Apr 30, 2018 · 41m · how-i-built-this
Panera Bread/Au Bon Pain: Ron Shaich
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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, host Guy Raz interviews entrepreneur Ron Shaich, who details his journey from managing a student convenience store to co-founding Au Bon Pain and transforming Panera Bread into a multi-billion-dollar fast-casual giant. Shaich shares his philosophies on contrarian leadership, innovating the 'third place' dining experience, and navigating high-stakes corporate transitions.
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 34.6% of the talking time here. How this is scored →
Guy as informed peer 1.9 Guest teaching 2.2 Guest disagreement 0.8 Guy pushing back 0.1
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 35:11 Shaich dismisses business school glamour views
Shaich emphatically counters romanticized notions of entrepreneurship and money, lecturing that business owns the founder rather than vice versa.
Hardest push from Guy ▶ 27:42 Raz presses on the decision to downsize store footprintRaz directly challenges Shaich's move to sell Au Bon Pain with 250 stores in favor of Panera with only 180, framing it as an extreme downsizing.
Biggest teaching moment ▶ 30:17 Shaich corrects opening pace and outlines contrarian recession strategyShaich corrects Raz's store opening figures from every five days to every three days and educates him on taking advantage of dropped real estate costs during the 2008 crash.
Guy holds their own ▶ 23:09 Raz connects the 'chill business' to the Starbucks third place modelRaz demonstrates industry domain knowledge by explicitly mapping Shaich's informal terminology to Howard Schultz's third-place Starbucks retail thesis.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Announcement of the How I Built This Summit | 0 | 0 | 0 | 0 | Monologue introduction and promo for the How I Built This Summit, followed by Guy Raz introducing Ron Shaich's background and the 'third place' concept. | |
| Student Politics and Founding the Campus Convenience Store | 2 | 2 | 0 | 0 | Ron explains his initial foray into business after being kicked out of a convenience store at Clark University, linking political campaigning to business operations. | |
| Launching The Cookie Jar and Joining Au Bon Pain | 2 | 3 | 1 | 0 | Ron recounts launching The Cookie Jar and buying into Au Bon Pain after noticing operational chaos. He gently reframes Guy's optimism about $400 first-day sales by pointing out high fixed rents and low profit margins. | |
| Operational Challenges and Near Catastrophes at Au Bon Pain | 1 | 1 | 0 | 0 | Ron shares humorous and stressful operational stories from early Au Bon Pain days, including drying spinach in clothes dryers and an electrocuted equipment operator. | |
| Mid-Show Break and Preview of Panera Expansion | 2 | 2 | 0 | 0 | Ron details how customer behavior showed him the bakery cafe model, pioneering the fast-casual category and out-operating well-funded corporate competitors like Pepsi and Sara Lee. | |
| Acquiring St. Louis Bread and the Third Place Strategy | 3 | 3 | 1 | 0 | Guy relates Ron's 'chill business' concept to Starbucks, and Ron refines the comparison by noting Panera's larger footprint fosters group gathering rather than isolated headphone use. | |
| Divesting Au Bon Pain to Bet Entirely on Panera | 3 | 3 | 2 | 1 | Ron details the intense boardroom fight to sell off Au Bon Pain and bet everything on Panera. Guy asks if it felt like downsizing, but Ron rejects the framing, clarifying it was ruthless focus. | |
| Contrarian Growth Strategies During the Great Recession | 2 | 4 | 2 | 0 | Ron rejects Guy's suggestion of taking victory laps and corrects his statistic about store openings, explaining Panera's contrarian growth playbook during the 2008 Great Recession. | |
| Partnership with Lou Kane and Taking Panera Private | 2 | 3 | 2 | 0 | Ron reflects on his partnership with Lou Kane, explains taking Panera private to resist quarterly public market short-termism, and rebukes naive perceptions of entrepreneurial glamour. | |
| How You Built That: Tyson Walters and Shed Defender | 2 | 1 | 0 | 0 | In the 'How You Built That' segment, Tyson Walters explains the invention and growth of Shed Defender dog suits in a lighthearted, collaborative exchange. |
Statements from this episode (15)
Shaich: Business is a political campaign that never ends
“But in so many ways, running a business is no different than a campaign. In fact, a campaign is a business that, that essentially has one day in which it ends. A business is a campaign that goes on and never ends.”
Shaich: Took 60% equity to merge Cookie Jar into Au Bon Pain
“I came to them and said, look it, I think I can fix this. 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.”
Shaich: Au Bon Pain dried spinach in clothes dryers until one exploded
“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 relied on an auto mechanic for equipment repairs
“We didn't even have the ability to maintain our equipment, and I would use my auto mechanic to help fix the equipment. I didn't know what else to call, and we had a dough divider that was essentially being held together with bailing wire and paper clips.”
Shaich: Au Bon Pain was the first example of fast casual 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. This was an attempt to do something that was better But in a quick service mode.”
Shaich: Pepsi and Sara Lee launched major bakery chains to compete with Au Bon Pain
“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 Boulangerette. Sarah Lee came after us. They bought a chain called Michelle's Baguette, and they were going to open 400 stor…”
Au Bon Pain acquired St. Louis Bread Company for $23M in 1993
“So in November of 1993, we bought the St. Louis Bread Company, those 19 stores, for twenty-three million dollars.”
St. Louis Bread matched Au Bon Pain volumes at half real estate 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 like gasoline stations for the body
“Post-World War II, fast food was special. You fast forward it to the 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…”
Shaich: VCs controlled 3 of 5 board votes during Au Bon Pain divestment fight
“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 Bread ultimately sold for $315 per share
“No, and it ended up selling for 315 a share.”
Shaich: Panera tripled its stock price during the Great Recession
“We said this is the time to build competitive advantage, and ultimately we tripled the stock through the recession.”
Shaich controlled 17% of Panera Bread's voting stock
“No, I, you know what, the truth is, I probably could, because I voted 17% of the stock, and I had this reputation, this credibility.”
Shaich: Public market short-termism forces CEOs into 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 …”