The Corporate Shift That’s Changing Everything
The restaurant industry is witnessing a remarkable transformation that’s turning decades of food service on its head. Panera Bread is planning to close all nine of its remaining fresh dough facilities (FDFs), the company said Wednesday. The long-expected move will be followed by a three-year strategic turnaround plan for the fast-casual bakery-café chain under CEO Paul Carbone, who took the helm of Panera Brands in late March. What’s happening at Panera represents a seismic shift that’s affecting how Americans think about “fresh” food at chain restaurants.
This isn’t just about one company making operational changes—it’s about the fundamental question of what consumers really want versus what they think they want. Once a powerhouse fast-casual brand, Panera’s sales declined more than 5% in 2024 to $6.1 billion. Traditionally, Panera’s breads would be mixed in the FDFs and dough balls would be delivered to cafes, where loaves would be proofed and baked in the mornings. But the reality of running thousands of locations has forced even the most quality-focused chains to reconsider their approach.
The Par-Baking Revolution Taking Over
Over the past two years, Panera has been shifting to what it has called an “on-demand” bread production model, in which the chain’s various breads are made by third-party producers, using the brand’s recipes. The breads are par-baked and frozen to be finished in cafes. Par-baking is becoming the secret weapon of chain restaurants everywhere, allowing them to maintain consistency while still delivering that fresh-baked experience customers crave.
The process is surprisingly sophisticated. Those bakeries follow Panera recipes to make bread that is par-baked and frozen, then delivered to cafes where loaves are finished. Company officials say the on-demand model simplifies operations and allows for bread to be baked throughout the day, rather than just in the morning, ensuring that freshly baked bread is available at all hours. It’s a technological advance that most customers never notice, but it’s revolutionizing how chains operate.
Why Fresh Dough Facilities Are Becoming Extinct
The closure of fresh dough facilities represents more than just cost-cutting—it’s a strategic pivot that’s reshaping the entire industry. Flynn said the traditional process of shipping fresh dough was always problematic, particularly gauging the amount of bread that would be needed. Bakery cases would be full in the morning, but would look depleted later in the day. This simple observation reveals the core problem that’s been plaguing chain restaurants for decades.
The math is brutal for restaurant operators. With on-demand baking, there’s less waste because cafes can choose not to bake more, if it’s not needed, he said. “The product is better. It’s fresher. It’s crisper,” he said. When a franchisee can reduce waste while improving product quality, the business case becomes undeniable.
The Employee Impact Nobody Talks About
Behind every corporate strategy shift are real people whose livelihoods hang in the balance. M.J. said that amid these changes, many bakers’ shifts went from 8-12 hours daily, to two to four hours, which led to many bakers quitting because it’s impossible to make a living off of so few hours. “Bakery of the Future” Panera stores are currently in place in more isolated areas that don’t have easy access to dough from Fresh Dough manufacturing Facilities (FDF plants), though multiple employees con This human cost is often overlooked in discussions about operational efficiency.
The testimonies from workers paint a stark picture. M.J. said. “Currently, there’s no publicly shared date on when frozen breads are coming to my stores, but certain cafes are being remodeled to hold larger walk-in freezers to make space for more product, and every new cafe opening has had less room for the bakers and smaller ovens.” These changes represent a fundamental shift in how restaurants staff their operations, with fewer skilled bakers and more emphasis on reheating and finishing products.
The Chains That Still Bake From Scratch
While many chains are moving toward par-baking, some holdouts continue to bake everything fresh in-house. The major steakhouse chains often serve excellent free bread, but Texas Roadhouse has confirmed that its bread is, in fact, made from scratch. As a matter of fact, there’s a whole section of its website dedicated to it. The company claims that its rolls are “baked fresh every five minutes,” so every table gets buns fresh out of the oven. Texas Roadhouse has made fresh bread a cornerstone of their brand identity.
Biscuits made from scratch every day are something you can count on at all of Maple Street’s 59 locations, but it’s that extra touch of creativity that took business at Maple Street Biscuit Company to another level. In 2016, a biscuit sandwich called The Squawking Goat was shown on the Food Network show “Guilty Pleasures,” and it brought Maple Street Biscuit Company exposure. For smaller chains, fresh baking remains a viable differentiator that can create genuine competitive advantages.
The Technology Behind Modern Chain Baking
Modern chain restaurants are embracing technology to maintain quality while scaling operations. Freezing the par-baked bread locks in quality, the company contends, without adding artificial preservatives. In the five markets where on-demand baking is in play, the company said the feedback from guests and team members has been positive, indicating the availability and consistency of bread has improved. The science behind preserving freshness through freezing has advanced dramatically in recent years.
The commissary model is also gaining traction. Rather than each Salad and Go drive-thru making its salads and other dishes in-house, every drive-thru is fed by a centrally located commissary that handles the bulk of food prep ahead of time. While that might sound like a factor limiting the chain’s potential for expansion, each commissary can theoretically support 400 locations. This centralized approach allows for unprecedented quality control and consistency across hundreds of locations.
The Customer Experience Paradox
The most fascinating aspect of this transformation is how customers respond to the changes. Franchisee Greg Flynn, founder of the Flynn Group that operates Panera units in nine states, said his roughly 25 cafes in Washington state moved to the on-demand model last year. “It’s fantastic,” he said. “It’s a giant improvement in the customer value proposition, and the employee process.” Flynn’s experience suggests that customers may actually prefer the consistency of par-baked products over the unpredictability of truly fresh items.
The sensory experience remains crucial. Flynn said. “It’s baked throughout the day, so you get that great look and smell of baking.” The on-demand process could also allow for more innovation, and new bread varieties are in the works, the company said. The key insight is that customers care more about the final product than the production process, as long as quality and freshness are maintained.
The Cost Economics Driving Change
The financial pressures facing chain restaurants are forcing operational changes that would have been unthinkable just a few years ago. All of this is reportedly part of the company’s “Bakery of the Future” plan, which was created to lower labor costs, get rid of wholesale pricing, and deliver more efficiency through the use of pre-baked and partially baked products. Labor costs have become the primary driver of change in how chains approach food production.
The numbers tell the story. Panera Bread saw sales decline more than 5% in 2024. Panera’s 2024 performance also paled in comparison with fast-casual sandwich peers, including Jersey Mike’s (up 11.6%), Charley’s Cheesesteaks (up 13.2%) and Jimmy Johns (up 1.9%), according to Technomic’s Top 500 restaurant chain data. When competitors are thriving while you’re struggling, operational efficiency becomes a matter of survival, not preference.
The Future of In-House Baking
The bakery industry is experiencing unprecedented growth, with new opportunities emerging for chains that can balance quality and efficiency. The market size of the global bakery industry was $513.17 billion in 2023, and is projected to reach $919.9 billion by 2032. Across the world, major corporations are largely responsible for getting bakery products into the hands of hungry customers. In 2022, the bakery industry competitive landscape has a few top players who hold a majority of the market share — in the U.S., 55% of all baked goods are produced by three major companies.
The consolidation trend is accelerating. Several major chains have already announced ambitious growth plans for 2024 and beyond. Some of those brands are expanding at an especially breakneck pace, aiming to open dozens or even hundreds of locations in the coming years. This expansion is only possible with operational models that can scale efficiently while maintaining quality standards that customers expect.
