Panera focuses on values to survive pandemic

A focus on values has helped Panera Bread navigate the coronavirus pandemic that has devastated the restaurant industry, the bakery-cafe chain's chief executive Niren Chaudhary said during a virtual National Press Club Headliners Newsmaker event on Feb. 9.

Instead of a patchwork response targeted solely on revenue decline, Panera management took a step back, identifying broader goals to guide its actions in order to survive the outbreak and thrive afterwards.

“What should be some of our values that we must use as a filter to make our decisions so that we do it the right way for the long term, because the pandemic will end. And, can we leverage this crisis as an opportunity to raise our game and do it in the right way?“ Chaudhary told Club Secretary Gillian Rich, who moderated the event.

Two guiding principles emerged, including that any actions must be taken with humanity, compassion and respect, and that Panera would leverage the crisis to become stronger and better across all lines of business.

“Of course we had to do blocking and tackling on our balance sheet and solving for our liquidity pressures and so on – everybody does that – but we wanted to step up and do more,” Chaudhary said.

Panera implemented immediate measures affecting its associates, customers and the communities it serves.

In 10 days, Panera Grocery was launched to provide customers with access to scarce everyday items. Curbside pickup was set up across 1000 cafes in five days.

Chaudhary reached out to the CEOs of CVS and Walmart, companies suddenly in need of more workers, to find temporary jobs for the almost 35,000 associates furloughed by Panera. Since then, the company has managed to rehire all furloughed employees, he said.

The company also served 50,000 meals to doctors and nurses in New York, and half a million families through a partnership with the food bank Feeding America.

“At a time like this when our communities in which we operate are deeply impacted, I think it is only right that companies like us step up and help those that are impacted the most,” Chaudhary said.

Chaudhary took the Panera helm in May 2019 and was feeling good about the direction of the business, which  included shifting from a founder-led to a team-focused culture, implementing food innovations and establishing a coffee subscription. Then the coronavirus arrived.

“We suddenly got hammered by the pandemic in March and I still remember how quickly our business actually got hit," Chaudhary said. "Within a span of just about a week we lost half of our revenue. We knew we were dealing with something that was totally unprecedented, something that there was no playbook for. We didn’t even know how serious it was or how long it was going to last."

Social-distancing restrictions have forced restaurants to either adapt or shut their doors. The National Restaurant Association said 110,000 restaurants closed in 2020.

Chaudhary hopes that independent restaurants also will rebound, noting that while the financial stimulus approved by Congress last year was a boon for franchise partners and family-owned businesses facing significant constraints on availability of capital, a second round of relief proposed by the Biden administration is sorely needed.

Restaurants must also adapt to changing consumer expectations as a result of the pandemic, Chaudhary said.

“As we look ahead, customers are going to look to be reassured on food, safety and quality. They are going to be looking at more and more off-premise convenience, digital mobile-led access, and more meaningful innovation that they can relate to and get excited by,” he said.

Though there may be more at-home consumption and drive-through convenience, Chaudhary also believes that restaurants with a focus on innovation – such as Panera’s new flatbread, warm bowls and coffee subscription offerings – will succeed in luring people back into stores.

“We all want to go out and reconnect once again,” he said.