Panera's Recipe for Recovery
For nearly four decades, the soup-and-sandwich combo at Panera Bread has been a staple for American diners. However, this iconic pairing is no longer generating the same enthusiasm. After US sales peaked at $6.5 billion in 2023 and subsequently stalled, the Missouri-based chain is now embarking on a sweeping, multimillion-dollar plan to reinvigorate its brand and win back customers.
Where Did It Go Wrong?
Customer dissatisfaction has been growing, with complaints centring on smaller portions, slipping quality, and a muddled menu. The chain also faced significant public relations challenges, most notably the charged lemonade controversy, where the highly caffeinated beverages were linked in lawsuits to two deaths and a case of serious heart damage, leading to their removal from all stores.
Panera's CEO, Paul Carbone, candidly admitted to the Wall Street Journal that past leadership focused too heavily on profitability, leading to cuts that impacted both staff resources and food quality. A key misstep was the decision to swap romaine lettuce for cheaper iceberg in its salads. 'No one likes iceberg,' Carbone conceded, confirming that romaine will be reinstated as part of a major menu overhaul.
The Multimillion-Dollar Reset
The ambitious revival strategy aims to boost annual sales from the current $6 billion to $7 billion by 2028. The plan is comprehensive and includes:
- Improving food quality and increasing portion sizes.
- Upgrading café interiors and boosting staffing levels to allow for human ordering, not just digital kiosks.
- Introducing new drinks, such as cold frescas and energy refreshers, to compete with beverage giants like Starbucks.
- Expanding menu variety, for instance by offering eight salad ingredients instead of five.
The chain has already begun this process, adding six new items in September and bringing back the beloved black bean soup alongside other seasonal offerings. This move corrects another error: cutting popular dishes while introducing unsuccessful ones like flatbread pizzas.
Challenges on the Path to Growth
Panera faces a fiercely competitive landscape, with rivals like Chipotle and Cava surging ahead in popularity. The company, which was taken private by JAB in 2017, has also experienced instability, seeing three different CEOs since 2020. An attempt to go public in 2021 was called off the following year, and US sales subsequently declined by five percent in 2024.
Further controversy arose when Panera announced it would close two fresh dough factories, shifting some cafes to par-baked, frozen bread rather than offering bread baked fresh daily. As Paul Carbone summarised the core issue, 'The guest doesn't dislike us, they just have forgotten about us.' Panera's costly reset is its bet on making the brand unforgettable once again.
