‘Desire-to-Friction’ Ratio: How Change Happens at Panera Bread

The following is based on Outside In, the customer centricity podcast.

Blaine Hurst, president of Panera Bread, will never forget the day founder and CEO Ronald Shaich stormed into his office with what seemed to be a monumental assignment. And a huge risk.

“Ron came in and said, ‘Blaine, we’re gonna commit to the world that we’re going clean. We’re going to publish this list, we’re going to have it completed by the end of 2016, and we’re going to figure out how to do it without spending a lot of extra money.’”

The list Ron was referring to was deemed the No No List – artificial preservatives, sweeteners, flavors and colors from artificial sources that were all BANNED from Panera’s food.

Implementing the No No List was a tall order. Panera is not a small operation. With more than 2,000 stores across the U.S. and Canada, it’s the ninth largest restaurant chain in America and generates $5 billion in annual sales. There were operational hurdles. Supply chain ramifications. Recipe reconfigurations.

“It was clearly a big challenge for the company to take a step back and look at 450 ingredients,” Blaine explains during our conversation on my Outside In podcast. “We ended up having to reformulate 122 of our ingredients…It was a truckload of work.”

But Panera made it happen. Today, you won’t find ingredients like ethoxyquin, caprocaprylobehenin, and dozens of other artificial additives you probably can’t pronounce (but have likely been eating since you were a child) in any of the restaurant’s U.S. food menu items. By making a public stand, Blaine says, “we believe that we can have an influence on the industry.”

“Going clean” is just the next step for a company that has been at the vanguard of the restaurant industry since the late 1990s. Panera was first to use chicken without antibiotics. It was first to add calories to its menu. And it was first to offer free wifi to guests, which isn’t about the food but shows just how forward-thinking Panera is about the restaurant experience. All these firsts might be why so many customers love Panera. For example, the MyPanera® loyalty program has 17 million active members.

Blaine says it’s the belief in its clean food mission that has made Panera’s change, complicated as it may have been, much easier to instill into the entire organization. Going clean was something everyone at the company embraced.

“When you are in leadership and you set a goal up that actually makes sense and rings true and that people understand and get – why not only would the company do it but why it’s good for everybody – the energy that we saw out of the teams to actually make that happen was nothing short of phenomenal.”

Besides clean food, there are other innovation initiatives cooking at Panera. A technology guy at heart (“My first job was at Texas Instruments doing punch cards”), Blaine is a digital trailblazer in the industry. As president of Papa John’s in the 1990s, he led the pizza chain’s development and rollout of the restaurant industry’s first-ever nationwide ordering site. “We had to use dial-up modems,” he remembers, reflecting on how far the industry has evolved.

Blaine is obsessed with “technology being that intermediary” between speed and joy for customers. “Panera 2.0,” which launched in 2014, has given guests a more streamlined and enjoyable dining experience. Guests can pre-order food and pay for it from their laptop or mobile phone. Inside the cafe, they don’t even have to stand in line; they can order while seated at their table or from an iPad kiosk.

For Panera, it’s all a matter of what Shaich has coined the “desire-to-friction ratio.” “The desire for the food, for the experience, must be greater than or equal to the friction – standing in line, the price you pay – of that experience,” Blaine explains of the customer experience. “That has been a cornerstone of what we’ve done over the last five years at Panera.”

“The only person who likes change is a wet baby,” Blaine quips (it’s something he’s been saying for 30 years). “As soon as change occurs, there’s a sense of incompetence. You feel like you’re not going to be as good with the change.”

That’s not an excuse to stop changing, though. Nor is it a reason to disregard the courage and self-confidence it takes to assume some risk and press on. Leaders that have it “are the ones that make differences in companies.”

Excited about what’s on the horizon at Panera Bread, Blaine offers some optimistically candid advice. “We can’t become complacent and just do what we did yesterday and expect the same results. We have to keep challenging ourselves to never stay stagnant. Never assume that today is good enough. We can always make it better.”

“Don’t try to figure it all out. But figure out enough. Figure out where you’re going, and then work like hell to get it done.”

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