With Panera Bread in the midst of a major brand transformation, the St. Louis-based company's traffic is up 5.2% year over year, according to recent data from Placer.AI – marking its biggest traffic growth spurt in nearly a year, since an increase of 10.8% last March.
While Panera originally made a name for itself by offering freshly baked bread and other baked goods — and later used ethical sourcing and “clean” ingredients as an industry differentiator — the fast-casual brand has recently changed its perspective.
With Panera looking to “get back to its roots” ahead of an IPO in the near future, the company recently rolled out a menu change, reportedly simultaneously eliminating around 19% of the menu, including flatbreads, grain bowls, select baked goods, cold beverages, and more. Additionally, the company has quietly rolled back some of its ethical sourcing practices to allow for “sensible use of antibiotics” and reduce supply chain pressure. At the same time, Panera is still battling multiple lawsuits related to Panera customers who allegedly died after drinking highly caffeinated soda energy drinks.
All of this leads to Panera's IPO, which is reportedly scheduled to take place in 2024. Positive traffic patterns are a good sign, although according to Placer data, some of the recent traffic increase may be due to recent growth in the company's footprint, with the company's latest locations focusing on smaller footprints with off-premise digital capabilities like the mobile pickup.
As Panera looks to become a publicly traded company again, the company will want to reposition itself to compete with other public fast-casual players like Chipotle and Sweetgreen. In recent years, Panera has made various investments to increase its relevance to a broader group of potential guests, including successful programs such as the popular Sip Club – which targets coffee and soft drink consumers on multiple dayparts – and less successful forays into the dinner part of the day. (For the latter experiment, many of these newer menu items, like flatbread pizzas and grain bowls, were on the chopping block in this recent menu overhaul.)
According to analysts at Placer, Panera has secured a top spot in the market by straddling the line between a true cafe and a lunch concept. Placer's data shows that traffic at Panera is fairly evenly split between the midday rush (30.8% of traffic) and the morning rush (30.2%). In comparison, the majority of Starbucks' traffic comes from pre-lunch sales (45.7% of sales), while Sweetgreen's traffic predominantly occurs during lunch and early evening.
Placer.AI's demographic comparisons between these three brands now show more similarities between Starbucks and Panera customers than with Sweetgreen. Although Sweetgreen and Panera are considered more lunchtime brands, Panera and Starbucks customers tend to be middle-class families with incomes close to the median U.S. household income. Sweetgreen customers may also visit during lunch hours, but are more likely to come from significantly higher-income single-person households (and likely from more urban environments).
This data supports Panera's desire to “return to its roots” as a soup, salad and sandwich brand. Instead of expanding its menu to attract dinner guests with pizzas, or competing for Starbucks customers' attention with various cold drinks, Panera is eliminating distractions and embarking on a third path to potential future success: a (mainly) lunch brand , which is accessible and appealing to the average middle class consumer.
Panera's major menu overhaul announced this year reportedly trimmed some classics like turkey chili and Asian sesame salad in favor of more appealing — and in many cases more indulgent — dishes like the new Chicken Bacon Rancher and Ciabatta cheesesteak sandwiches. In addition to eliminating menu items, Panera employees have also discussed the decision, complaining about cutting bakery hours and, in some cases, replacing fresh-baked bread entirely in favor of pre-baked bread.
Whether these changes Panera has made in recent months will serve the company well as it moves into the public eye remains to be seen, but the company is trying to set itself up for success in the long term.
Contact Joanna at [email protected]M
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