Panera’s ‘Paper Cuts’ Takeaway: Prioritizing Quality Over Reducing Expenses

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Panera’s ‘Paper Cuts’ Takeaway: Prioritizing Quality Over Reducing Expenses

Bitget-RWA2025/11/19 22:40

By:Bitget-RWA

- Panera Bread’s CEO Paul Carbone launched the "Panera RISE" strategy to boost sales and restore customer trust by reversing cost-cutting measures like replacing romaine with iceberg lettuce. - Key initiatives include reintroducing premium ingredients, expanding menu options, and enhancing service to achieve $7 billion in systemwide sales by 2028. - JAB Holding and franchisees are funding the turnaround, while the IPO of Panera Brands remains delayed to prioritize customer satisfaction over short-term gain

Panera Bread (PANERA) is launching a multi-million dollar revitalization plan designed to restore its leadership in the fast-casual dining industry. CEO Paul Carbone introduced the "Panera RISE" campaign, which centers on refreshing the menu, elevating the guest experience, and streamlining operations. A key aspect of this approach is moving away from previous cost-saving tactics that drove customers away, such as swapping romaine for iceberg lettuce in salads—a decision Carbone now concedes was a mistake. "Nobody wants iceberg," he remarked,

recognizing the negative response from guests

who disliked the cheaper greens.

This new direction aims to counteract years of falling sales and diminishing consumer enthusiasm.

Panera’s U.S. revenue dropped 5%

to $6.1 billion in 2024, according to Technomic, as competitors like Chipotle and Panda Express gained ground. Carbone blamed the slump on a series of small-scale cost reductions, such as cutting staff, shrinking portion sizes, and simplifying the menu. "It’s really a case of being worn down by countless small cuts," he explained,

describing how these incremental changes weakened

the brand’s attractiveness.

With Panera RISE, the company will bring back premium ingredients like romaine lettuce and broaden its menu with new drinks and higher-quality selections. The plan also involves updating cafe interiors and investing in more front-line staff to improve service. Carbone stressed the need to strike a balance between value and quality,

planning to introduce a "barbell" menu

that features both budget-friendly and premium choices to appeal to a wider range of customers.

Panera’s ‘Paper Cuts’ Takeaway: Prioritizing Quality Over Reducing Expenses image 0

On the financial side, the initiative aims to reach $7 billion in total sales by 2028, up from about $6 billion currently.

Achieving this will depend on

growing the chain’s 2,200 U.S. outlets and upgrading existing locations to maintain high standards across both franchise and company-owned stores. JAB Holding Company, which controls Panera, along with franchise partners, have committed substantial investments to back the transformation.

Plans for Panera Brands, the parent company, to go public are paused until the operational upgrades are fully in place,

a move Carbone called

essential to focus on customer experience rather than immediate profits. This postponement comes after earlier failed attempts at an IPO,

such as a 2021 planned merger

with a special-purpose acquisition company that was abandoned in 2022 due to market volatility.

Experts in the industry see Panera’s strategy as part of a larger trend in fast-casual dining, where brands like Chipotle and Sweetgreen have also seen fewer customers as consumer preferences and economic conditions shift. Carbone’s emphasis on bringing back food quality and attentive service fits with

a movement among brands to reconnect with diners

by offering more premium options, balancing increased costs with added value for guests.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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