Friday, April 29, 2016

Thriving in a Post-Chipotle World

In light of their food safety gaffs, the restaurant chain Chipotle is still struggle to recover.  In their first quarter report, sales are down 30% in same-store sales and their share price is down about 40%.

But where there is decline for one, others have thrived.  Panera sales have increased, with same-stores increase of 4.7%

Business Insider
PANERA PRESIDENT: 'We live in a post-Chipotle world'
Kate Taylor
Apr. 27, 2016, 10:57 AM

As Chipotle struggles, Panera is thriving.

Panera reported on Tuesday that system-wide same-store sales increased 4.7% in the first quarter, with revenue growing 6% to $685.1 million, up from $648.5 million the same quarter last year.

"I've been looking forward to this earnings call for some time," CEO Ron Shaich said Wednesday in the company's earnings call. "By every criteria, our first quarter has been among the most exciting we've seen at Panera in a very long time."

The chain's recent success might be linked to the recent struggles of its fast-casual competitor Chipotle, which announced on Tuesday that revenue dropped 23.4% to $834.5 million, with same-store sales dropping nearly 30%.

Data shows that many of the customers who ate at Chipotle in recent months have begun visiting Panera more frequently, helping boost sales at the chain.

In December, directly following two E. coli outbreaks linked to Chipotle restaurants, 13.4% of Chipotle customers also visited Panera, up from 11.6% in September, before the outbreaks, Reuters reports, using data from the market-analysis firm Placed.

Though the two chains compete for a similar type of customer who is invested in eating fresh, natural food, Chipotle's struggles are helping shape Panera's future more broadly. People have a laser focus on the quality of the food they're eating, and Panera knows that.

"We live in a post-Chipotle world, where there is an elevated focus on food safety at all restaurants," Panera's president, Drew Madsen, said in the company's earnings call.

Panera prides itself on the quality of its food. It is cutting dozens of artificial ingredients from the company's "No No List" from the menu, and the company is also rolling out new food-safety initiatives. The focus on all-natural, fresh food used to be Chipotle's forte; now, with a largely negative perception of the chain's food safety driving down sales, a "clean" menu at Panera could be an even greater draw.

"A major part of our brand promise is being an ally for wellness that our customers trust to help them eat the way they want to eat," Madsen said. "Obviously, food safety is a critical piece of that commitment." 
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