As Chipotle struggles, Panera is thriving.
On Tuesday, Panera reported that system-wide same-store sales increased 4.7% in the first quarter, with reported revenue growing 6% to $685.1 million, up from $648.5 million the same quarter last year.
“I’ve been looking forward to this earnings call for some time,” CEO Ron Shaich said in the company’s earnings call on Wednesday. “By every criteria, our first quarter has been among the most exciting we’ve seen at Panera in a very long time.”
The chain’s recent success might be linked to the recent struggles of fast-casual competitor Chipotle which announced on Tuesday that revenue dropped 23.4% to $834.5 million, with same-store sales dropping nearly 30%.
Data shows that many of the customers that ate at Chipotle in recent months have begun visiting Panera more frequently, helping boost sales at the chain.
In December, directly following the E. coli outbreaks, 13.4% of Chipotle customers also visited Panera, up from 11.6% in September, prior to the outbreaks,
reports Reuters, using data from market analysis firm Placed.
Beyond competing for a similar type of customer who is invested in eating fresh, natural food, Chipotle’s struggles are helping shape Panera’s future more broadly. People have a laser-focus on the quality of the food they’re eating, and Panera knows that.
“We live in a post-Chipotle world, where there is an elevated focus on food safety at all restaurants,” Panera President Drew Madsen said in the company’s earnings call.
Panera prides itself on the quality of its food. It is in the process of cutting dozens of artificial ingredients from the company’s “
No No List” from the menu, and th company is also rolling out new food safety initiatives. The focus on all-natural and fresh food used to be Chipotle’s forte; now, with a largely negative perception of the chain’s food safety driving down sales, a “clean” menu at Panera could be an even greater draw.
“A major part of our brand promise is being an ally for wellness that our customers trust to help them eat the way they want to eat,” said Madsen. “Obviously, food safety is a critical piece of that commitment.”
Another major change transforming Panera is the rollout of Panera 2.0, an digital initiative that adds kiosks where customers can order and pay. By the end of 2016, the company says that more than 20% of sales will be ordered, produced, and paid for digitally.