Panera Bread just killed its most favourite feature. What’s next?

Panera Bread is closing all nine of its remaining fresh dough facilities (FDFS) across the United States under its new CEO, Paul Carbone.

A Panera Bread Co. restaurant in Novato, California, US, on Wednesday, Feb. 21, 2024. Photographer: Michaela Vatcheva/Bloomberg(Bloomberg)

The closures, expected to unfold over the next two years, follow years of speculation and a gradual transition away from the brand’s original dough production model.

Panera baked its bread using dough prepared off-site at regional FDFs. These dough balls were delivered to cafés, where staff proofed and baked fresh loaves each morning. While this gave Panera its signature fresh-baked aroma, the model sometimes led to cafes running out of bread by the afternoon.

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Now, the company is fully adopting an “on-demand” model. Instead of preparing dough in-house, Panera will rely on third-party partners to produce bread using its recipes. The bread will arrive par-baked and frozen, allowing staff to finish baking it in cafés throughout the day.

What’s next for Panera Bread?

Brooke Buchanan, Panera’s Chief Corporate Affairs Officer, said, “We didn’t make this decision lightly,” per Restaurant Business.

“We wanted to make sure it was the right model for us moving forward, not only for operations and for consistency, and ensuring our high quality… but also because of our team members.”

Shuttering the remaining FDFs will result in hundreds of layoffs though Panera has pledged to “offer job fairs and bridge benefits.”

Panera is already making changes to the menu. New offerings like the Croque Monsieur Croissant Toast. Last year, the brand overhauled core items like soups, salads, sandwiches, and mac and cheese.

Despite these efforts, Panera’s performance in 2024 took a hit. Sales dropped more than 5% to $6.1 billion, the first decline since the pandemic. Meanwhile, competitors like Jersey Mike’s and Charley’s Cheesesteaks posted double-digit gains, according to Technomic data.

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Still, there’s a glimmer of hope. “We saw encouraging sales improvements in the first quarter,” Buchanan noted, though she didn’t share figures.

Owned by Luxembourg-based JAB Holding since 2017, Panera has been undergoing significant changes ahead of a possible IPO. But for now, Buchanan said, “We’re in the middle of a turnaround. We are taking a strategic look at where we are today and where we want to be three years from now.”