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Case study: How Panera is handling menu labeling

Sometime in the near future, most of the industry will have to comply with menu-labeling legislation. Panera Bread‘s Scott Davis showed in an NRA Show 2011 session that menu labeling isn’t necessarily going to result in a consumer revolt. Here’s what the fast-casual chain’s chief concept officer had to say.

Panera started looking at menu labeling several years ago, when New York City’s menu-labeling legislation came on the horizon. At first, the company was concerned with how consumers would react to calories. Panera is considered a “healthy” restaurant, with no fryers and lots of vegetable-filled soup, salad and sandwiches. But executives knew that some of Panera’s most popular items, such as broccoli-cheese soup, had far more calories than the average consumer would assume.

Panera looked at its menu and divided items into three categories: Good for You, Indulgent and Gotcha. The idea was that some items, such as cinnamon rolls, clearly are indulgences, so it’s OK if they have a higher calorie count. But Gotcha items were a problem. If a consumer doesn’t expect his or her soup to be 500 calories, that count on the menu could be a rude awakening — for the consumer and Panera.

Transparency became Panera’s strategy. For three years, Panera developed and tested its menu to eliminate all or most of the Gotcha items. When a new menu rolled out in New York, a funny thing happened: nothing. Consumers did not appear to change the way they ordered. The company realized that some consumers find the information important and love having all of this nutritional data. But a lot of consumers simply don’t care.

That said, Davis stressed the importance of transparency with nutritional information. If you don’t give that information to consumers, they will find it elsewhere. Davis used the example of Chipotle Mexican Grill, which discovered several years ago that a consumer had created an online calorie calculator for all of the chain’s menu items.

It all comes down to trust, Davis said. If you provide this information, consumers will trust you more. By providing the information, you should trust that customers appreciate the effort.