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Panera Bread: A Brand Winner

Panera Bread dominates the bakery/café category. It owns over 60% of the market share, with sales over three billion dollars obtained from over 1,500 units. And just in the last five years Panera Bread has increased its earnings per share by over 24% each year. In 2010, Fortune magazine named it as one of the 100 fastest-growing companies. Operating under the names Panera Bread, Saint Louis Bread Company and Paradise Bakery & Café, its excellence performance has been recognized in several other ways. For example, it had the highest level of customer loyalty among quick-casual businesss according to a 2012 TNS Interesearch survey and was named Casual Dining Brand of the Year in a 2012 Harris EquiTrend Poll.

Yes, Panera has the functional brand benefits of providing fresh, wholesome and tasty sandwiches in a pleasant setting. But why else has it been successful?

It’s the bread! The bread is the key to a bakery/café and to their sandwiches. And Panera has shown a passion for bread. Their specialty bread offering is varied, intriguing, tasty and FRESH. The freshness not only contributes to the taste of the sandwiches, but also creates an ambiance in the store that really changes the total experience. You walk into one of their stores and realize it really is a bakery, with that special aroma and bakers that care. Others can bake fresh bread, but can’t duplicate the passion. On the Panera website there is a bread-pairing tool, much like top businesss have wine pairing recommendations. So pasta with white clam sauce will be best with their asiago cheese bread. Their “Seven tips for Sandwiches” starts with having great bread and ends with serving immediately to maximize the freshness.

Panera shows that they have a sense for their customers and their relationship to the brand, plus an ability to be creative in generating programs that make a difference. One example is the hidden menu. You have to know it exists to access it. The items on this menu generally contain an excellent source of protein with limited processed carbs. They include a power breakfast egg with roasted turkey, a power Mediterranean chicken salad and a power chicken hummus bowl. The hidden menu provides the ultimate social benefit of being an insider.

The loyalty program is another illustration of their creativity. The program, initiated in November of 2012, has over 10 million members and is very different than others that give free meals after a certain number of visits. Its rewards are a surprise. Customers receive notification by e-mail or upon ordering that a surprise reward has been earned. It could be almost anything, from a pastry or other food item, a recipe book, an exclusive preview and tasting, cooking and baking tips, or ideas for entertaining. But regardless it will be something you’ll like, as the program tracks your purchasing patterns. It is about surprise and delight. Psychologists and Las Vegas casinos know that a reward means a lot more if its arrival and amount is a not predictable.

Panera gives back. It has long supported community needs in part through their community breadbox, where cash contributions in the store are matched by Panera and are donated to local non-profit organizations. The cafes also donate day-old bread to those in need. In May of 2010, Panera opened their first Panera Cares business, located in convenient, high-trafficked areas and to people in need. In that business, anyone can enjoy the Panera menu and experience and are asked to pay whatever they can afford. The goal is to provide those hungry with limited resources with a meal that preserves their dignity, in contrast to waiting in line at a soup kitchen. There are currently five in place, with more being planned to open soon. Incidentally, about 60% pay the full amount and 15-20% pay more, so that Panera nets about 75% of the regular full price.

The Panera success story starts with a passion for bread that provides authenticity and trust – two brand traits that are powerful and differentiating. But the hidden menu and the surprise loyalty programs are creative extensions that reflect a brand that has energy and a willingness to innovate beyond the usual.

The “give back” values and the Panera Cares concepts are not only innovative and effective, but are also vehicles that publicize the needs of people who are down on their luck. It generates a shared value with customers, another basis for a relationship.

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About David Aaker

A recognized authority on brands, David Aaker is Vice Chairman of Prophet and consults exclusively for Prophet clients. He is the creator of the Aaker Model™ and has published more than 100 articles and 15 books.
Author: David Aaker