At Work

Panera is set to hit $2 billion in digital sales by the end of this year

Key Points
  • Panera Bread is slated to pass $2 billion in digital sales this year, double that of last year.
  • Digital sales, which include online, mobile and kiosk orders, account for about 33 percent of the company's sales.
  • Panera receives 1.4 million digital orders a week, up from the 1.2 million a week in 2017.
Blaine Hurst, CEO of Panera 
David A. Grogan | CNBC

Digital ordering is paying off for Panera Bread.

The soup and sandwich chain is slated to pass $2 billion in annualized digital sales this year, double that of last year, its CEO Blaine Hurst said at CNBC's Productivity@Work event in New York City Tuesday.

Panera, which was sold to JAB Holdings in 2017 for $7.5 billion, started this journey in 2014 with the launch of a program called Panera 2.0. The goal was to make ordering and pick-up easier by installing self-order kiosks, updating its mobile app and laying the groundwork for delivery.

These initiatives were well ahead of what other restaurants were doing at the time. Only now are companies like McDonald's and Chipotle beefing up their digital efforts.

Panera's dive into expanding its online, mobile and delivery capabilities was about leveraging tech to make the customer experience better, Hurst said.

He said the company works on a two-year time table with these initiatives because of how quickly consumer expectations and technological innovations change, noting that both are getting harder to predict.

Still, Panera seems to have a finger on the pulse of what consumers want. In 2017, Hurst forecast that digital sales would be one-third of all sales within the next five years. The company hit that mark this year.

Currently, digital sales, which include online, mobile and kiosk orders, account for about 33 percent of the company's sales. This is the highest rate in the industry, according to Panera, outside of the pizza segment, which typically sees digital transactions as 50 percent of total sales.

Chipotle last week said its digital orders were just over 11 percent of its sales.

"We did not expect to be here until 2020," Hurst said on CNBC's "Power Lunch" Tuesday ahead of his appearance at the Productivity@Work event. "So we're nearly two full years ahead of target in terms of our digital growth."

In 2014, the company hoped that it would get 20,000 digital orders a day with its new programs, Hurst said. Now, it's doing 1.4 million a week, up from the 1.2 million digital orders that came through each week in 2017.

Early on, Panera added more staff in the kitchen to handle the increase in volume and in the dining room to bring food to customers' tables and cut down on bottlenecking at the pickup line.

Panera bolstered its digital sales by adding delivery in 2016 at select locations. A year ago, delivery was only in 15 percent of Panera's restaurants. Today, it's in 75 percent.

"Consumers want what they want, when they want it, where they want it and how they want it," Hurst said.

Panera Bread continues to outperform the restaurant industry, CEO says