DOWNSIZING TOOK AWAY MY BEAR CLAW FIX.

Insta Pundit contributor Stephen "Vodka Pundit" Green links to "Panera lost diners by cutting portions and staff. It’s reversing course to win them back."  It's the same old story, downsizing is a false economy.  Market tests have steep grading curves.

When Panera Bread began shrinking its sandwiches and skimping on salads, it started shedding customers.

Now, to win them back, the chain plans to reinvest in the business and undo many of those same cost-cutting measures, it said Tuesday.

Once the No. 1 fast-casual brand in the U.S., Panera has dipped to No. 3.

It hasn't been a good year or two for the "fast casual" sector more generally.  That might be evidence of precarity among the middle classes, reverting to McDonald's, or of upward mobility, going for casual dining with service.

There's been a lot of the usual corporate asset-swapping, asset-stripping, and restructuring going on, but skimping for its own sake is a fool's errand.

Phase one of Panera’s plan is to improve the quality of its food, reversing cost-cutting measures imposed in the face of high inflation, according to [CEO Paul] Carbone.

“We squeezed food costs. We squeezed labor,” he said.

Some of those changes happened while Carbone was chief financial officer. He now calls himself a “reformed CFO” — albeit one who still listens to earnings conference calls.

“It’s really about death by a thousand paper cuts, it truly is,” Carbone said about the chain’s downturn.

Take Panera’s salads, for example. In the summer of 2024, Panera began using a mix of half romaine, half iceberg lettuce to make its salads, saving the chain money compared with when it was using romaine alone. This summer, it reverted back to entirely romaine salads.

“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 said.

And then there’s the cherry tomato. Carbone said Panera is one of the few restaurant chains that doesn’t slice the bite-sized tomatoes in half, a decision made to save on labor costs.

“We make the guest chase the cherry tomato around the bowl,” he said.

And when a salad comes with an avocado, customers have to cut the halved fruit themselves, rather than it coming presliced. The chain will start slicing the cherry tomatoes and avocados early next year.

Now bring back my Bear Claw.

I wonder if improving the experience will run afoul of the challenges involved in adding staffing when entry level workers might be the best reason to automate.  Mr Carbone will give it a go.

To improve the customer experience, Panera is planning to invest more into labor. Like many restaurants, Panera in recent years scheduled fewer workers and relied more on the self-order kiosks it pioneered in the industry. That approach saved money, but customers often walked into a cafe and couldn’t find an employee in sight, according to Carbone.

Panera will also invest back into its kiosks, which it hasn’t significantly upgraded since they first entered its restaurants roughly a decade ago. And its dining rooms will get a facelift, too.

If these changes succeed in bringing back lapsed customers, then Panera’s restaurants will become more profitable, fueling future restaurant growth. And those new bakery-cafes could look different.

“What does the cafe of the future look like? We’re doing a lot of work around that, we’re going to test different things,” Carbone said.

That might work for others.  The bull session at Insta Pundit is heated in a number of ways.  I didn't see any groundswell for bringing the Bear Claw back.  So it often goes, everything I like goes away.