A Panera Bread sign hangs outside the restaurant on July 25, 2025 in Miami, Florida.
Joe Raedle | Getty Images
When Panera Bread began cutting back on its sandwiches and skimping on salads, it began losing customers.
Now, to win them back, the chain plans to reinvest in the business and reverse many of those same cost-cutting measures, it announced Tuesday.
Once the leading fast-casual brand in the United States, Panera has fallen to third place, 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 channel’s traffic has been declining, according to CEO Paul Carbone, who took the reins at the start of the year. The controversy that followed the chain’s foray into the energy drink sector didn’t help matters either.
Panera’s struggles coincided with a tough year for fast-casual restaurants. Chipotle, Soft green And How are you have all lowered their forecasts for the full year as they note that younger consumers are eating out less often.
Carbone has a plan to keep customers coming back. Under the strategy, dubbed “Panera RISE,” the company aims to refresh its menu, focus on value, improve its service and build new restaurants. He said the project has support from franchisees who operate about half of its 2,200 U.S. locations, as well as support from JAB Holding, the investment arm of the Reimann family that owns the company.
Panera’s slide was poorly timed for JAB. The company is preparing an IPO for the chain’s parent company, Panera Brands, which also owns Caribou Coffee and Einstein Bros. Bagels.
In 2021, four years after privatizing the channel, JAB reached a deal with Danny Meyer’s special purpose acquisition company for a merger that would take the company public. But Panera abandoned those plans a year later, citing market conditions. In late 2023, the company confidentially filed for an IPO that has still not happened.
Asked about the status of Panera’s IPO plans, Carbone told CNBC that the chain’s management team is currently focused on increasing traffic and implementing the Panera RISE strategy.
Enter the war of values
The first phase of Panera’s plan is to improve the quality of its food, rolling back cost-cutting measures imposed in the face of high inflation, according to Carbone.
“We’ve reduced food costs. We’ve reduced labor,” he said.
Some of these changes occurred while Carbone was CFO. He now calls himself a “reformed CFO,” even though he still listens to earnings conference calls.
“It really is death by a thousand paper cuts, it really is,” Carbone said of the chain’s slowdown.
Take Panera’s salads, for example. In the summer of 2024, Panera began using a half romaine, half iceberg lettuce mix to prepare its salads, saving the chain money compared to when it used romaine alone. This summer, we returned to all-Roman salads.
“You know what the guests told us? Nobody likes icebergs, and nobody understands that and says, ‘Oh my God, that white salad, it looks so appetizing,'” Carbone said.
And then there is the cherry tomato. Carbone said Panera is one of the few restaurant chains that doesn’t cut bite-size tomatoes in half, a decision made to save on labor costs.
“We ask guests to chase the cherry tomato around the bowl,” he said.
And when a salad comes with avocado, customers should cut the halved fruit themselves, rather than pre-slicing it. The chain will begin slicing cherry tomatoes and avocados early next year.
Additionally, Panera’s salads typically contain five ingredients, while those from competitors like Sweetgreen have up to eight.
But salads aren’t the only ones affected by cost-cutting measures.
“In some cases, we reduced portions, so customers were coming into our cafe to buy a sandwich that had increased in price significantly, with lower quality ingredients, in a smaller size,” Carbone said.
The menu refresh will also include new items. Last month, the chain announced it was testing new “fresca” and “energy refreshment” 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 has denied any wrongdoing and settled the lawsuits earlier this year.
When it comes to value, Panera plans to rely on a dumbbell menu strategy, offering customers options at both low and high price points. The approach has worked particularly well for casual dining chains like Chili’s, but Panera doesn’t offer the same entrée offerings as a full-service restaurant.
“We haven’t cracked the code yet,” Carbone said. “We do a lot of testing.”
Restaurant industry chains have embraced value offerings, from McDonald’s Value Meal to Applebee’s “2 for $25” deal, sparking what’s known as the “value wars.” However, restaurants must balance the desire to attract cash-strapped diners with maintaining their profit margins.
To improve the customer experience, Panera plans to invest more in the workforce. Like many restaurants, Panera in recent years has scheduled fewer staff and relied more on the self-ordering kiosks it pioneered in the industry. This approach saved money, but customers would often walk into a cafe and find no employee in sight, according to Carbone.
Panera will also reinvest in its kiosks, which it has not significantly improved since entering its restaurants about a decade ago. And its dining rooms will also get a makeover.
If these changes succeed in bringing back inactive customers, Panera restaurants will then become more profitable, fueling future restaurant growth. And these new bakery cafes could be different.
“What will the coffee of the future look like? We’re working a lot around that, we’re going to test different things,” Carbone said.