Panera Bread is rolling out delivery at hundreds of its restaurants across the US.
“We’re in full roll out mode — this is no longer a test for us,” Panera CEO Ron Shaich said in a presentation at the ICR Conference on Wednesday.
Shaich said that the company plans to add delivery at 35% to 40% of the chain’s roughly 2,000 locations by the end of 2017.
“For us, delivery is a mass-market opportunity,” Shaich said.
According to Shaich, Panera has a menu that is well-suited for delivery.
“It’s not because we’re smarter [than our competitors] — we’re blessed,” Shaich said. Blessed, according to Shaich, with a menu of soups, salads, and sandwiches that are easy to transport, much like pizza.
Panera began rolling out delivery in early 2016. Roughly 15% of Panera locations now offer delivery, exceeding the company’s original plan to add delivery to 10% of stores by the end of the year.
The fast-casual chain began exploring delivery five years ago. Panera investors have been pushing the company to add delivery at restaurants, especially following the successful roll out of Panera 2.0, a tech initiative that built the chain’s digital ordering system for Panera’s app and in-store kiosks.
“With Panera 2.0 effectively implemented across the company base, investor attention has turned to the implementation of delivery, which our delivery model suggests will annually contribute ~1-2% same store sales and 2-3% to [earnings per share] growth through 2020,” Cowen and Company analyst Andrew Charles wrote in his nomination of Panera as a “best restaurant stock pick” of 2017.
Panera’s kitchen crews can treat delivery orders the same way they would treat take-out orders. The only added costs are those associated with the actual delivery process, which Shaich said add up to roughly $3 to $3.50 per order. Panera charges a delivery fee of around $3.
Panera said its average delivery order is $22, while its average to-go order is $9.
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