Panera's decision to go 'private'
Dec. 8, 2017
by Eric Schroeder
Ron Shaich, CEO of Panera Bread, said it's become tough to take a long-term view as public company.
ENGLEWOOD CLIFFS, N.J. — The ability of Panera Bread Co. to think long term was a key advantage for the St. Louis-based bakery-cafe chain in the public market, but a change in who appears to be running the show in the stock market left the company little choice but to go private, Ronald M. Shaich, CEO of Panera Bread, told Jim Cramer, host of CNBC’s “Mad Money,” during a televised appearance
on Dec. 6.
“It’s far better to do the kind of transformative events that drove Panera’s huge success, far better to do it in the context of being a private company,” Shaich said during the TV appearance. “The reality is Panera was able to drive the best performance in the restaurant industry the past 20 years — twice Starbucks, four times Chipotle — we were able to do that because we transformed that company, our company, six different times.
“You go all the way back. We were a croissant shop, (and then) became a bakery-cafe. We then went from there and made the bet on fast-casual. We were the poster child. I then sold Au Bon Pain and bet the entire thing on Panera. We then had the opportunity to be contrarian. When everybody in the (2000s) were loading up on debt we held back. When the recession hit we invested into the guest experience, saw our comps triple, we saw our stock triple.”
According to Panera’s website, the company was the best-performing restaurant stock when measured over the last 20 years, delivering a total shareholder return of 9,753 percent from April 18, 1997, to April 24, 2017, compared to 210 percent for the S&P 500 during the same time period.
Shaich, who is set to step down as CEO of Panera on Jan. 1, 2018, walked away from the top post once before. In 2010 he stepped away before ultimately returning a couple years later with a renewed focus for the bakery-cafe chain.
“We bet on digital, loyalty, delivery — and it worked,” he said.
Looking ahead, he sees tough sledding for public companies in light of the fact that traders, not institutional investors, appear to have taken on a larger role in the stock market.
“The reality is if we really want to build value in companies we need to take a long-term view,” he explained. “The greatest competitive advantage of the FANG stocks — Facebook, Amazon, Netflix and Google — is they have the ability to be long term.
“The greatest competitive advantage Panera had, the reason we produced the results we did is because we could think long term. And the reason I took our company private is I’m increasingly worried about our ability to do that in a public market.”
Panera Bread Co. was acquired by JAB Holding Co. in July for approximately $7.5 billion.