How Panera Bread Navigated Covid, the Labor Market, Inflation and More

While Panera Bread is often situated in strip malls alongside other fast casual restaurants, the company has long been a pioneer of using quality ingredients and promoting healthy choices. It was among the first companies to add calorie counts to its menus, and it maintains a “No No List” of more than 150 substances — such as high-fructose corn syrup and aspartame — that it will not use in its recipes.

Niren Chaudhary, the company’s chief executive since 2019, did not make his career working with companies with the same focus. He spent 23 years with Yum Brands, building out fast food chains such as KFC in his native India, and then was a senior executive at Krispy Kreme for six years before joining Panera, which also includes Caribou Coffee and Einstein Bagels.

Since taking over, however, Mr. Chaudhary has embraced the mission and pushed Panera to find ways to help combat climate change. The company did an analysis to understand which of its ingredients had the most impact on the climate, and is working on using more sustainable products. It is sourcing more renewable energy for company operations. It has committed to becoming carbon negative by 2050. And it has begun disclosing how carbon-intensive each item on the menu is.

“Twenty-five to 30 percent of greenhouse gas emission comes from food,” Mr. Chaudhary said. “We contribute a lot to the problem as an industry, so therefore we as a food industry have to do something about it.”

This interview was condensed and edited for clarity.

How did your childhood in India influence your career over the years?

India is a spiritual country, and it’s kind of shaped me and my very core. My philosophy is that the best way to practice spirituality is to just be a good human, and being a good human is the best form of religion. That means focusing on your actions and not being so obsessed about the outcomes. The right outcome will happen if there is sincerity of purpose. That really shaped me growing up.

How has your relationship with food changed during your time in the restaurant business?

Food is such an emotional expression and an experience of life. It becomes a catalyst to bringing people together and to create fantastic memories.

I’ve been in the restaurant business for 30 years, and have always been drawn to quality brands that are leaders in their own categories, and that focus on doing the tough things in pursuit of their core values. What’s important to me is they are the highest-quality expression of what they can do in their respective sectors.

Do you believe the international spread of the American diet has had a deleterious effect on overall global health?

In developing markets and a country like India, where organized food retail doesn’t exist, there is a mega opportunity to create high-quality, consistent food experiences that are accessible to the masses. That just doesn’t exist. And it has the other multiplier effects of improving the back end of the supply chain, creating more jobs and more educational opportunities for the youth. So I think it has a very distinctive and definitive role to play.

Of course, brands have to be responsible, have an impact agenda, to serve the communities, to be responsible, to lead on things like diet and environment and so on. If you’re not moving in that direction, you will have a limited shelf life.

And do you think the arrival of chain restaurants has been a good thing for health and diet and cuisine and culture in India in particular?

I would unhesitatingly say yes. It depends on how these global brands show up, but ones that arrive with a lot of respect for the local communities, local culture, and form a bridge with the local host country will be successful, because you’re serving a need of a consumer. And there are some other significant multiplier effects in a country like India for the economy at large. So I would say absolutely.

Panera doesn’t fit neatly into the fast casual or fast food category. How do you explain how the company is different from other restaurant chains?

We want to make this world happier and healthier because of the quality of our ingredients. The way in which we deliver it is with food that is good and also good for you, and that you feel good about eating.

A lot of Paneras are outside major metro urban centers. Are you finding that what you just described — food that is good for you and fresh ingredients — is something that now really plays to a national audience?

Undoubtedly. It is becoming a core expectation of consumers that are eating out, especially as the pandemic settles. Consumers are getting more and more conscientious about what they put in their bodies, and also about the impact their food has on the environment around us, and on the planet.

Ten years ago, we were the first brand to make transparent the calorific value of our food, and then everybody followed. Recently, we were the first brand to make transparent the carbon footprint of our food, and we’re hoping that others will follow as well.

How are you going to make food that people crave and that’s actually still healthy and has good ingredients? Those two priorities have often been at odds with each other.

We have a very deep and firm commitment to the quality of the ingredients we use, and we will never, never move away from that in the future. So anything that we do has to be clean, has to be real, has to be responsible, has to be transparent, has to be convergent with the values of the highest-quality ingredients. That will never change.

This is not an easy thing to do. But we believe we can do it, and that’s where we resonate, because that is a big idea. People don’t need to compromise anymore. No false compromises.

What’s behind the labeling of menu items’ carbon footprints? I can’t imagine that many customers are asking about that.

I really think that climate change is the biggest threat that we all face. And I believe that we cannot expect governments and people around us to solve the problem. And I think it’s time all corporate leaders and companies embrace that mind-set, and many are. That’s how we start making meaningful progress. Not by expecting somebody else to come and wave a magic wand and somehow make it better.

We all know that we are behind the Paris agreement targets. We are running out of time, and it is such a massive challenge. That’s the reason why we believe it would be wrong for a company like us not to lead the way on this.

Have you seen the effects of climate change on the business at all yet?

That’s clearly a headwind and a risk. It is something that we watch very closely on the supply chain side, because we have such a high quality of ingredients. So I think the impact of climate change on crops and harvests is certainly a threat around the corner. This will unfold in ways that one can’t imagine.

How is the company adapting to the tight labor market?

The war over talent is going to be a significant headwind and a challenge for the industry. But I think there’s a structural element to it as you go forward, particularly in the restaurant space. It’s going to be harder and harder to recruit high-quality leaders into the restaurant business, given other options that people are looking at, like the gig economy or becoming an entrepreneur. People are re-evaluating and asking, “How do I want to spend my life, and how do I want to show up?”

We have invested heavily in capability building and training and retention and recognition. But the bigger challenge in the longer term is how do you attract more people into the restaurant sector? And then within that, how does Panera become the No. 1 employer of choice?

Have supply chain disruptions affected the business?

There is definitely a massive disruption on the supply side. There’s no question about it. And that, in turn, is leading to inflation and everything else. We have a lot of strategic suppliers who work for us, and thanks to the long-term nature of our contracts, we’ve been able to navigate the supply chain shortages in the pandemic remarkably well, except for items like packaging, which have been very, very erratic. Also, our procurement is supposed to be entirely within the U.S., so there’s less volatility in terms of the global disruptions. So I feel pretty confident that as the supply chain returns to normal we’ll see some easing of the inflation component.

What about just wages? Some of the starting salaries for your entry-level workers are still close to minimum wage.

For our frontline workers, our philosophy is that we want to be higher than the local competition. So whatever the local competitive environment is, we want to be better than what exists out there, and compete on that basis. But we will differentiate with our culture, our growth opportunities and our training. Because it’s not limited to a financial transaction. It’s more than that. It’s how you’re treated, how you’re respected, how you grow, what the brand stands for, things like the impact agenda. People want to work for companies that stand for something and that have meaning.

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