A Panera Bread sign hangs on the exterior of the restaurant on July 25, 2025 in Miami, Florida.
Joe Raedle | Getty Images
When Panera Bread began shrinking its sandwiches and skimping on salads, it started shedding customers.
Now, to win them back, the chain plans to reinvest in the business and undo many of those same cost-cutting measures, it said Tuesday.
Once the number one fast-casual brand in the U.S., Panera has dipped to number three, ceding the top spots to Chipotle Mexican Grill and Panda Express. Last year, its sales fell 5% to $6.1 billion, according to Technomic estimates. For years, the chain’s traffic has been shrinking, according to CEO Paul Carbone, who took the reins earlier this year. Controversy after the chain’s foray into energy drinks didn’t help matters, either.
Panera’s troubles have coincided with a tough year for fast-casual restaurants. Chipotle, Sweetgreen and Cava have all cut their full-year forecasts as they see younger consumers eating out less frequently.
Carbone has a plan to bring back customers. Under the strategy, named “Panera RISE,” the company aims to refresh its menu, focus on value, improve its service and build new restaurants. He said the plan has the backing of the franchisees who operate roughly half of its 2,200 U.S. locations, along with the support of JAB Holding, the investment arm of the Reimann family that owns the company.
Panera’s slide has been poorly timed for JAB. The firm has been plotting an IPO for the chain’s parent company Panera Brands, which also owns Caribou Coffee and Einstein Bros. Bagels.
In 2021, four years after taking the chain private, JAB struck a deal with Danny Meyer’s special purpose acquisition company for a merger that would take the company public again. But Panera scrapped those plans a year later, citing market conditions. In late 2023, the company confidentially filed for an initial public offering that still hasn’t happened.
When asked about the status of Panera’s IPO plans, Carbone told CNBC that the chain’s management team is currently focused on growing traffic and implementing the Panera RISE strategy.
Entering the value wars
Phase one of Panera’s plan is to improve the quality of its food, reversing cost-cutting measures imposed in the face of high inflation, according to Carbone.
“We squeezed food costs. We squeezed labor,” he said.
Some of those changes happened while Carbone was chief financial officer. He now calls himself a “reformed CFO” — albeit one who still listens to earnings conference calls.
“It’s really about death by a thousand paper cuts, it truly is,” Carbone said about the chain’s downturn.
Take Panera’s salads, for example. In the summer of 2024, Panera began using a mix of half romaine, half iceberg lettuce to make its salads, saving the chain money compared to when it was using romaine alone. This summer, the it reverted back to entirely romaine salads.
“You know what guests told us? No one likes iceberg, and no one gets that and says, ‘Oh my God, that white salad, it looks so appetizing,'” Carbone said.
And then there’s the cherry tomato. Carbone said Panera is one of the few restaurant chains that doesn’t slice the bite-sized tomatoes in half, a decision made to save on labor costs.
“We make the guest chase the cherry tomato around the bowl,” he said.
And when a salad comes with an avocado, customers have to cut the halved fruit themselves, rather than it coming pre-sliced. The chain will start slicing the cherry tomatoes and avocados early next year.
Plus, Panera’s salads typically have five ingredients, while those of competitors like Sweetgreen feature as many as eight.
But it wasn’t just salads that were affected by the cost-cutting measures.
“In some instances, we shrunk portions, so guests would walk into our cafe to buy a sandwich that has gone up significantly in price, with lower quality ingredients, in a smaller size,” Carbone said.
The menu refresh will also include new items. Last month, the chain announced that it is testing new “fresca” and “energy refresher” drinks.
Panera previously offered highly caffeinated energy drinks, but it discontinued the line, which included Charged Lemonade, following two wrongful death lawsuits and related negative publicity. Panera denied wrongdoing and settled the lawsuits earlier this year.
When it comes to value, Panera is planning on leaning into a barbell menu strategy, offering customers options on both the low- and high-price end. The approach has worked particularly well for casual-dining chains like Chili’s, but Panera doesn’t have the same appetizer offerings as a full-service restaurant.
“We haven’t cracked the code yet,” Carbone said. “We’re doing a lot of testing.”
Chains across the restaurant industry have embraced value offerings, from McDonald’s Extra Value Meal to Applebee’s “2 for $25” deal, igniting the so-called “value wars.” However, restaurants have to balance the desire to attract cash-strapped diners with maintaining their profit margins.
To improve the customer experience, Panera is planning to invest more into labor. Like many restaurants, Panera in recent years scheduled fewer workers and relied more on the self-order kiosks it pioneered in the industry. That approach saved money, but customers often walked into a cafe and couldn’t find an employee in sight, according to Carbone.
Panera will also invest back into its kiosks, which it hasn’t significantly upgraded since they first entered its restaurants roughly a decade ago. And its dining rooms will get a facelift, too.
If these changes succeed in bringing back lapsed customers, then Panera’s restaurants will become more profitable, fueling future restaurant growth. And those new bakery-cafes could look different.
“What does the cafe of the future look like? We’re doing a lot of work around that, we’re going to test different things,” Carbone said.
