Customers clog Panera's free Wi-Fi

ST. LOUIS -- Restaurant giant Panera Bread made a big business bet eight years ago to offer free Wi-Fi to its customers as a way to boost sales, long before Starbucks.

The fresh breads eatery aimed to court customers in between meals. The experiment worked, raising sales early on about 15%.

But now, it's become a challenge to meet the Wi-Fi demand, says Panera's vice president of technology, Blaine Hurst. "With mobile carriers cracking down on data plans, more and more people say, 'I'll go to Panera for free Wi-Fi.' How do we make sure we have capacity?"

With free Wi-Fi available at national chains such as Starbucks and McDonald's, and becoming more accessible without charge at hotels or airports, Panera is grappling with how to keep its Wi-Fi customers happy amid heated rivalry.

For now, Panera has got a gold-plated problem: Customers' use of its Wi-Fi is way up. Monthly connections to Panera's wireless network at its 1,565 locations have grown to 2.7 million sessions monthly in April from 2.2 million a year ago.

The downside is slow Internet service. The company's network sometimes gets clogged because so many people are online at once. Some Panera locations will restrict Internet use to 30 minutes during the busy lunch hour. But Hurst is looking for solutions.

He's experimenting with rewarding frequent Panera customers with loyalty program benefits: unrestricted Wi-Fi. "Is there a way … you get guaranteed access because you're a frequent Panera shopper?" Hurst says. "How do we make it better for our guests?"

Nicole Miller Regan, an analyst at Piper Jaffray, says Panera would be smart to tie premium Wi-Fi with its MyPanera loyalty program, which she says has "extremely high" participation.

Panera says some 45% of all transactions are by loyalty members, who get free "surprises" (cookies, cupcakes, coffee) periodically in exchange for signing in with the card.

"The loyalty program is even more important than the Wi-Fi," she adds. "The technology of the program tells Panera who you are, what you like, what your patterns are and how to incentivize you."

USA TODAY met with Hurst at a Panera that sports the name "St. Louis Bread Co.," which it acquired. Laptops and iPads were buzzing, as customers typed away on devices over coffee, bagels and sandwiches.

Some 50% of all Wi-Fi traffic at restaurants and airports is coming from laptops — while the other half is from smartphones and tablets, says David Staas, the interim CEO at JiWire, which sells advertising for Wi-Fi networks.

For the mobile masses, Wi-Fi is "a bigger selling point now," he says.

JiWire surveyed Wi-Fi users and asked them about the advantages of using a free service. About 55% said it was to get a faster connection, while 37% said it was simply to avoid monthly data charges, Staas says.

According to OpenWiFiSpots.com, there are more than 65,000 free Wi-Fi spots in the U.S. Among them, 23,000 belong to Starbucks, which offers it free at all locations. McDonald's has free Wi-Fi at more than 11,000 of its more than 13,000 locations.

Of the other national chains, some fast-food eateries have Wi-Fi, but it's more commonly found at coffee shops such as Coffee Bean, which has about 830 locations; and Caribou Coffee, which has 126.

Beyond Wi-Fi and the loyalty program to boost itself, Panera is turning to social media. As are many companies, it's trying to keep people interested. But unlike competitors, who tend to spend more time on discounts, coupons and deals, Panera uses social media to introduce customers to staffers.

The company's YouTube pages highlight Panera employees, featuring chats with chefs and clerks, who now get in-store promotion with their pictures on posters.

Hurst says this approach is just good business. "If you know who we are, and a little more about us, it helps your engagement with us and our engagement with you."