Service recovery strategies and customer loyalty at Panera Bread

Consultation

To complete this consultation the owner/manager of a local Panera Bread, which is a chain of franchised and company-owned restaurants was interviewed. Panera has defined and continues to expand their market share in the quick service restaurant (QSR) market that serves coffee, bakery items, desserts, light lunches and dinners. The business continues to do very well mainly as the result of customer loyalty and the free WiFi, large meeting spaces, and congeal atmosphere in the restaurants. They are often used for get-togethers of friends and in organizations, in addition to small staff meetings of companies as well.

Assessment of the Health of the Business

Based on a discussion with the general manager of the local Panera Brea, the company is having an excellent year as the new breakfast and lunch items are selling well, and the catering business has now grown to 30% of all sales through his store. Panera also offers delivery of orders over $50 which is a major time-saver for local businesses who want to have a mix of bagels, breads, spreads and sandwiches delivered for internal meetings. The general manager mentioned that the store is seeing a cycle of orders develop from these top customers, as they have started relying on Panera for the monthly catering of their internal meetings.

In addition to these examples of customer loyalty, profitability is being enhanced by the addition of new beverages, new hot drinks for the holidays and a monthly ranking of stores by customer satisfaction level based on surveys. These customer satisfaction surveys tell the Area Vice Presidents how stores are doing on 32 different criteria of customer satisfaction, including how well the store does with its service recovery efforts. The general manager explained that Panera Bread takes service recovery very seriously. What service recovery attempts to do is to turn around a bad customer experience and make it a good one. This concept of taking a customer who is upset or dissatisfied and turning them into a positive customer is what Panera credits with the high level of sales they have every week of freshly baked goods and pastries. The company also has an escalation process in place for all franchisees to get responses from the CEO of Panera Brea if necessary. This total accountability around customer satisfaction has never been used from a customer in his store, but it does free up this employees to do whatever it takes to make a customer happy, he said. It is because they know if their CEO is willing to go the extra mile for a customer, they certainly will be willing to as well.

The health of the business is also seen in how many franchisees and company-owned stores are being built and launched throughout the area of the city this one is located at. There are several within twenty miles of each other. The general manager says that when there is a high concentration of commuters, those between the pages of 35 -- 55 making higher than the area per capita income, that growth often occurs as a result. This is the primary target market for Panera Bread. As these demographics continue to grow in certain areas, Panera is able to move into these communities and quickly create stores and capitalize on the unique needs they fulfill with their beverage and QSR food items.

Comparison to Other Businesses within Its Industry

Panera is unique and competes with the low-end QSR outlets in my community for lunch customers, yet is unique with its on-the-go offerings for breakfast. It has a very unique position overall in the market

Opportunities for Growth

The greatest opportunities for growth are adding more menu items, greater variety of drinks and more items for carry out. Taken together, more items on the menu and a greater variety of services for catering are the best areas for growth.

Recommendations for Improvement

The greatest improvement needed is in the wait times to place an order. The majority of the customers come in between 7am and 8:30am and during this time, it is extremely busy. The amount of time to place an order can easily go to 20 minutes or longer. Second, the quality of the breakfast sandwiches can be either extremely good or bad. Panera needs to create a more consistent level of quality in their products. Third, the lack of variety for lunch has also been a problem, there needs to be greater variety of sandwiches and salads.