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    Panera Makes a Bold Breakfast Play

  • New menu items, coffee, and tech fuel a fresh strategy for the brand.

    Panera Bread
    Speed and quality. Can Panera offer it all for breakfast?

    When talking about breakfast as an untapped opportunity for Panera Bread, two numbers leap to the surface. More than 75 percent of its business takes place after 11 a.m., and 30 percent of its robust catering segment is breakfast.

    Both of these have serious potential to shift.

    On Monday, the 2,300-unit brand launched a new strategy intended to heat up the breakfast wars, and drive occasions into one of its lagging dayparts. Panera is targeting two categories: Convenience and quality, and doing so with fresh menu items, an elevated coffee platform, and technology that supports all of it.

    “Many of today's fast breakfast options include frozen, microwaved food items that lack flavor or nutritional value; and made-to-order foods can often come with a wait time that impacts the morning commute,” Panera said in a release.

    READ MORE: McDonald's targets breakfast as it searches for a value sweet spot.

    On the menu front, Panera introduced three new breakfast wraps— Maple Glazed Bacon with Scrambled Egg & Gouda Cheese; Chipotle Chicken with Scrambled Egg, Avocado and Peppadew peppers; and the vegetarian Mediterranean with Scrambled Egg White, roasted tomatoes, spinach and Feta cheese. All are 100 percent clean, with no artificial preservatives, sweeteners, flavors, or colors from artificial sources as defined by Panera’s “No No List.”

    Panera started offering breakfast sandwiches last year, but not wraps. It’s an entirely new category for the chain. Why the change? Because they’re portable.

    "We've long set the standard for an elevated morning experience from bagels to brioche breakfast sandwiches and craft bakery. But we recognize our guest is looking for new breakfast offerings for their busy lives," said Sara Burnett, Panera vice president of wellness and food policy, in a statement. "By offering handcrafted breakfast options made with our real, fresh pantry ingredients and pairing them with coffee that matches the quality of the food in our cafes, our customers can get all their breakfast needs under one roof at their own pace.”

    Panera’s push into convenience has been an end-to-end effort over the years. Pathways like Rapid Pick-Up and catering will fit the breakfast strategy, it said. And Panera is one of the few quick-serves, not in the pizza segment, to staff its own delivery platform and drivers. The company initially chose to focus delivery after breakfast when tests showed less demand compared to lunch. But it’s remained an option in test markets and the opportunity grew as awareness did. Breakfast delivery is currently live in 624 of Panera’s units.

    The company also added a reorder function to its app recently, which allows guests to select their daily breakfast in a few clicks and have it waiting for them at the restaurant, or meet them at the office where available.

    Additionally, this May, Panera plans to conduct a market test on a new “Panera Tap” technology for hot coffee where guests can skip the register or kiosk altogether. It’s set for the Raleigh and Durham, North Carolina, area. How it works is customers open the Panera app and tap an NFC smart poster to purchase a grab-and-go coffee via mobile payment.

    The coffee discussion is an intriguing one for Panera, and not an unexpected development. When JAB Holding agreed to buy the chain for $7.5 billion in April 2017, it seemed a natural step for Panera to up its java game. JAB runs Peet’s Coffee, Caribou Coffee, Espresso House, Stumptown Coffee Roasters, and Jacobs Douwe Egberts. It also holds a roughly 71.5 percent stake in Keurig Dr Pepper (JAB owns Krispy Kreme as well).

    Per an article in CNBC, the chain said the first thing the parties discussed was the branding of Panera’s coffee. Rather than agreeing to a licensing deal with one of its coffee giants, JAB encouraged Panera to lead with its own brand, according to Dan Wegiel, Panera’s chief growth and strategy officer.

    Panera said Monday it’s “made a significant investment to upgrade its coffee,” and introduced new standards for brewing. Employees will now start grinding whole beans in house. Panera’s coffee stations are getting a makeover as well, which will allow guests to see the coffee-making process up close, akin to Starbucks, Dunkin’, and the other coffeehouse players.

    Panera’s changes include the recent launch of Cold Brew. Two flavored options are made with vanilla sourced from Madagascar: Madagascar Vanilla Cream Cold Brew and Madagascar Vanilla Almond Cold Brew, made with unsweetened almond milk.

    The chain has also begun rolling out a new line of hot coffee—a fresh light roast and dark roast.

    The light Roast is a blend of Central and South American beans with hints of citrus, roasted nuts, and chocolate. Dark Roast is a blend of Costa Rican and Colombian coffee beans that give this slightly sweet coffee a rich, mellow finish.

    Panera said the new coffee blends will be in restaurants nationwide by late summer in a “completely revamped coffee station,” accompanied by the current Hazelnut and Decaf offerings.

    Panera also revamped its bakery line, offering 10 new items, including Cheese and Cherry Brittanys, Almond and Chocolate Croissants, Cinnamon Crunch, Blueberry and Orange Scones, a Cocoa & Creme cookie, Brownie and a Vanilla Cinnamon Roll.

    "Our focus on breakfast isn't just about a single item or category—it's about looking at the market and bridging a gap for guests. People are compromising between convenience and quality in the morning, and we know that's a problem Panera can help solve," said Blaine Hurst, Panera CEO, in a statement. "Craveable, clean, high-quality menu options made easily accessible by digital and channel access is what has propelled our lunch business forward.  Now we are taking that powerful combination to breakfast, giving our guest even more of what they want, when and where they want it."

    Wegiel told CNBC the menu changes could unlock catering opportunities. To put it simply, more menu items will fight breakfast fatigue for loyal customers.

    That’s essentially the heart of the strategy. Breakfast tends to be the most loyalty-inspiring daypart in limited service. The reason being guests make it a part of their routine and stick to a brand they trust. Between Starbucks, Dunkin’, McDonald’s, and Taco Bell, among others, it’s a race to brand affinity. They all differ, though, is what they court. Whether it’s speed, quality, variety, or something outside the box. Can Panera deliver it all?