Italian sandwich shops that use baked-on-site bread are getting pretty scarce in Chicago.
I was surprised to hear that LAppetito bakes their own bread. Its a good place especially considering its location. Some of the sandwich combinations are unusual and nice.
All in all I think Bari Foods, mentioned by others, does about as good job a job as anyone even though they dont make their own bread. In the same neighborhood, Atlas Bakery used to make sandwiches on their own bread but they closed maybe 10 years ago.
Then there was Cardinales Bakery on Halsted south of 35th St. Their bread was good but I never thought the sandwiches were all that special (quantity over quality). It burned down maybe 5 years ago and I dont think it reopened.
One of my favorite places was Scudieros Bakery in Melrose Park, just a little west of Come Back Inn, the place with the big stuffed bear (their Kodiak Burger was/is good). Its been ages since Ive had one of their sandwiches but I remember liking them very much. The very good bread is baked right there in the back room and the fillings were good too.
2113 W Lake St
Melrose Park IL
One of my favorite places from way back during undergrad years is Fontano's -- both the original one near the UIC campus and the little hole-in-the-wall on Jackson west of Wabash downtown. They do a salami-and-provolone sub sandwich (on locally baked bread) that's just unbelievable.
See my mention of the Conte Di Savoy on Taylor Street.
But I'll also second L'Appetito. I used to work nextdoor and would often run over for gelato breaks at 3pm, or a shot of good espresso if I had a meeting that I knew would make me sleepy. But good sandwiches too.
I'm pretty fond of L'Appetito. It's a little pricey. They have 2 stores: one at the base of the Hancock, the other a couple of blocks west on Superior or Ontario I think. I doubt the bread is homemade, but the owners are real live Italians and there's a pretty nice selection of meats, cheeses and prepared foods.
There are probably less slick, more "authentic" neighborhood places, but L'Appetito is very centrally located and quite satisfactory.
Since we seem to be voting, I'll cast my ballot for L'Appetito as well. The off-Michigan location that Mark was searching for is at Huron and Wabash. I, however, don't think they are pricey. My favorite sandwich there is the grilled ham and emental, for $3.00. If you're not too hungry it can even serve two people, when accompanied by chips or one of their salads.
I once inquired about their bread, and the owner said that they made it themselves. I doubt that it's made on the small premises, but I have no reason to question her claim. I know that the thin ciabatta style loaf they use for their panini, is not sold anywhere else in the city.