Panera Says Digital Sales Could Hit $1 Billion By 2017

Pedestrians walk by a Panera Bread restaurant in Midtown Manhattan, New York, NY, Tuesday, February 10, 2015.
Pedestrians walk by a Panera Bread restaurant in Midtown Manhattan, New York, NY, Tuesday, February 10, 2015.
Victor J. Blue 2015 Victor J. Blue

Blaine Hurst has no problem espousing the swift ease of digital orders booked at Panera Bread. And that shouldn’t be a surprise: he spearheads the fast-casual cafe food chain’s evolving, and fast growing, tech strategy.

“We have cafes today where at lunchtime, 65% to 70% of transactions run through the kiosks,” says Hurst, executive vice president and chief transformation and growth officer at Panera. “So we know it is working.”

In fact, Panera (PNRA) has made serious strides since it introduced Panera 2.0 almost two years ago, an initiative meant to improve the experience at Panera’s cafes by adding technology and operational improvements to help keep up with high transaction volumes. Essentially, Panera 2.0 is the chain’s major investments in tech, which includes digital ordering and kiosks to make it easier for customers to place orders without waiting on line.

On Friday, the company estimated that over 20% of orders would be produced and paid for digitally by the end of 2016, up from 16% currently. To date, system-wide digital sales equal a $500 million e-commerce business. It could reach $1 billion in annual sales by 2017. Impressively, in some markets, digital sales are making up more than a third of retail sales.

Panera says it has more than 21 million loyalty members and more than 17 million active users that are a part of the company’s MyPanera loyalty program.

Some of the services are already fully implemented across Panera’s entire U.S. system. Rapid pick-up is in all domestic cities, as is digital ordering capabilities for catering. Around 400 restaurants have been upgraded to incorporate kiosks to make ordering even faster and minimize lines – which is especially helpful during the busy lunch hour.

The digitally savvy Hurst says that he now always uses the kiosks when placing an order at Panera. He explains that it is the quickest way to place an order – especially because he likes to customize his salads.

“Do you know how long it takes me to say, ‘I want this salad, no cheese, no dressing and no side choice.'” Hurst says. Instead, after a quick swipe of the credit card, his order history and favorites are immediately recalled by the computer. He can then place an order quickly.

Panera has made investments to make the ordering process faster. The latest iteration was able to trim five seconds from the total ordering process. While that might not sound like a lot of time, the less “friction,” the better.

Hurst is almost the ideal customer for a company like Panera, which is trying to perfect its digital strategy in an increasingly crowded world of apps, devices, and data. When Fortune met with Hurst at a Panera restaurant just south of New York City’s Bryant Park, the executive was wearing an Apple smartwatch – as well as a Jawbone UP activity tracker and a blood sugar monitor.

That’s a lot of data for one man to comb through. And as he explains to Fortune, it helps him think about how Panera wants to purposefully engage with customers digitally, without overwhelming them with too much information or options.

“How do we engage with the consumer in a world where we are all so connected, so that it is actually helpful, not just a hassle?” asks Hurst.

The most important metric Panera seems to be focusing on is the percentage of sales that come from digital. It stands at 16% today, which Hurst believes is market-leading penetration with the exception of big pizza chains, which can derive almost half of sales from digital sources.

What’s the ceiling for Panera? The restaurant chain says digital orders could make up half of the total business down the road, which means it could be just as big of a business as it is for pizza chains today.

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