Feb 10, 2020 · 42m · how-i-built-this
Panera Bread/Au Bon Pain: Ron Shaich (2018)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, Ron Shaich details how he transformed a modest Boston cookie shop into Au Bon Pain and Panera Bread, pioneering the fast-casual restaurant industry through relentless operational focus and bold strategic pivots.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 35.2% of the talking time here. How this is scored →
Guy as informed peer 3.0 Guest teaching 2.2 Guest disagreement 1.2 Guy pushing back 0.6
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 28:29 I wasn't downsizing, I was focusing
Shaich rejects Guy Raz's characterization that selling Au Bon Pain was downsizing, forcefully insisting it was a calculated focus of corporate capital and human energy.
Hardest push from Guy ▶ 29:40 Probing on the victory lapRaz challenges Shaich on whether he felt vindicated and celebrated after Panera hit a billion dollars following extreme board resistance.
Biggest teaching moment ▶ 29:48 The retailer's nightmare vs complacencyShaich educates Raz on the psychology of executive leadership, explaining that true retail operators never celebrate because of the perpetual anxiety that tomorrow no customers will show up.
Guy holds their own ▶ 24:01 Distinguishing Panera's third-place model from StarbucksRaz identifies the business strategy as mirroring Starbucks' third-place model, prompting Shaich to explain the specific operational differences in spatial layout and group dynamics.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Live Show Announcement: Sub Pop in Seattle | 0 | 0 | 0 | 0 | Guy Raz delivers a live show promo and introduces the background of Ron Shaich and Panera Bread via monologue and brief teaser clips. Because this is introductory framing, there is no conversational sparring. | |
| Founding the Campus Convenience Store at Clark | 3 | 2 | 1 | 1 | Shaich details getting kicked out of Store 24 and opening a student-run convenience store at Clark University. Raz prompts him with light clarifying questions about what motivated the move. | |
| From Harvard Business School to The Cookie Jar | 3 | 2 | 1 | 1 | Shaich explains attending HBS, working at the Original Cookie Company, and deciding to open an urban cookie store with family equity. Raz asks standard interview prompts regarding why landlords rejected him. | |
| Early Days and the Bodysurfing Philosophy | 3 | 3 | 1 | 1 | Raz suggests $400 on day one sounds pretty good, but Shaich reframes the economics of retail volume and compares entrepreneurship to body surfing. Raz listens and prompts further on long-term strategy. | |
| Partnering with Louis Kane and Merging with Au Bon Pain | 3 | 2 | 1 | 0 | Shaich outlines partnering with Louis Kane and structuring a 60/40 deal to turn around Au Bon Pain's disorganized operations. Raz acts as an attentive interviewer guiding the narrative arc. | |
| Chaotic Kitchen Battles in the Early Au Bon Pain | 2 | 1 | 1 | 0 | Shaich humorously recounts chaotic operational mishaps, including putting spinach in clothes dryers and an electric shock incident in the bakery. Raz reacts with amusement. | |
| Customer Insights and the Birth of Fast Casual | 4 | 3 | 1 | 0 | Shaich details observing customers slicing baguettes to make sandwiches, which led to inventing the fast-casual bakery-cafe concept. Raz supports the narrative by highlighting the shift in consumer experience. | |
| Out-Operating Corporate Competitors to IPO | 4 | 3 | 2 | 1 | Shaich explains how Au Bon Pain out-operated massive corporate rivals like Pepsi and Sara Lee to reach IPO, then acquired St. Louis Bread Company. When Raz compares Panera to Starbucks, Shaich reframes the key differences in spatial design and utility. | |
| The Bold Bet: Divesting Au Bon Pain for Panera | 4 | 3 | 2 | 1 | Raz suggests Shaich was 'downsizing' by divesting Au Bon Pain, but Shaich firmly corrects the framing, emphasizing that he was 'focusing' resources on a massive growth opportunity. Shaich describes the bitter boardroom battle with venture capitalists. | |
| Scale, the Retailer's Nightmare, and Recession Strategy | 4 | 3 | 2 | 1 | Raz asks if Shaich took a victory lap as sales hit $1B, which Shaich immediately dismisses by explaining the 'retailer's nightmare' and the constant dread of failure. Shaich also corrects Raz on opening cadence during the Great Recession. | |
| Reflections on Partnership with Louis Kane | 4 | 3 | 2 | 1 | Raz asks about selling to JAB Holding and stepping down as CEO. Shaich explains the structural danger of short-termism in public markets and delivers a frank monologue on how entrepreneurship completely consumes one's life. | |
| 'How You Built That': Lisa Dalton's Can Do Labels | 2 | 1 | 0 | 0 | Raz interviews Lisa Dalton for the 'How You Built That' segment about creating Can Do Labels for blind individuals. The exchange is warm, supportive, and narrative-driven. |
Statements from this episode (16)
Shaich funded his first Boston cookie store with $100,000 initial equity
“I had about 25,000 dollars. My dad essentially lent me, gave me 75,000 dollars, and that 100,000 dollars became the grub steak, the equity, that allowed us to build that first 400 square foot cookie store. In downtown Boston.”
Shaich took 60 percent equity in the merger with Au Bon Pain
“You give me 60% of the company. You and your investors keep 40%. I'll put my cookie store, which was making money, in with your three Obonpens, and we'll create a new company.”
Early Au Bon Pain dried spinach in clothes dryers until one exploded
“But we put defrosted spinach in clothes dryers letting it run off the water was a great idea until one day we blew the top off the dryer and ended up with spinach in In all 3000 square feet of the production space.”
Shaich: Au Bon Pain pioneered the fast-casual restaurant category
“What the bakery cafe was an alternative between down and dirty fast food. And fine dining. And for people who were working in white collar jobs increasingly in urban settings, this was the first example of what we later came to call fast casual.”
Corporate giants Pepsi and Sara Lee launched failed rival bakery-cafes
“Pepsi came after us. They decided this was going to be the third leg of Pepsi food service, and they created something called La Petite Boulangerie. Sarah Lee came after us. They bought a chain called Michelle's Baguette, and they were going to open 400 stores…”
Au Bon Pain bought 19 St. Louis Bread stores for $23 million
“So, in November of 1993, we bought the St. Louis Bread Company, those 19 stores, for twenty-three million dollars.”
Shaich: St. Louis Bread matched Au Bon Pain volume at half cost
“St. Louis Bread Company was generating volumes nearly as high as Au Bon Pain, but doing so in real estate that cost half as much.”
Shaich: 1990s fast food became commoditized 'gasoline stations' for humans
“Post-World War II, fast food was special. You fast forward it to 1990 with 60,000 drive-throughs in America. Fast food had become self-service gasoline stations for the human body, and the reality of it was, That there were many consumers that were holding the…”
Shaich won a board battle with two votes against VCs' three
“It was a huge boardroom struggle, because I had two votes, our venture capitalists had three, and all of them had invested in Au Bon Pain.”
Shaich: Panera stock surged 100x after selling off Au Bon Pain
“The stock has been up a hundredfold since then.”
Panera Bread ultimately sold to JAB Holding for $315 per share
“And ended up selling for 315 a share.”
Shaich: Panera tripled its stock price through the Great Recession
“We said this is the time to build competitive advantage, and ultimately we tripled the stock through the recession.”
Shaich owned six times more stock than co-founder Louis Kane
“I owned, you know, six times more stock than him, but most of the community at that point undoubtedly thought the company was Lou's.”
Shaich: Public markets force CEOs into short-term cost-cutting over transformative bets
“There's a pervasive sense of short-termism that has invaded our markets. The reality is, when you have such short-term pressure on our CEOs, they react. And what that ends up meaning is cost-cutting. And they avoid the kind of transformative events that drove …”