Panera Bread Company, the prominent fast-casual restaurant chain, has announced an ambitious new strategy to achieve $7 billion in sales by 2028. This decisive move comes as a direct response to a significant earnings slump that saw the company's sales fall and its competitive standing diminish.
From Industry Leader to Number Three
Recent data has painted a challenging picture for the once-dominant chain. According to estimates from Technomic reported by Nation's Restaurant News, Panera Bread's sales fell by 5.1% to $6.1 billion in 2024. This decline had a direct impact on its market position. After years of enjoying the top spot, Panera fell to become the nation's third-largest fast-casual chain in 2024, now sitting behind rivals Chipotle and Panda Express.
The Panera RISE Turnaround Plan
The company's recovery strategy, officially named Panera RISE, is a multi-faceted initiative designed to reinvigorate the brand. The plan focuses on several key areas, including refreshing the menu, refocusing on delivering clear value to customers, enhancing customer service, and building new stores.
Paul Carbone, who took over as CEO of Panera Brands, the parent company, earlier this year, stated in a press release, "Over the past year, we have made considerable progress in strengthening our foundation to better serve our guests." He described Panera RISE as a "momentum driver, grounded in the areas of differentiation that have made Panera an iconic brand for nearly 40 years." The plan has reportedly gained the backing of franchisees who operate about half of its 2,200 U.S. locations.
Reversing Cost-Cutting Measures
A central part of the new strategy involves reversing previous cost-cutting measures that were implemented to combat high inflation. Carbone admitted frankly, "We squeezed food costs. We squeezed labour." He provided specific examples of where these cuts negatively impacted the customer experience.
In one notable instance in 2024, Panera began mixing its fully romaine salads with cheaper iceberg lettuce to reduce expenses. This decision was poorly received. "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 told CNBC. The chain has since reverted to using only romaine lettuce.
Furthermore, Carbone conceded that portion sizes were sometimes reduced while prices were simultaneously increased. "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," he explained. The first phase of the Panera RISE plan will directly address these issues by improving food quality.
Beyond restoring quality, the turnaround plan also includes introducing new menu items, such as "fresca" and "energy refresher" drinks. The company is also committing to invest more in its workforce. A previous drive to cut costs led to fewer workers being scheduled in stores, which saved money but often resulted in customers waiting longer as staff were overwhelmed with orders.
