’s no longer really unique. Chipotle Mexican Grill, for example, announced similar brand commitments to healthy food and natural ingredients around the same time, but has struggled to compete with Panera’s No. 10 ranking among QSR magazine’s top quick service restaurants. Chipotle is at No. 12, and has always been behind the bakery chain.

Part of Panera’s success today lies in its recent aggressive reach for customers on the go (and on their phones) in the suburbs (with drive-thrus) and in larger cities — a move away from its quaint suburban-gathering-place image. Compare the suburban Edgewater Panera Bread to one of the newest locations across the river in Manhattan. The first thing diners see upon entering are two tables of digital ordering screens. Unlike in earlier designs, the room is dark, almost grayscale. Hues of golden brown and bread-like sepia are replaced with grayish blue. There are no painted portraits of bread bakers or patterns adorning the minimalist space. Everything is served to-go, from behind the counter, so there are no metal silverware, mugs, or trays.

Customers who insist on dining in can head up an easily missed staircase to an upstairs dining room. There are tables and chairs, but no cozy booths. Panera’s typical warm, living-room vibe has been replaced with something more corporate and cold. A faux fireplace on one wall feels like an afterthought. In the evening, most diners dine solo; book clubs, bible studies, and families can still be found “gathering” here, but not everyone who participates in them orders food.

Perhaps the most distinguishing element of this modern Panera, and a clue that the brand is heading in a different direction with its new high-tech locations, is the small, seemingly handwritten letter sitting in a frame on the fireplace: “For the comfort of all our guests, please limit your stay to 45 minutes or less...,” it reads.

Panera [Official]

Hurst told Eater that as the market evolves, there is significant growth in the number of people taking things to go, so there’s been a push to cater to that group. “We’re seeing an increased percentage of our sales going off-premise. Not people hanging out,” Hurst says. “That’s just reflective of how all of us are living our lives today.”

As a result, not unlike its competitors, the company has been investing in online and digital experiences. In 2014, Panera launched mobile and tableside ordering through web devices, and the company ordered kiosks and electronic table locators for tableside delivery. The digital approach has been incorporated to some degree in urban to-go stores and traditional suburban models alike.

Still, Hurst promises that the company’s attention to physical space, the bread and butter of Panera’s image, won’t ever disappear completely. “We’re working on a new restaurant prototype to continue to make that environment more friendly, more current, and a more current voice in design,” Hurst says. Panera, in other words, is still holding on to the hearth-inspired element that brought it to the forefront of the fast-casual movement — warm bread. Only now, the brand has expanded its reach beyond suburban “Stroller Moms.”

“We’re less specific about who the people are and more about what do we do that makes us special and makes us a better competitive alternative in the area that we choose to compete in,” Hurst says. “Our gathering place business is for business-to-business meetings, right? A place to hang out. And on college campuses, for students, and student study groups. So we’re a little bit of everything — to everyone.”

Vince Dixon is Eater’s data visualization reporter.
Editor: Daniela Galarza