Panera Bread 2015 Annual Report Download - page 5

We also are building upon our successful “Food as it should be” marketing platform, with new traditional media
flights expected to launch throughout the year along with creative digital and earned media initiatives.
We will continue to drive awareness and trial of new growth opportunities like Rapid Pick-Up, kiosks and
catering through MyPanera, and also plan to enhance our one-on-one marketing efforts through the program.
And we expect store design to figure more prominently in our innovation efforts in 2016 as we work to further
elevate the Panera experience. Throughout the year, we plan to introduce several store design packages to update
and energize our cafes, ranging from a refresh to a remodel to a new café prototype.
Expanded Growth Opportunities
We are continuing to build new Panera cafes. In March, we celebrated a notable milestone – our 2,000th cafe –
and approximately 100 cafes are slated to open across the system in 2016. We are also testing new café formats
designed to expand Panera’s reach into nontraditional locations.
Given the strong catering results we saw in 2015, we are increasingly confident we can consolidate market share
in what is a highly fragmented category, and we will work to achieve of our goal of growing our catering
business into a $1 billion business over time.
Our goal for Panera At Home, our consumer products division, is to build it into a business generating $1 billion
in retail sales and over $300 million in wholesale revenues over time. In 2016, we will begin transitioning
categories within our Panera at Home portfolio from a licensed model to a co-pack model in which we manage
the customer.
Finally, we are particularly excited about our delivery initiative. Delivery was a hot topic in 2015, as restaurant
brands rushed to stake a claim in the market. But while many companies view delivery as a modest play for those
few customers seeking the ultimate in convenience without regard to price, we see it as a mass-market
opportunity with high sales potential. Indeed, it is a prime example of our omni-channel strategy to leverage our
brand credibility and e-commerce capabilities into new sales channels.
Since we view delivery differently, we are also tackling it differently. We have been testing delivery for several years
now and plan to roll it out to most of our cafes over time – not just introduce it in a few select geographies. Our testing
has confirmed that sandwiches and salads are highly desirable foods that travel well, and that the e-commerce and
operational capabilities we’ve already built make delivery relatively easy to add into our café work streams.
In 2016, we expect to roll delivery out to about 10% of the system, or to 200 to 300 company and franchise cafes.
While we expect delivery to contribute slightly to overall comp growth in 2016, we expect it to be neutral to very
modestly profit negative this year because of startup, training and initial awareness-building costs. Longer term,
we believe delivery can significantly contribute to both sales and profit growth.
Ensuring Necessary Capabilities
We know that to deliver on the promise of our strategic plan, we need to have in place the technological and
human capabilities necessary to successfully execute the initiatives. To that end, we have worked for several
years to build the e-commerce functionality and physical facilities, such as catering hubs, that we need to support
our omni-channel strategy. While the nature of these investments requires us to incur costs before we see the
benefits, we are increasingly confident in the wisdom of our decision to do so.
For instance, our goal has been to grow sales through customer-facing access points, such as the web, mobile
devices and kiosks, and we are doing just that. By the end of 2015, digital utilization reached nearly 16% of total
company sales, double the figure at the end of 2014. Meanwhile, digital utilization reached 23% of sales at 2.0
cafes.
Indeed, we were facilitating 120,000 digital transactions a day at the end of 2015, which we believe makes
Panera one of the largest e-commerce operations in the restaurant industry outside of the big three pizza players.
We have also evolved the speed, joy and stability of our digital and web apps. Our digital apps are now among
the most stable in the industry and consistently score 4.5 out of five stars at the Apple Store. To continue this
momentum, we have hired a talented team of digital leaders to execute our e-commerce strategy.