Sunday, November 23, 2014
Inquirer Daily News

Did ad agency fire Panera Bread as a client?

CHICAGO - In an unusual move, Chicago-based ad agency Cramer-Krasselt has essentially told its client, Panera Bread, to take this job and shove it.

Peter Krivkovich, chairman and CEO of Cramer-Krasselt, sent a memo to employees Wednesday morning saying the firm was resigning as lead creative agency after two years and, apparently, one too many headaches.

"Sometimes, it's just time to bite the bullet and say, Okay, enough is enough," Krivkovich said in the memo.

The memo cites "the constant last-minute shifts in direction, the behind-the-scenes politics, the enormous level of subjectivity that disregards proof of performance - all churn people at a rate that becomes much too much, even in this crazy business."

More coverage
  • PF Chang's probes data breach at Pa., NJ restaurants
  • The "environment of inconsistency" at Panera Bread apparently drove the decision to walk away from a major client.

    "That's hard to do in this increasingly low-margin, high-churn business," Krivkovich said. "Most agencies just suck it up and take it."

    The resignation memo was first reported by Advertising Age, and has since been obtained by the Chicago Tribune.

    While surprised by the memo, Michael Simon, chief marketing officer of Panera Bread, had a very different take on the circumstances behind the parting.

    "They did not resign from the account," Simon said. "I think this was just an agency that was a little frustrated and disappointed that they couldn't get to where we all wanted to be and they're protecting themselves a little."

    Simon said Panera informed Cramer-Krasselt a week and a half ago that it was going to put the account into review in a bid to achieve "breakthrough" creative. The incumbent agency declined to participate in a competition for the business, according to Simon.

    Panera has some 1,800 restaurants in 45 states and Canada operating under the Panera Bread, Saint Louis Bread Co. and Paradise Bakery & Cafe names. The company did $605 million in sales during the first quarter, an 8 percent year-over-year increase. But net income declined by 12 percent, and sales growth is slowing.

    Simon said the brutal winter weather and some operational issues - notably the typically chaotic lunchtime service that has overwhelmed some busier Panera locations - have slowed growth, but he said that the creative produced by Cramer-Krasselt also failed to "move the needle."

    "It was good solid work," Simon said. "What we wanted was great work."

    Cramer-Krasselt was named lead creative agency for Panera Bread in May 2012, heralded at the time as a big win for the Chicago advertising community. Panera had conducted an agency review after deciding to part ways with Boston-based Mullen, which had worked on the account since 2005.

    In the memo, Krivkovich implies that Mullen apparently found Panera Bread equally difficult to work with.

    "The previous agency found that out as well," Krivkovich said. "There is a pattern. And in the end, no amount of money makes it worthwhile. Fortunately, we have always been in a position to act in situations like these if we really, really have to."

    Simon said Panera is indeed "demanding," but said it was no different than most client-agency relationships.

    "This is not a pattern," Simon said. "This is just a brand looking for great, breakthrough creative."

    Panera has already reached out to several agencies to begin the search for a new advertising partner, according to Simon. He has no concerns that the memo will scare away the competition, particularly with some $94 million in annual ad spending up for grabs.

    Krivkovich called Panera Bread "a wonderful brand" and pledged to help the company's former client with the transition to a new agency. He also said he would continue to eat there.

    A spokeswoman for Cramer-Krasselt declined to comment.

    (c)2014 Chicago Tribune
    Visit the Chicago Tribune at www.chicagotribune.com
    Distributed by MCT Information Services

    Robert Channick Chicago Tribune (MCT)
    Business Videos:
    Also on Philly.com:
    Stay Connected