Weekly Wrap December 1: Panera's Comeback Attempt, Gen Z and Communal Dining, and More

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 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.

Plus, Panera’s salads typically have five ingredients, while those of competitors like Sweetgreen feature as many as eight.

But it wasn’t just salads that were affected by the cost-cutting measures.

“In some instances, we shrunk portions, so guests would walk into our cafe to buy a sandwich that has gone up significantly in price, with lower-quality ingredients, in a smaller size,” Carbone said.

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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.

Tyson Foods’ decision to close a beef plant that employs nearly one third of residents of Lexington, Nebraska, could devastate the small city and undermine the profits of ranchers nationwide.

Closing a single slaughterhouse might not seem significant, but the Lexington plant employs roughly 3,200 people in the city of 11,000 and has the capacity to slaughter some 5,000 head of cattle a day. Tyson also plans to cut one of the two shifts at a plant in Amarillo, Texas, and eliminate 1,700 jobs there. Together those two moves will reduce beef processing capacity nationwide by 7-9%.

Consumers may not see prices change much at the grocery store over the next six months because all the cattle that are now being prepared for slaughter will still be processed, potentially just at a different plant. But in the long run, beef prices may continue to climb even higher than the current record highs — caused by a variety of factors from drought to tariffs — unless American ranchers decide to raise more cattle, which they have little incentive to do.

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The prospect of losing a major buyer for cattle and increasing imports from Brazil, which already accounted for 24% of the beef brought into the country this year, only adds to doubts about how profitable the U.S. cattle business might be over the next several years, making it less likely that American ranchers will commit to raising more animals.

“There’s a just a lack of confidence in the industry right now. And producers are unwilling to make the investment to rebuild,” said Bill Bullard, president of Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America.

Boosting imports from Brazil has the potential to affect the market — much more than Trump’s suggestion to increase imports from Argentina — since the country sends more beef to America than any other. But for steak lovers, the sky-high price of the cut isn’t likely to be affected regardless, as most imports are lean trimmings that get mixed into ground beef.

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Tyson expects to lose more than $600 million on beef production this year after already reporting $720 million of red ink in beef over the past two years.

“While the M&A market is not back to where it was in years such as 2021, there has been an uptick this year, and successful restaurant franchisees have not been an exception,” Allison Gargano, partner and co-leader of the retail and ecommerce industry team at law firm Morgan Lewis, wrote in an email.

The acquisitions signal a shift in the private equity market, as restaurant franchisors — rather than franchisees — are typically the target of investment. Improved economics, primarily driven by lower interest rates, are fueling the trend.

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Private equity firms are attracted to franchise portfolios because they offer three distinct paths to value creation: organic growth, expansion and acquisition.

“Their model is uniquely aligned with franchises,” Ladgenski said. “There’s a trifecta of opportunities for private equity.”

These investors are often more sophisticated than family-owned restaurant franchisees, allowing them to grow profits organically by improving operations, controlling food costs and streamlining management.

Private equity firms also have greater access to capital than the vast majority of individuals and families, leveraging undrawn limited partner funds, delayed draw term loans and relationships with Wall Street — rather than local and regional banks.

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However, in recent years, many individual and family investors have struggled amid rising prices and high interest rates, with many looking to sell.

Now, as interest rates finally begin to drop, those restaurant portfolios have become more attractive investments for private equity due to their greater financial and operational sophistication.

So, what are private equity firms looking for in a restaurant franchise portfolio?

Private equity firms often target fast-growing brands with strong unit economics, such as Dunkin’, Taco Bell and Wingstop, that allow for rapid growth.

According to new data from the online reservation service company Resy, 90% of Gen Z diners say they enjoy communal tables, compared to just 60% of boomers, highlighting a generational revival of one of the restaurant world's most polarizing trends: seating multiple groups of diners together at large banquet tables.

For a generation raised online but hungry for real-world connection, sharing a table with strangers has become less about awkward proximity and more about the promise of controlled socialization, and the potential for a new friend — or even a date.

"Share plates have become the new standard, especially among Gen Z, and communal tables are the perfect setting for that — they naturally turn dinner into a shared experience," Pablo Rivero, CEO of Resy and Tock and Senior Vice President of Global Dining at American Express, said. "You never know who you'll be seated next to; that's the fun of it!"

Resy's report found 63% of respondents feel that communal tables are great for meeting new people, with half saying they've had interesting conversations with someone they otherwise wouldn't have spoken to while dining with strangers. One in three said they'd met a new friend this way, and one in seven said they'd landed a date.

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Communal dining also offers a few other perks, Della Penna said: shared plates are often a more affordable way to dine, they provide customers with low-risk opportunities to try new flavors, and the in-person experience is seen as a better value than drive-thru or take-out options.

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For Gen Z, which is also turning its back on AI and spearheading a resurgence of flip-phones, communal dining appears to be part of a broader recalibration toward the tangible: shared experiences that can't be downloaded, duplicated, or filtered.