Panera almost killed its delivery test 4 years ago -- now it's dominating the industry and rolling out across the US

PaneraPanera is now delivering food across the United States.
  • Panera is now delivering food across the US.
  • CEO Blaine Hurst told Business Insider that most other chains are “playing catch-up” when it comes to delivery.
  • Panera almost killed its delivery program during its original test in 2014.
  • Now, 62% of Panera’s business is off-premise, which includes drive-thru, take-out, delivery, and catering.

Panera is now delivering across the US.

On Tuesday, the chain announced that delivery is now available in 897 cities and 43 states nationwide. While delivery has taken the restaurant industry by storm in recent years,Panera CEO Blaine Hurst said that, originally, the service was nothing close to the hit it is today.

“In 2014, we nearly killed delivery,” Hurst told Business Insider.

Panera deliveryPanera

Hurst has been a driving force at Panera from the beginning, participating in the first delivery “test” with longtime CEO and executive chairman Ron Shaich in Boston in 2012 – on electric bikes.

In 2014, Hurst was running Panera’s first major delivery test in Louisville. While he was personally convinced that delivery was key to Panera’s future, the company was struggling to find enough delivery people and was dealing with related operational complexities.

“I was on the plane back with Ron [Shaich] from the meeting where the team collectively voted to kill it,” Hurst said. “Ron and I were talking, and I said, ‘Just let me finish the Louisville test. It will either work or it won’t work. And if it doesn’t work, we’ll shoot it.'”

Fortunately for Panera, Shaich decided to give Hurst the go-ahead to continue the test. Today, off-premise makes up 62% of Panera’s business, including delivery, drive-thru, to-go, and catering.

“The good news is our in-cafĂ© sales are still doing fine, but it’s because our growth is coming from the other channels,” Hurst said. “Digital is the biggest driver, and catering.”

As the restaurant industry has struggled to grow sales, delivery has emerged as a rare bright point.

While other chains have entered into partnerships, such as McDonald’s with UberEats and Taco Bell with GrubHub, Panera’s delivery is entirely in-house. That meant a greater initial investment, but it also allows the chain to have more control on quality and an easier rollout in regions where services like UberEats do not operate.

“Everybody else is kind of playing catch-up,” in comparison to Panera on delivery, Hurst said, with the exception of pizza chains.

Panera is trying to continue to grow these sales, introducing new restaurant designs that aim to better serve the increasing number of digital and delivery customers. However, that doesn’t mean Panera is planning to ignore its more traditional business.

“We will not forsake this dining experience,” Hurst said. “It is too important to our business.”

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