Panera is set to hit $1 billion in digital sales by the end of this year

Key Points
  • Panera Bread is set to garner between $1.1 billion and $1.2 billion in digital sales this year, the company said Wednesday.
  • Currently, digital sales — which include online, mobile and kiosk orders — account for about 26 percent of the company's sales.
  • The company receives about 1.2 million digital orders each week.
Source: Panera Bread

Digital ordering is paying off for Panera Bread.

The soup and sandwich chain is slated to pass $1 billion in annualized digital sales this year and expects to double that by 2019, the company said Wednesday.

"We've gotten here much faster than we forecasted," Blaine Hurst, Panera's president, told CNBC.

Currently, digital sales — which include online, mobile and kiosk orders — account for about 26 percent of the company's sales. Panera said that this is the highest rate in the industry outside of the pizza segment, which typically sees digital transactions as 50 percent of total sales.

Hurst is optimistic that digital sales will continue to grow for the company. He said that conservative estimates place digital sales at one-third of all sales within the next five years. However, Hurst said he wouldn't be surprised if half of sales were digital sometime between 2019 and 2021.

The company said that it currently receives about 1.2 million digital orders each week.

Panera's Rapid Pickup program, which it launched in 2014, was its entry into digital. It later added delivery in 2016 at select locations.

The company stepped up its delivery efforts in April when it said it intended to hire 10,000 new employees by the end of 2017, with 75 percent of the new hires working as delivery drivers, and the remaining 25 percent working in the cafes.

Panera has already rolled out delivery to 15 percent of its system, including 20 percent of its company-owned locations. By the end of 2017, it hopes to expand delivery to 35 percent to 40 percent of system-wide locations.

The company said after the initial investment of about $25,000 and about three to six months of transition, most cafes are about to tally about $5,000 a week in sales. Delivery, Hurst said, is about 10 percent of sales in these cafes.

"For us, it's not just about new technology for technology's sake — it's about making the guest experience better," Ron Shaich, Panera's CEO, said in a statement.

The restaurant added digital kiosks to allow guests to customize their meals and reduce the number of staff mistakes. Panera then added more staff to handle the increase in volume from digital orders and to bring food straight to customers' tables to cut down on bottlenecking at the pickup line.

While shares of the company slipped in 2014 when the company first invested in the technology that would build out its digital platforms, shares have soared in 2017. Panera's stock is up more than 53 percent this year, mostly due to its pending acquisition by JAB Holdings. The deal is valued at about $7.5 billion.

Hurst said JAB Holdings isn't going to slow down Panera's digital progress.

"JAB's intent is to continue what we are doing," he said. "Because we are clearly the leader of digital, except for the big three pizza guys."