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[19 comments]

Panera Bread turns to tech for faster, more accurate service

May 14, 2014

Panera Bread is turning to a high-tech solution to improve the customer experience at its restaurants. The company, according to reports, is reducing the number of cashiers at its counters and turning to kiosks, mobile and online to enable customers to place their own orders. By doing so, the company expects to reduce the amount of time its customers have to wait to get their meals, improve the accuracy of orders and improve service as workers who once took orders will now be delivering them to customers' tables.

Long wait times have been identified as a problem by Panera's management and the company has increased labor hours in an effort to address the issue in the short term. By 2016, the chain expects to have kiosks in all its locations, effectively cutting the number of cashiers in each restaurant by half. Some of the employees who have been used to take orders and run the registers, Panera founder and CEO Ron Shaich told USA Today, will now be used to deliver orders to customers' tables. No one, he said, would lose a job as a result of the new technology.

Panera is also looking to improve its takeout business. Using a computer or a mobile device, consumers will now be able to place orders up to five days in advance and pick them up at a set time.

Mr. Shaich also believes that order accuracy will increase as a result of more customers placing their own orders. "The dirty little secret in the food industry is one in seven orders is wrong," he told Bloomberg Businessweek. "We're one in ten, a little better than average. Half of those inaccuracies happen during order input."

FINANCIALS:     [NASDAQ:PNRA] [ ]

Discussion Questions:

Will the new ordering system being implemented by Panera Bread improve the customer experience at the restaurant? Will such systems become standard practice in fast casual restaurants? Do you think the decision to redeploy workers to delivering orders to customers' tables and other tasks is a good business move?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is Panera Bread's use of kiosks, mobile and online ordering to improve the speed and accuracy of its service?

Comments:

IF Panera can use its limited staff to provide better customer service, this will be good for consumers and good for business.

Mobile apps are becoming increasingly important in the QSR space. Along with Panera, a number of chains, including Chipotle, Dunkin' Donuts, Jersey Mike's, Red Robin and Sonic, now offer mobile payment options. Some, such as Dunkin' and Starbucks, have operated them for some time, testing the waters and attracting the attention of competitors.

Not only do these technologies have potential to improve the customer experience, but the increased presence of payment apps introduces vast opportunities for loyalty programs that adopt them, because they provide added insights that enable merchants to create more spot-on, real-time offers affordably.

The trick will be delivering offers of contextual relevance in an increasingly crowded field while not being invasive - and not just for QSR chains. Quick-serve restaurants may be leading the way in mobile payment and loyalty integration, but all merchants - retailers in particular - can learn some lessons from their QSR cousins on how to use payment apps to effectively bolster a loyalty initiative.

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Bryan Pearson, President and CEO, LoyaltyOne

From my vantage point as a Panera "regular" (due to lack of other options), I'm very skeptical that they will actually deploy staff to deliver food to tables, or that pushing customers to self-service kiosks will improve their service in any way. A better plan would be to reduce staff turnover, remodel their restaurants, and add more staff to reduce wait times and improve customer service.

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Al McClain, CEO, Founder, RetailWire.com

QSR and fast casual restaurants will increasingly turn to self-ordering systems to increase speed, improve order accuracy and unlike Panera, cut costs by reducing staff. Companies like Tillster are developing kiosks that can take orders, up-sell and track loyalty programs.

In restaurants where consumers don't have many questions about what comes with an order, self-ordering systems should work, as speed is a primary factor in consumer choice. I don't think kiosks will become popular at casual dining establishments.

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Max Goldberg, President, Max Goldberg & Associates

Self serve ordering kiosks will definitely improve the speed, efficiency and accuracy benefiting both customers and Panera alike. Wawa implemented self serve kiosks some years ago and used digital media to allow deli customers to build their own sandwiches and pay for them directly. This allowed employees to concentrate on getting the order correct by staying focused. It also eliminated all of the language obstacles, resulting errors and delays typically associated with these human interactions.

Implementing the technology is the easy part. Designing the order methodology and workflow and incorporating the correct digital media is more challenging. The success for both the QSR and more importantly the customer experience is in the design - both ergonomically and logically - of the ordering and payment process.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Has Panera tested this and based rollout plans on the test, or is this the rollout plan before doing the test? Having consumers use kiosks at the deli in grocery stores has been successful but having consumers use self-service checkouts has not been equally successful.

Why is there a long line at the ordering process? Because consumers have questions or because they are modifying the standard orders? Will the kiosk solve those problems? If the kiosks solve the problems they will spread to other restaurants quickly.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

I think eating is a social activity and people like to interact with people.

I look at this more as a ploy to save labor costs so, if it's successful, it will spread.

The idea of business is tied directly to the idea that people can afford products. Each of these human disintermediations reduces potential markets, and that -- in the long run -- is never good for business.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Not real sure about this one! If I stop in for a bagel and coffee I might appreciate no waiting in line. But if I have a more complex order and need questions answered, I don't see a lot of upside as a consumer. The wait time for those orders might be longer with reduced cashier staff. This needs to be tested extensively by Panera before a widespread rollout.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

I think having kiosks will be good, but they will still need to offer the cashier option, much like the grocery stores do. I love the idea of a couple of kiosks to order from. This would speed up the order process for some, but there's no way my mom would do it. They need to make sure they don't scare off any customers.

I think the other issue will be having food from kiosks delivered to tables. I go to Panera's fairly often and I don't see them being able to transition from people standing in line waiting for their food. That said, when I go to Panera's, I think it's more annoying to wait for my food than it is to wait to order. While waiting for our food, we're all huddled into a small hallway where people are squeezing by to get their drinks, customers are leaning in to hear their name and hovering over food to see which one is theirs. A better way of food delivery combined with a kiosk/cashier option would certainly help. I also agree with Al that they will have to redesign their restaurant.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

As I sit at my desk, with two kiosks nearby, I have to question the word "new." What's new about this?

Kiosks for order placement/check-out started circa 2001. In fact, fast food was probably the first adopter. Every week we discuss mobile and web. Every week we talk about omni-channel.

So if "new" is defined as a company that has a service problem that finally, reiterate finally, wakes up to one obvious way to deal with customer experience, then I guess this is new.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

Editor's note: Panera Bread has tested the concept in the Charlotte and Boston markets and plans to roll out the concept to 150 additional locations this year.

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George Anderson, Editor-in-Chief/Associate Publisher, RetailWire LLC

It's a question of what you as a customer perceive to be the problem, and I'm getting the idea that some of the problems others have mentioned may reflect on the geographical location. In Madison, Wisconsin, in several Panera stores, I've NEVER found the wait for ordering or the readiness of the order to be at all onerous.

I agree with those who note the importance of personal contact with an order-taker. As for using staff to deliver orders to tables...GONG! (That's from the gong show, get the hook for this idea!) I don't see any point or advantage in doing so; maybe just one of the ways to palliate and keep those who'll lose their job taking orders, but I doubt it...they will last.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

The results of these changes will be worth watching. My sense is that there are too many changes on both sides of the aisle - customers and associates with new customer-facing technologies and processes, new flows, new behaviors and zero about food quality, temperature, portions, pricing, menu variety, etc. Lots of x's and o's but are we losing sight of the "football"?

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Mohamed Amer, Vice President, Global Consumer Industries, SAP

Panera Bread is essentially a self-serve restaurant. You order at the counter and pick up at the counter. Adding the kiosks may enhance the experience. Delivering the food takes the service to a higher level than the current way they do business. The long-time customer will have to learn how to navigate the new experience, which looks to be an enhancement. I love that Panera is pushing to improve.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

It has been my observation that self ordering kiosks have not been successful at the QSR level. I've seen the kiosks deployed, often out of service, and subsequently removed from multiple Carl's Jr. and Jack in the Box locations. In fact, I'm not aware of one QSR with these kiosks anymore.

I do like the idea of a self ordering kiosk, but let's face it: it's faster for the customer to walk up to the human and say I'll take the #2 with no tomato and hand over the $10 bill or card than it is for the customer to walk up, navigate through a couple screens to find the #2 then navigate through additional four or five screens to do the no tomato and then a side and drink option. This is why these kiosks have not been widespread. They are cumbersome and frustrate the customer.

I think with time and with certain customer segments the kiosks can be more successful and Panera and its customer base may be a better fit for these than Jack in the Box or Carl's Jr.

Mike B, Storewanderer, None

Genuine connections are made between people, not people and technology. Does Panera want to rely on first encounters with their customers to be with a kiosk instead of a person? This may work for regular customers, but I wonder if this is the first impression you want to give to a first-timer. Besides, many customers make decisions about what they want to order while standing in line and looking at the pastries and breads on display. How will this impact impulse purchases? How do you up sell someone? Perhaps there could be some kind of compromise. Are there no other areas that can be made more efficient?

There will probably be glitches in the transition, and customers may need assistance before it runs smoothly. Of course, being able to have an order more quickly and accurately delivered to your table would be a plus. As a Panera customer, however, I don't want to lose that initial human connection.

'RetailRetell'

Great concept for improving customer experience in a fast-casual environment. The big win: handle more orders during peak hours - like morning coffee and weekday lunch.

There is excellent precedent for this type of solution at best-of-breed convenience stores like Wawa and Sheetz, both of which have used ordering kiosks for some years. Upgrading to a phone app for ordering ahead is a natural step.

At the c-stores, the order feeds into a fulfillment process in the kitchen, where order cues are displayed on screens, along with details that help ensure accuracy. The same data drives the checkout. Confirm, swipe and go.

The benefits of such systems are several: (1) They speed the ordering process and reduce the queue. (2) Order accuracy is enhanced. (3) Checkout is faster and errors rare. An well-designed app can even eliminate the payment step. (4) Panera can shift front-end staff to spend more time on service and less on order-taking.

But the number one benefit is handling the peaks. Morning coffee and the business lunch breaks are bottlenecks for fast service restaurants. Pre-ordering, speed and accuracy can enable more happy customers, less congestion, and ultimately more transactions per hour.

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James Tenser, Principal, VSN Strategies

Based on studies I've seen with self-checkout systems in supermarkets, customers are more likely to select the correct produce and other items that the cashier is capable of doing for them. Customers know what they bought.

If this transfers to ordering - and I would suspect it does - customers know their order better than the cashier can translate it. They will get their order placed right!

This puts Panera in a position to execute on the right information to start with and deliver it properly to the customer. That takes getting an order correctly right out of the equation.

Let's see how it works. It is something worth watching.

'Scanner'

Japan used this kiosk order/staff deliver food system for the longest time so there is a precedent. The problem with delicatessen from Subway to Panera to Chipolte is the long order line due to a sandwich preparer having to listen to a customer describe what they want on their sandwich.

Mobile and kiosk ordering will cut down the line and get customers to their seats fast and enable staff to focus on the order with solid information versus listening in real-time, hoping to get it right.

Ed Dunn, Founder, (Stealth Operation)

Certain segments of the customer base clearly will prefer to conduct business through technology. They feel more in control and can move through their transactions at their own pace, rather than wait for lines or checkout cashiers to punch all the buttons.

However, we should not neglect the value of person-to-person customer service and experience. Smiles, greetings by name and offers to explain or help customers with making decisions comprise a radically different experience than any technology can provide. Losing that experience will lead a retailer or restaurant to see declines over time.

What technology does is to standardize the experience, which may be an improvement vs. today's highly uneven customer service. However, I fear that the experience may be standardized at a low level, which would be a true loss.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

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