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Panera Bread Founder Ron Shaich’s New Book Criticizes IPOs


Panera Bread founder Ron Shaich has run a public company for more than two decades, but that doesn’t mean he’s a fan of IPOs or Wall Street.

More than six years after selling the chain for $7.5 billion, Shaich looks back on his nearly four decades at the helm of the company he transformed into a fast-casual dining giant. Shaich’s new book, “Know What Matters,” hits stores Tuesday.

The book begins with his early entrepreneurial efforts as a student and ends with the blockbuster sale of Panera to JAB Holding. Shaich blends his career story with business advice for entrepreneurs and CEOs navigating the ups and downs of running a publicly traded company.

He cautions readers against chasing profits, trends and the prestige of being publicly traded. Ironically, Panera Bread is considering an IPO, but Shaich, who is no longer involved with the chain, is directing his advice toward the founders.

The restaurant now known as Panera Bread was born from a 1981 merger between Cookie Jar, founded by Shaich, and the struggling French bakery Au Bon Pain. In total, Shaich spent 32 years at the helm of the company, excluding the two years in which he had technically retired but remained active as executive chairman.

Today, Shaich serves as chief executive officer of Act III Holdings. He founded the venture capital firm, which focuses primarily on restaurant and entertainment startups, with part of the profits coming from the sale of Panera. Act III invested in How are you in 2018, years before its IPO this year. Shaich owns a 10.3% stake in the Mediterranean chain, according to public filings.

One of the most unexpected pieces of advice in Shaich’s book is his caution about public disclosure. Shaich took Au Bon Pain public through an IPO in 1991. Although Au Bon Pain purchased the St. Louis Bread Company, renamed it Panera Bread, and then abandoned Au Bon Pain to focus on Panera’s growth, Shaich’s company went public.

Still, Shaich said he thinks IPOs don’t make sense for most companies.

“The reality is that 90% of CEOs who take a company public live to regret it,” Shaich told CNBC. “Why? Because you massively expand the number of voters you actually need to act for.”

In the book, Shaich recounts the various antagonists he encountered during his career, including Wall Street analysts and activist investors who were trying to take on Panera. He shares his reluctance to cede control to outsiders.

“Looking back, I became more skeptical about raising capital, both from venture funds and the public market,” Shaich writes in the book.

Shaich’s lack of appreciation for the typical venture capital model also shines through in his own business. Act III has no outside investors, called limited partners, which allows the company to focus on the long term, according to Shaich. The company also provides ongoing capital to its investments so founders can focus on the business rather than fundraising, he said.

In fact, Act III’s Cava deal is probably the company’s most traditional venture capital investment. But Shaich, who is president of the company, is confident the fast-casual chain is on the right track. According to him, Cava CEO Brett Schulman could be among the 10% of CEOs who don’t regret going public.

“Cava is a company that will succeed as a public company. Frankly, because it’s a powerful niche: the Mediterranean,” Shaich said. “This is a company that is ready to go public because it has a clear plan for the next 1,000 stores.”

Shaich wasn’t as complimentary of other recent restaurant IPOs. He said at an Axios event earlier in October that the salad chain Soft green should not have been made public until it was profitable, the outlet reported. (Sweetgreen has not yet reported a profitable quarter, but executives have said they believe the company could break even for the full year.)

Shaich is less transparent about Panera’s potential IPO. Last year, Panera canceled a deal with restaurateur Danny Meyer’s special purpose acquisition company that was set to go public for the first time since JAB bought the chain. Earlier this year, the company announced it was preparing for an IPO by unveiling a CEO succession plan.

Shaich declined to comment on Panera’s expected IPO, citing a nondisclosure agreement he signed as part of his deal to exit the company.

“But I will say this, I love Panera…I support it in every sense of the word,” Shaich said.

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