(Bloomberg) -- Panera Bread’s risky bet to build its own delivery network is paying off.
The chain of fast-casual cafes owned by the European coffee giant JAB Holding Co. said sales have jumped more than 10 percent at the U.S. locations where the company offers delivery.
Last year, Panera announced plans to bring the service to its roughly 2,100 restaurants by the end of 2018. It was a rare move in an industry where most chains that deliver use third-party vendors like Postmates and Uber Eats. And it’s not cheap, either. Panera said it’s hired more than 13,000 drivers and is spending about $15,000 per restaurant to create the service.
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Using a company like Uber Eats allows restaurants to quickly jump into online ordering and delivery as time-challenged consumers increasingly demand such services. But the third-party providers also take a cut of each order and can sometimes control the consumer data that comes with it.
“The economics are brutal,” said Michael Halen, an analyst at Bloomberg Intelligence.
Panera isn’t having that problem. The company currently offers delivery from about 1,300 of its locations. The typical Panera does just shy of $50,000 a week in sales, and delivery is adding anywhere from $5,000 to $7,500, according to Blaine Hurst, the company’s chief executive officer. The break-even point is about $2,500 worth of orders.
Hurst, a former Papa John’s executive who helped the pizza chain launch online ordering in the late 1990s, said about 80 percent of delivery sales are incremental, meaning the orders are coming from customers who wouldn’t have otherwise ordered from Panera.
“Giving away that kind of volume doesn’t make sense,” Hurst said. “It lets us manage and maintain that experience.
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