Article
What Panera 2.0 means for all operators
Panera 2.0 is two new customer experiences in one.
April 18, 2014
By Noah Glass
Olo
At Panera's Investor Day in late March, Chairman and CEO Ron Shaich charmed those gathered in Charlotte with a personal story of how he used to "skip the line" for breakfast at his local Panera by calling the manager ahead of time and sending his son in to pay when they pulled up. As Shaich told the audience, "That was a lovely system except it only worked for the CEO."
Moments later, Shaich unveiled Panera 2.0, the digital ordering platform that Panera began testing in 2011, and plans to have deployed system wide by 2016.
What is Panera 2.0?
It's two new customer experiences in one: 1) "Rapid Pick-Up," which allows guests to order from the Panera website or the new Panera mobile app; and 2) "Enhanced To-Go and Eat-In" kiosks (enclosed and mounted iPads), that enable the customer to order in-store. Customers can order as guests or as MyPanera members, the brand's loyalty program that allows guests to earn points and redeem rewards. Panera 2.0 promises to better serve both take-out customers — by letting them schedule orders for pickup — and dine-in customers — by letting them identify a table to which their food should be delivered.
Shaich cautioned that Panera 2.0 is not vision not for technology, but an evolution of Panera's guest experience. In short, Panera 2.0 is not just about pleasing the techies in the crowd. It is about better serving all customers. Over the past nine years, we've worked with more than 150 restaurant brands to realize the same vision: a digital ordering program that utilizes technology to offer customers an experience that is:
- Faster
- More accurate
- And more personal.
It's faster
Digital ordering makes the customer experience faster by allowing customers to order ahead with a scheduled pickup time. Customers can pick up their order at a special counter or pickup spot, without having to wait because the store has received and prepared the order just-in-time. It also means a faster experience when the customer orders from inside the four walls of the restaurants — from a kiosk or her own device — because the customer does not have to wait in line, repeat a regular order or stop to pay. This faster experience for remote and in-store orders means productivity gains and greater throughput for the operator, in addition to a better customer experience.
It's more accurate
In the status quo process of ordering, there are too many opportunities for the order to get lost in translation: Mishearing, mis-understanding, and/or mis-entering. Across the restaurant industry, more than one out of every 10 orders is inaccurate, meaning 10 percent of customers across the industry have a bad experience. As Shaich noted in Fortune magazine, "If we're in the to-go business, we have to be 100 percent accurate. Forty percent of inaccuracies come from incorrectly inputting orders in the register, so it helps when customers make their selections themselves digitally."
By putting the order entry process in the customer's hands, the operator removes much of the process that leads to order inaccuracy (of course, the back of the house still needs to prepare exactly what the customer has requested). Again, this more accurate experience increases customer satisfaction — and reduced waste for the operator.
It's more personal
Commenting on the dine-in and takeout service models improved by Panera 2.0, Shaich said in Fortune:
"We had a one-size-fits-all system. Everybody went into the same line, whatever their needs were."
He noted that 50 percent of Panera diners customize their orders, which is typical for the fast casual segment in which Panera operates. By allowing customers to see all of the ways in which they can customize an order (including all possible ingredient substitutions that take into account the food cost to the operator), restaurants can provide customers with a richer understanding of each dish and allow them to customize it exactly to their taste. By then allowing customers to save those highly customized dishes as "favorites," they can order highly customized orders in a single click the next time around. This more personal experience means a better customer experience — and greater customer-level insight for the operator.
What's Panera 2.0's ROI?
Today, Panera 2.0 is live in 15 stores around the nation, and the early results are quite impressive. Shaich shared that Panera 2.0 stores are seeing 20-30 percent of orders coming in digitally, and volumes in a store visited by Fortune were up more than 50 percent at lunch. He recognized that great technology is not enough, noting in Fast Casual that:
"Panera 2.0 is an investment in the customer, enabled by technology and powered by operational excellence."
In other words, the technology is necessary, but not sufficient for delivering a great customer experience. It takes commitment to employee training and focus on operational excellence to execute and realize the full potential of digital ordering for faster, more accurate, more personal service.
Panera 2.0 concept sounds great, but how much does it cost? Fortune's Beth Kowitt wrote that Panera "will have spent $42 million by the end of the year on the e-commerce components of the project. Panera 2.0 costs about $125,000 per location to implement."
If that sounds like a lot of upfront cost to you, just wait. Kowitt added, "to support the operation, Panera more than doubled the size of its IT team since 2005." A significantly larger IT team means significant ongoing costs to maintain, upkeep, and upgrade the new platform with new features and functions over time.
It's affordable for all restaurants
The good news is that you don't have to make the same investment to realize the same return. You can utilize software-as-a-service (SaaS) digital ordering providers to avoid upfront costs and pay a low monthly subscription per store that covers all maintenance, upkeep, and upgrades of the platform over the long haul. Even better, SaaS customers get the benefits of always being on the latest platform and having access to features and functionality generated from the wisdom of the crowd of customers. And, best of all, utilizing a best-of-breed online and mobile ordering provider will eliminate the five year time period that Panera spent in launching Panera 2.0. That's the real way for savvy restaurant CEOs to truly "skip the line."
