QSR July 2023

THE POWER OF CHANGE / CONTINUED FROM PAGE 41

OPERATIONS / CONTINUED FROM PAGE 38

enza destroyed for quite a long time, the egg market. Based off of our suppliers and the strength of our network, we’ve maintained our supply of cage-free eggs throughout the entire pandemic.” Financially, being climate friendly brings its wins and losses, Burnett says. Panera chooses to think of the long-term return. Some things are investments for the future, like LED lighting, which might be costly upfront, but over time saves money spent on electricity. Systemwide, the com pany refers to this situation as the power of “and.” How can Panera do well in business and meet its climate goals? Chaudhary says it’s a constant tight rope. The company will never stray from its food beliefs, but a business model can only move forward if there’s growth. As a result, Panera positions itself as a quality brand that believes in “offering more for a little bit more” concerning how its menu prices com pare to quick-service competitors. “We have to be profitable,” Chaudhary says. “Our investors have to get the appro priate return that they deserve. And if you’re doing that and our sustainable activities are also profitable, only then will they perpetu ate. So at Panera, I think our commitment is very much a part of our value equation to our consumers and built into a business model.” The chief executive believes the com pany’s sustainable message—to customers, vendors, suppliers, and all stakeholders— can best be summarized by a proverb stating, “We do not inherit the Earth from our ancestors, we borrow it from our chil dren.” Chaudhary finds it compelling as to what the world must do collectively. That’s how Panera chooses to operate each minute, hour, and day. “Food is one dimension of it, but also how we show up with our people, the culture that we build, how we embrace diversity, our commitment to giving, tal ent from underprivileged backgrounds, access to education, and our commitments to planet that we have formalized recently,” Chaudhary says. “That continues that whole theme of being very committed to having a broad impact agenda. “And I think that is what then shows up as an enhanced reputation for the brand.” Ben Coley is the editor of QSR . He can be reached at bcoley@wth wmedia.com .

tive is so closely tied to it being a good social steward,” Chaudhary says. “I’m quite con fident that with these goals being publicly committed, that future leaders will also have a similar level of commitment to drive compliance.” A SUSTAINABLE REPUTATION As Panera looks across the global restau rant industry, especially post-pandemic, one unmistakable trend is that consumers care more about what they put into their bod ies, Chaudhary says. “I think we are obviously very credi ble on that dimension,” Chaudhary says. “Whenever we look at the reasons for which consumers choose us versus our competi tors, overwhelmingly, the biggest response is that, ‘We think that Panera is best-in class in serving food that we feel good about eating. We feel much better after we leave a Panera, having had a meal than we did when we went in because of the quality of the ingredients.’” According to a 2022 Datassential key note report, 90 percent of surveyed guests said sustainability, in general, matters to them. Fifty-seven percent said restaurant sustainability practices are “somewhat influencing” their decision to dine out. A little more than 21 percent said they would go out of their way to eat at a sustainable res taurant. Gen Z and millennials expressed a bigger connection to sustainability in com parison to baby boomers. Chaudhary says it’s also an “established fact” that customers gravitate toward com panies that have a clear impact agenda. So do investors and other associates—a major ity want to do business with brands that seek a better world. “There’s no question about it,” the chair man says. “So I do think that it not only is the right thing to do, but it also makes a tre mendous amount of business sense.” The pandemic certainly didn’t stop Panera’s mission. Not even the recent avian influenza outbreak. “Some of the challenges actually pre sented us with an opportunity to strengthen and rethink how we were building our supply chain, which actually make us poten tially stronger for the future for all those sustainability changes that we have coming in the future,” Burnett says. “Avian influ

The biggest headaches early on centered around soaring costs for transportation and packaging. In fact, Next Level Burger didn’t see any significant input challenges related to its menu until last year. Like Native Foods, the problems had less to do with meat alternatives than with whole food ingredients. Warmer weather, a lack of rain, and cloud cover caused by wildfires resulted in a significant decline in potato yields during the 2021 growing season, which translated into a widespread shortage in 2022. The pinch was even tighter for organic pota toes, which already account for a fraction of the potatoes grown in the U.S. In some cases, de Gruyter says he saw an acute and temporary 100 percent increase in organic potato costs. “For some restaurants, fries are sort of a cheap throwaway that you add to the meal,” he says. “For us, it’s a meaningful part of our input, so when you see organic American fries double in cost, it’s painful to watch.” A recent study from the consulting firm Simon-Kucher found a majority of U.S. restaurant guests are willing to pay at least 10 percent more for sustainable meals. Younger generations are willing to pay an even higher premium, with half of Gen Z and more than a third of millennials indi cating they’d pay up to 20 percent more for sustainable items. Food waste management and environ mentally friendly packaging are the top sustainability attributes restaurants can use to attract eco-conscious consumers, according to the study. Other elements of sustainability that are important to guests include raw material sourcing, resources used in production, and emissions from distribution. Health remains the primary driver for consumers ordering plant-based options, even as awareness around the environmen tal impact of meat and dairy consumption grows, says Dave Clement, partner at Simon-Kucher. Consumers are willing to pay more for healthy choices, and there’s an understanding that the costs to procure and produce plant based items can be higher, he adds.

Sam Danley is the associate editor of QSR . He can be reached at sdanley@wthwmedia.com .

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