Panera makes news by not discounting its bread

In times like these, people: they want quality, not quantity; and they'd rather stick with reliable businesses no matter what the price. The company that survives? It'll offer plenty of valuable perks; customers in the know are happy to pay more for good service with the extras.

Wait: huh?

That's what competitors are saying in a mix of horror and awe as bakery/coffeeshop chain Panera Bread continues to fill tables with customers, cheerfully paying the same for the same bread, pastries and sandwiches as they did when times were good. The company is reporting that same-store sales rose 2.8% in the first 27 days of the third quarter, and is predicting more growth across the board -- operating profit, average customer check, and number of transactions -- for the quarter. And according to the Wall Street Journal, this is because the company is offering quality products and "bucking industry trends" by refusing to cut prices. Loyal customers point to the free Wi-Fi, a perk Panera has long offered its customers.

The CEO's statements may not make him any friends among his customer base. Ron Shaich says that he's "focused on the 90% [of Americans] that are still employed." Well, fuzzy math aside -- 10% unemployment rate does not mean that 90% of the country has a job, it's far less than that (here's one explanation, which doesn't even count those who are unemployed by choice) -- this is sort of insulting.

What's more, WalletPop writers as a group were skeptical. Sure, many of us have used the Wi-Fi at Panera. But Gina Roberts-Grey, in upstate New York, reports that her local Panera Bread is far less busy than its less-fancy competitors. "At noon, the height of the lunch rush, I had my pick of empty tables, unlike the McD's right next door whose drive-thru line was in the street and dining room was full," she writes. Outside of Detroit, where the unemployment rate is high, Shaich's theory seems to hold true; Jennie Phipps reports that her local Panera enjoys "an amazing business -- always full of people during the day."

Here in Portland, the Panera across the street from my children's pediatrician seems to always have a few tables full, even in the middle of the afternoon. But busy it's not, and I am personally no fan of their overly-sweet pastries which display little in the way of bakery prowess. The independent bakeries sell goodies for similar prices, and they're actually baked on site from scratch. I never get the feeling the Panera Bread employees know their sponge from their proof.

I see Panera's success as a fluke, not evidence of brilliant strategy; and predict the press around the company's growth -- with its spotlight on Panera's $16.99 lobster sandwich -- will only affect it negatively. Are you still going to Panera? Will you after today's news?
Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.