A Panera Bread sign is posted on the exterior of a restaurant in Miami, Florida, on July 25, 2025.
Joe Radle | Getty Images
When Panera Bread downsized its sandwiches and skimped on salads, it began to lose customers.
Now, to win back customers, the chain announced Tuesday that it plans to reinvest in its business and roll back many of the same cost-cutting measures.
Panera, once the No. 1 fast-casual brand in the U.S., has fallen to No. 3, ceding the top spot to the next brand. Chipotle Mexican Grill And Panda Express. Revenue last year fell 5% to $6.1 billion, Technomic estimates. The chain’s foot traffic has been shrinking for years, said CEO Paul Carbone, who took the helm earlier this year. The controversy that followed the chain’s foray into energy drinks didn’t help either.
Panera’s woes coincide with a tough year for fast-casual restaurants. chipotle pepper, sweet green and hippopotamus All companies lowered their full-year forecasts because younger consumers are eating out less frequently.
Carbone has a plan to bring back customers. Under the strategy, dubbed “Panera Rise,” the company aims to revamp its menu, focus on value, improve service and build new restaurants. He said the plan has the backing of franchisees, which operate about half of the company’s 2,200 U.S. stores, and JAB Holding, the investment arm of the Lyman family that owns the company.
Panera’s slide was bad timing for JAB. The company is planning 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 entered into a merger agreement with Danny Meyer’s special acquisition vehicle to take the company public again. However, Panera withdrew the plan a year later, citing market conditions. The company secretly filed for an initial public offering in late 2023, but it has yet to materialize.
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.
Entering a war of values
Carbone said the first step in Panera’s plan is to reverse cost-cutting measures imposed in the face of high inflation and improve the quality of its food.
“We squeezed food costs and we squeezed labor,” he said.
Some of these changes occurred while Carbone served as chief financial officer. He now calls himself a “reinvented CFO,” but he’s still someone who listens to earnings calls.
Mr. Carbone said of the chain’s poor financial performance, “It’s like dying in a thousand pieces of paper, it really is.”
Let’s take Panera’s salad as an example. In the summer of 2024, Panera began using a half-and-half mixture of romaine and iceberg lettuce to make salads, saving the chain money compared to using only romaine. This summer, I completely went back to romaine salad.
“You know what our guests told us? Nobody likes icebergs, and nobody understands that and goes, ‘Oh my God, that white salad looks so good,'” Carbone said.
And cherry tomatoes. Carbone said Panera is one of the few restaurant chains that doesn’t slice its bite-sized tomatoes in half, a decision to save on labor costs.
“Have guests chase cherry tomatoes around the bowl,” he said.
Also, if the salad comes with avocado, customers have to cut the fruit in half themselves, rather than it coming pre-sliced. The chain plans to launch cherry tomato and avocado slices early next year.
Additionally, Panera’s salads typically contain five ingredients, while competitors’ salads, such as Sweetgreen, contain as many as eight ingredients.
But salads weren’t the only products affected by cost-cutting measures.
“In some cases, because we reduced our portions, customers would come to our cafe and buy sandwiches with significantly higher prices, lower quality ingredients, and smaller sizes,” Carbone said.
Menu updates also include new items. Last month, the chain announced it was testing new Fresca and Energy Refresh drinks.
Panera previously offered energy drinks with high caffeine content, but after two wrongful death lawsuits and related negative publicity, Panera discontinued sales of the products, including Charged Lemonade. Panera denies wrongdoing and settled the lawsuit earlier this year.
When it comes to value, Panera plans to lean toward a barbell menu strategy, offering customers both low- and high-priced options. This approach has worked especially well at casual dining chains like Chili’s, but Panera doesn’t have the same appetizer menu as a full-service restaurant.
“We haven’t cracked the code yet,” Carbone said. “We’re doing a lot of testing.”
Restaurant chains are embracing value-added services, from McDonald’s Extra Value Meals to Applebee’s “2-for-$25” deals, sparking a so-called “value war.” But restaurants must balance their desire to attract cash-strapped customers with maintaining profit margins.
To improve the customer experience, Panera plans to increase investment in its workforce. Like many restaurants, Panera has reduced employee schedules in recent years and relied more on its industry-first self-ordering kiosks. Carbone said this approach saved money, but employees often couldn’t be found when customers walked into the cafe.
Panera also plans to reinvest in the kiosks, which have not been significantly renovated since they were first installed in restaurants about 10 years ago. The dining room will also be renovated.
If these changes are successful in winning back lost customers, Panera’s restaurants will become more profitable and will fuel future restaurant growth. And those new bakery cafes may be different.
“What will the cafe of the future look like? We’re doing a lot of research on that and we’re going to test different things,” Carbone said.
