Panera tries to speed up service

The chain can't serve customers fast enough, and that's hurting the bottom line.

By Benzinga Oct 24, 2013 11:58AM

A pedestrian passes a Panera Bread Co restaurant © John Gress/ReutersBy Jim Probasco


Panera (PNRA) is a fast-casual restaurant chain with a problem. It isn’t fast enough.


The reasons are many. There aren't enough employees. Equipment isn't adequate to handle the workload, and telephone and fax orders create disruption. According to Bloomberg, after a long wait, customer orders are often wrong.


The problems are showing up in Panera’s bottom line. Comparable sales last quarter grew 1.7 percent at company-owned stores and just 0.9 percent at franchised restaurants. What little growth there was mostly came from increased menu prices.


Competition is fierce. "You've got fast-food trying to beat Panera," said CEO Ronald Shaich on a recent earnings call. "You've got casual dining." The company is facing attacks from all sides.


Much of what’s troubling Panera has to do with public perception of what fast-casual means. In theory, fast-casual is supposed to be a notch above regular fast food in both quality and menu complexity. Consumers know this and accept the fact that service will be slower at Panera than at McDonald's (MCD) or Wendy's (WEN).


When it’s a lot slower, however, customers become impatient. Impatient customers become infrequent customers and eventually former customers.


Panera is not alone. Chipotle (CMG) CEO Monty Moran told investors that a common complaint the company hears has to do with the need to wait in a long line to get food. Because of this, the company is seeking ways to speed up service with extra personnel in both the food and serving lines.


Extra people, of course, cost money. Panera said its plan to add 35 hours of labor per week to each company store would cost nearly $15 million. Additional production equipment will also add expense. In Panera’s case, the company may have little choice.


Other solutions include moving all catering to catering hubs, a process that the company estimates will take years to complete. In addition, the company hopes to encourage a shift to online ordering, as opposed to telephone orders.


Meanwhile, Imperial Capital lowered its price target on Panera from $212 to $205 Monday. Reiterating a "buy" rating, analyst Robert M. Derrington said, "We believe Panera Bread will likely not prove immune to recent weak industry trends and we are lowering our projections for 2013 and 2014 EPS."


Derrington added that despite stiff competition and slower consumer spending, Imperial Capital believed Panera management was “in the early stage of laying the ‘innovation' foundation for its next 5-year increase" in same-store sales and per-share earnings.


At the time of this writing, Jim Probasco had no position in any mentioned securities.


Read more from Benzinga

52Comments
Oct 24, 2013 7:50PM
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The worse thing for me going there to eat with my wife (which she loves) is all the computer geeks taking up the booths and setting there for hours sipping coffee and taking up space. I think many feel it is their right to set-up there and use it as their personal office. 

Oct 25, 2013 10:07AM
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As an employee of Panera Bread I understand all of these complaints about waiting time. But remember, all the food is being made as it's ordered, not pre made and sitting under a heating lamp. Errors happen, especially when people have very complicated orders. I agree it can be annoying, but sometimes you have to bear with us because after all we're human too. 
Oct 24, 2013 8:40PM
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I for one do not mind waiting a little longer @ Panera. I like their sandwiches and soups.

The Bakery isn't bad either. It's usually quiet and not many purple haired weirdoes, at least

at my local Panera. Oh, and you can't smell hot grease from the french fryer.

Oct 24, 2013 10:26PM
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Why the hell does everything have to happen in a split second nowadays?  With all the modern technological advances man has created, you'd think we would have more leisure time.  No, instead everything must go faster.
Oct 24, 2013 11:27PM
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say what you want but I can always go there and get a good quality breakfast  or  lunch  and  don't remember ever being as dissatisfied as I was with the faster chains

 

Oct 24, 2013 9:51PM
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Faster is not always better, except if you a greedy CEO of course and are pushing cheaper, faster crap for a higher price by lower paid employees.
Oct 25, 2013 8:49AM
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So why are some people complaining about having to wait?  Haven't they ever gone to other places and had to wait in line?  Evidently not?  If you don't want to wait, then you need to stay home and make your own food.  My wife and I really like their sandwiches and soup.  Get a life and grow up.
Oct 24, 2013 11:02PM
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Staff more people ! Stop tryin to milk every penny of profit by making people do 3 jobs at once or only having 20 hr a week employees who of course arent going to care about the job.
Oct 25, 2013 9:49AM
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I don't need them to be faster.  I love their food and I would hate to see the quality go down if they try to speed things up.
Oct 24, 2013 8:01PM
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just put on a feed bag and eat in your car.
Oct 24, 2013 8:00PM
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The fact that MD's is stilll around shows the level of intellegence in the market place...cheap, crap food...oh but it is fast and fast is what matters because I'm so imortant and can't cook at home or figure out how to make a sandwich. 
Oct 24, 2013 10:32PM
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I think the main problem with the industry as a whole is the lack of  help. They all seem reluctant to hire additional personal and that could be due to the up coming Obama care  joke. 
Oct 24, 2013 9:33PM
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We tried to order takeout (called from the road when in a hurry) but then we were forced to wait 20 minutes in line to pay even though the bag was visible behind the counter.   We walked out to never ever return.  Called spoke with the manager via phone and he said that was their policy and you have to wait like everyone else.  A lot of options out there....Panera not being one.
Oct 25, 2013 1:24AM
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I used to eat at Panera 2-3 times a week. Then I moved to a city that doesn't have one. I recently visited my hometown and ate lunch there- I was so disappointed. The service was quick but the food quality has gone downhill. The sandwiches are smaller with less filling, the produce doesn't taste fresh, and the meat is overly processed. Not sure if the management changed or if I just remember it better than it was. Get your act together Panera!
Oct 25, 2013 10:27AM
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I have only been to Panera 4 times, twice buying high price sandwiches with almost no meat in them, the other two times buying bagels one time buying 6 bagels and getting only 5, the next time buying a dozen and watching them as they were sliced and one rolling off the slicer and between the machines. The lady helping me didnt even notice because she was busy talking to other employees. So as far as the Hemet Ca store, it sucks.
Oct 24, 2013 9:48PM
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I stopped going to Panera for one reason, that reason being that their employees aren't friendly. It's like it's an inconvenience for them to take your order and produce the products.
Oct 25, 2013 9:15AM
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I like Panera.  When I go, I know it will take more time than a drive-thru.  Ever go to a Wendy's?
Oct 25, 2013 7:05AM
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I like Panera Bread.  They need to make the store roomier.
Oct 25, 2013 11:36AM
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Waiting is the least of their problems. It is not a fast food restaurant. Their problem is skimpy portions. A tablespoon of chicken salad in half a sandwich, a handful of lettuce? This has all happened in the last 2 years. Since the economic downfall in 2007 businesses have been cutting corners and now we're seeing the outcome.
Oct 25, 2013 12:26AM
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Twice, I went to order take out of JUST soup and both times was waiting for over 20 minutes!!  This food was for an ill friend, who requested Panera soup!  If it had been an order for myself...I would have walked out!  People who ordered sandwiches and more after I had placed my order, received their food before me.  Have not been back and probably will not revisit!  Staff were ALL very cold and Very unhappy!
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