More bread please – Case studies highlighting the impact of private equity

For those less familiar with private equity, the industry and its investment strategy can seem opaque and overwhelming, from understanding ‘who is who’ to what a private equity firm actually does on a daily basis.  

There’s a lot to digest. So, if you’re feeling a bit overwhelmed, don’t worry. In this article, we’ve done our best to make it a bit more palatable.

We are going back to basics, bringing our attention to something all of us know (and love): bread. 

Family matters: Klosterman bakery 

Business and family life are among the greatest balancing acts known to modern humans. Both require governance, open communication and commitment. Bring the two together, and it becomes exponentially more complex.  

Klosterman Baking Company navigated this balancing act for four generations. Founded in 1892 as French Baking by Frank Klosterman and Charlie Thiewald, the company grew into the Midwest’s largest family-owned bakery. By 2022, it was operating 17 bakeries and distribution facilities across eight states, supplying more than 8,000 restaurants, retailers, convenience stores, and institutional clients.¹  

After 130 years of family ownership, the Klostermans sold the business to New Water Capital on July 8, 2022, for an undisclosed amount. “As a family, we decided it was in our best interest and the interest of the company that a new organisation take the lead of the business,” said Chip Klosterman in a statement.¹

Strategic shift under New Water 

New Water Capital, a Boca Raton-based private equity firm focused on lower-middle-market companies, has a track record in food manufacturing (including The Perfect Bite Co. and Pegasus Foods). At Klosterman, their first major step was relocating the company’s headquarters to a larger facility in Hebron, Kentucky — a move designed to expand production capacity and streamline logistics. The firm also backed investments in analytics systems and operational processes to improve efficiency. 

Legacy and operations 

CEO Dale Easdon, who has worked with New Water across multiple portfolio companies, describes their model as “reinvestment instead of micromanagement.” Klosterman’s leadership team has introduced training programmes across the organisation, with all senior leaders required to achieve black-belt certification. This focus on process discipline complements cultural initiatives such as open-door leadership, employee recognition, and expanded health benefits. 

Waste reduction has also become a formalised initiative: surplus products are resold at discounted prices, donated to local charities, or repurposed as animal feed to ensure nothing goes to waste.² 

Why it matters 

Klosterman illustrates how private equity can handle succession in a legacy business: capitalising growth, professionalising operations, while retaining cultural elements like community engagement and employee focus. 

Key outcomes 

• Relocation & expansion: Headquarters moved to Hebron, KY, to increase capacity and logistics efficiency. 

• Operational rigour: Roll-out of employee and leadership training. 

• Cultural continuity: Employee-first policies and surplus redistribution programs maintained. 

• Broader positioning: Access to New Water’s food manufacturing expertise and network.  

GAIL’s Bakery – Sustainability 

Building a legacy while also leaving a better planet behind is a significant undertaking for a scaling company. Rapid expansion typically prioritises efficiency, speed, and market share. But legacy and sustainability require patience and systems thinking. 

GAIL’s Bakery began in the early 1990s when Yael (Gail) Mejia started supplying freshly baked, artisanal bread to some of London’s top chefs and food venues. In 2003, Tom Molnar and a group of friends joined Yael’s premium wholesale craft bakery, helping to grow the business organically.³ 

In 2005, GAIL’s opened its first high-street bakery in Hampstead, bringing chef-quality craft baking and artisanal principles directly to consumers. Over the following decade, the company expanded its footprint steadily across the UK.  

By 2021, GAIL’s had grown to 73 bakeries, becoming a household name synonymous with fresh, hand-crafted baked goods. That same year, Bain Capital Special Situations invested in the company to accelerate growth and embed sustainability into its business model—supporting GAIL’s next chapter as a leader in the modern British bakery landscape.³

Strategic investment 

Bain’s capital was directed towards scaling GAIL’s footprint while introducing sustainability initiatives that would otherwise be difficult for a mid-sized operator to fund. The investment supported new store openings, energy transitions, and operational improvements, allowing GAIL’s to compete in a market where consumer demand increasingly overlaps with environmental concerns.⁴

Sustainability in practice 

GAIL’s launched its “Waste Not” program, aiming for zero food waste. Leftover bread was converted into new products such as Waste-Less Sourdough, crackers, and buns. By 2023, over 90% of surplus edible food was donated to charities. The company also switched all bakeries to 100% green energy, prioritised environmentally certified suppliers, and adopted biodegradable and compostable packaging.⁴

Why it matters 

The GAIL’s case illustrates how private equity can underwrite not just expansion but a shift in operating standards. Without outside capital and expertise, scaling alongside sustainability would have been a far tougher challenge. The Bain partnership highlights the growing investor emphasis on combining financial returns with environmental and community impact. 

Key outcomes 

• Zero food waste initiative: Launch of Waste-Less product line and surplus donation.⁴

• Green energy transition: All stores moved to 100% renewable sources.⁴

• Community engagement: Over 90% of edible surplus donated.⁴

• Sustainable packaging: Full shift to biodegradable/compostable materials.⁴

Panera Bread – Digital transformation 

For established retail companies that are firmly rooted, keeping up with technological advancements and changing consumer preferences can be challenging. Legacy retailers are often encumbered by scale: complex supply chains, entrenched vendor relationships, and legacy IT systems. 

Panera Bread, which began as St. Louis Bread Company in 1987 (rebranded Panera Bread in the late 1990s), grew into a leading U.S. fast-casual chain known for its bakery-café model. By the mid-2010s, it operated more than 2,000 locations but was hampered by legacy IT systems and fragmented infrastructure. Digital transformation was essential but costly.⁵

In April 2017, Panera was acquired by JAB Holding Company for USD 7.5 billion, making it one of the largest restaurant transactions in U.S. history. JAB, which also owns Krispy Kreme and Peet’s Coffee, positioned Panera as a cornerstone of its food-and-beverage portfolio.⁵

Strategic investment 

Post-acquisition, JAB directed resources into digital ordering, delivery platforms, and customer-facing apps. These upgrades proved decisive during the COVID-19 pandemic, when digital sales and delivery surged. Panera was able to expand its loyalty program, redesign store formats to accommodate pickup and delivery, and launch menu innovations faster due to better data integration.⁶,⁷

Operational impact 

By 2023, Panera reported that more than half of sales were digital — one of the highest adoption rates in the U.S. restaurant industry. Investments also went into kitchen redesigns, supply-chain efficiencies, and consumer-facing improvements such as contactless payments. JAB’s portfolio approach meant cross-pollination with other brands, allowing Panera to adopt proven digital and delivery playbooks.⁶

Why it matters 

Panera’s case shows how private equity ownership can accelerate digital transformation in industries where legacy infrastructure often acts as a drag. The ability to finance a systemic overhaul, backed by cross-brand experience, positioned Panera to weather the pandemic and maintain a competitive advantage. 

Key outcomes 

• Acquisition scale: USD 7.5 billion deal by JAB in 2017. ⁵

• Digital adoption: Over 50% of sales via digital channels by 2023. Up from 16% in 2015.⁶,⁷

• Operational upgrades: Store redesigns, menu innovation, contactless systems. 

• Portfolio synergies: Leveraged JAB’s food-and-beverage network to accelerate best practices. 

Final thoughts 

Private equity can be a catalyst for succession, scaling, and transformation. From bread baked in Cincinnati to waste-free sourdough in London and digital menus across America, these cases illustrate how outside capital can shape legacy, sustainability, and technology trajectories. 

That said, every deal is different. Outcomes depend on management execution, market conditions, and the specifics of a firm’s strategy. Private equity isn’t a guaranteed recipe for success — it’s a toolkit. When deployed thoughtfully, it can support long-term growth and resilience. When misaligned, it can create disruption without lasting value.