Facing its share of controversies and customer complaints over the past few years, bakery-cafe chain Panera Bread has announced big changes for the coming year.

Panera Bread Co. will expand delivery to 35–40 percent of its more than 2,000 restaurants by the end of the year, and add more than 10,000 in-store and delivery driver jobs, the company said Monday.

Panera, with its mainstream American menu, large booth seats, and inoffensive decor, has thrived in the suburbs. But can it compete with a quirky coffee shop or family-owned deli in Brooklyn or San ...