With winter now in full swing, one significant part of Panera Bread's (PNRA) business is being cleaned up in a bid to keep sales warm.

Panera Bread, which has over 1,900 restaurants in the U.S., announced on Wednesday that all of the soups on its menu are now free of artificial colors, flavors, sweeteners and preservatives. The new versions of Panera Bread's soups such as cream of chicken and wild rice and broccoli-cheddar now qualify as "clean," a buzzword in the food industry that means items are free of artificial ingredients.

"When you look at the difference, the new soups are made from things you would make soup out of at home," explained Panera Bread's head chef Dan Kish in an interview at a Panera location in New York City.

Soup is big business for Panera Bread, generating about 25% of annual sales, or $672 million, in 2015, based on Wall Street's projections for full-year results. The broccoli cheddar flavor alone, which is the chain's most popular, accounts for about one-third of the soup business, amounting to roughly 66 million servings out of the 200 million servings of soup Panera Bread sells each year. The company's soup menu rotates daily between 10 core soups, in addition to seasonal flavors such as turkey chili. 

According to the company, soup sales continued to trend higher in 2015.  


Panera's popular broccoli and cheddar soup.

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Kish added, "It was about moving away from things such as vegetable oil to cook the onions and broccoli to simply using butter to make the broccoli and cheddar soup."

One of the ingredients Panera Bread had to remove in order to reformulate the broccoli and cheddar soup, said Kish, was sodium phosphate, a key ingredient in the cheddar cheese used in the soup. As a result, Panera Bread and its supplier had to develop a new cheddar cheese without the additive.


Panera Bread's head chef Dan Kish has been slicing and dicing the company's ingredient lists.

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In the end, a total of eight ingredients, including sodium phosphate and autolyzed yeast extract, were removed from the broccoli and cheddar cheese soup. Prices on some of the new clean soups went up compared to prior versions, while others fell.

Panera says the overall impact to the consumer is negligible.

Clean soups are the latest in a broader push by Panera Bread and its fast-casual rivals towards more health-conscious offerings. In October, the company released a clean version of its pumpkin spice latte, featuring real pumpkin. The news came months after Panera Bread unveiled what it calls its "No No List."

The list contained a self-imposed ban on more than 150 ingredients, including artificial colors, flavors, sweeteners and preservatives, that the company plans to eliminate from its menu by the end of 2016. Kish said Panera remains on track to achieve this goal.

Panera Bread's push toward healthier fare may be starting to positively influence sales, with same-store sales momentum building sequentially in each quarter of 2015. System-wide same-store sales rose 0.7% in the first quarter, 1.8% in the second quarter, and 2.8% in the third quarter. Panera Bread is tentatively scheduled to announce fourth-quarter results in February.

Shares rose about 8.9% in 2015, outperforming the S&P 500's 0.7% decline.

Said BTIG analyst Peter Saleh in an Oct. 28 note to clients, "we consider the improving sales trends at Panera an encouraging development that can likely be maintained given the company's sales initiatives and digital adoption." Saleh rates Panera Bread a neutral, meaning he doesn't expect the stock to appreciate or depreciate meaningfully over the next 12 months.

Panera Bread isn't alone in trying to clean up its soup game.


Campbell Soup's children's soups are now free of MSG.

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Campbell Soup (CPB) - Get Report , maker of chicken noodle soup and Pepperidge Farm cookies, plans to remove artificial colors and flavors from nearly all of its North American products by the end of fiscal 2018. One change that Campbell has well underway is to remove the widely unpopular flavor enhancer monosodium glutamate, better known as MSG, from children's soups. The first batches of its kids' soups absent MSG hit U.S. supermarket shelves last August.

"If there are ingredients in the products that aren't contributing to the value consumers perceive, we look to take them out -- which helps to have a cleaner label and manage the costs," said Jeff George, Campbell Soup vice president of research and development for the Americas division, in an interview.

Campbell's is hoping new versions made from ingredients customers can actually pronounce will renew interest in what's been a challenged category.

According to the latest data from researcher Nielsen, sales of shelf-stable soup in the U.S. fell 2.1% year over year to $4.4 billion for the 52 weeks ended Nov 21. The shelf-stable category includes four different types of soup businesses: broth, condensed, liquid bullion and ready-to-serve.

The largest sales drop this year has been in the ready-to-serve category, which consists of products such as creamy tomato that can be quickly nuked in a microwave and then eaten. Sales of ready-to-serve soups have seen a 4.4% decline to $1.8 billion for the 52-weeks ended Nov. 21.

Other packaged food companies, such as cereal giant General Mills (GIS) - Get Report , have also focused on removing artificial flavors and ingredients from their products. 

Although Panera Bread has upgraded the quality of the ingredients in its soup and pumpkin spice lattes, one thing not on the immediate horizon is an all-organic menu. "We haven't hit a hard line on organics yet. There are a lot of impacts from organics -- costs being one of them," said Kish. "Each organic ingredient seems like a small impact, but when you total it all up it would be a big impact to the average amount a customer would have to pay."

Panera does currently use organic ingredients in some parts of its menu, such as in quinoa, brown rice, kid's milk, and the American cheese on its kid's grilled cheese sandwich.