Panera Eyes Urban Locations

As part of a move to open more urban locations, Panera Bread recently debuted its first unit in New York. The bakery-café unit in busy Midtown Manhattan marks the St. Louis-based chain's 1,500th restaurant.

Panera chief operating officer Scott Davis discussed the new restaurant and the chain's ongoing initiatives with Nation's Restaurant News at the opening.

Are there unique challenges to opening in New York City?

The hardest part of New York is getting the right real estate. Because of the size of a [typical] Panera, over 4,000 square feet, that's usually the biggest challenge for us.

Panera already operates 90 restaurants in the New York metropolitan area. Are there any specific regional tastes here?

We don't see major regionality here. New Yorkers love great food, we make great food, so we know it's going to be a great fit.

New York requires restaurant chains to post calorie information. Does that pose challenges?

We've been providing calorie information on the menu across the country for about a year.

We had franchisees operating in the New York area, so that was a test market for us. Consumer response was very positive. A lot of them didn't even notice it, but for those that it mattered, too, it was a cue of trust between us and them, and it helped them decide what they wanted to order.

I ended up losing 40, 50, 60 pounds in the process of learning [our nutritional information]. I think in the end if you don't have anything to hide it's going to be great.

Did ordering patterns change when Panera began providing calorie information?

There was a little bit of a shift around, but not tremendous. We saw a lot of people go for You Pick Two [giving customers a choice of two from the options of half a sandwich, half a salad or a cup of soup]. That really works well for us — soups in particular because they tend to be lower in calories.

What new initiatives is Panera working on?

We're really pushing the quality of our protein. Last year we added steak for our panini and steak salad. We have a new, all-natural, antibiotic-free turkey that was introduced last fall. We're seeing how protein can be a differentiator for us. We're also pushing more for certified humane [proteins] and sustainability.

We also installed a new style grill that delivers a higher quality panini. And breakfast sandwiches continue to grow for us. We just rolled out an all-egg-white Mediterranean sandwich this past month.

What are the added costs of those protein changes?

When you start the program, there's some added cost, but typically as demand rises the suppliers realize that it's a bigger market, and the prices start to get more normalized.

Are Panera customers concerned with the treatment of animals?

The typical customer of Panera is very food-engaged, and I'm seeing that, particularly in places like Manhattan, [statements about the origins of ingredients] is more and more the standard. I think you're going to see more of that tipping across the nation in the next year or two.

Given that you've got folks like us and folks like Chipotle taking the lead nationally, I think people are really starting to worry about where their food comes from and responding by going to the places they can find it in the restaurant.

Are the prices higher at the New York City Panera than at suburban restaurants?

They're more than in the suburbs, but in line with our [other] city pricing. We're not in Times Square, so it's appropriate for the rent structure and the market.

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