Ron Shaich has a track record of exceptional achievements and accolades in the restaurant industry. With his extensive experience and proven success, the visionary leader has won numerous awards.
The founder and former CEO of Panera Bread has shared those lessons in his new book Know What Matters: Lessons from a Lifetime of Transformations.
Shaich learned from a lifetime of asking what really matters and then making the transformations necessary to bring what really matters to life.
The Boston, MA, resident has been part of building three iconic restaurant brands: Au Bon Pain, Panera Bread, and now Cava. Along the way, he developed “fast casual,” a $300 billion–plus segment of the industry.
His new book reveals what he learned about entrepreneurship, running large enterprises, business transformation, and life itself.
He illustrates these lessons with his experiences turning a 400-square-foot cookie store into 2,400 restaurants with $5 billion in revenue, delivering annual investor returns of 25 percent over two decades, outperforming both Starbucks and Chipotle.
Total Food Service sought out Ron Shaich to share his Recipe for Success: Discover today what will matter tomorrow and never hesitate to undertake sweeping transformations in order to get the job done.
Shaich also offers clear-headed lessons for the entire life cycle of an enterprise, from bootstrapping a startup to going public to managing large companies to selling a business.
Furthermore, Shaich’s involvement in numerous boards and organizations showcases his commitment to making a positive impact.
He chairs or sits on the boards of esteemed institutions such as Clark University, Cambridge Innovation Center (CIC), Cava, Life Alive Organic Cafe, Tatte Bakery & Cafe, and Level99.
He is also a co-founder of No Labels, an organization dedicated to bipartisan problem-solving and strategic planning for the country.
With his extensive background and proven success, Shaich’s current ventures, Life Alive and Level99, are set to redefine the culinary and entertainment landscapes.
Life Alive, known for its plant-based meals and focus on positive eating, will expand to the Washington, D.C. market with the support of Act III Holdings, Shaich’s investment firm.
Act III has already achieved significant success with Tatte in the same market. Level99, combining “escape room” puzzles with craft beer and farm-to-table dining, recently opened its second location at Providence Place Mall in Rhode Island, to be followed by planned expansions in D.C. and Chicago.
Additionally, the renowned Tatte group will soon enter the New York market.
Shaich’s ambitious expansion plans for Life Alive, Level99, and Tatte, combined with Act III Holdings’ financial backing, are poised to make 2024 the fastest-growing year for his investment firm since its inception in 2018.
With Ron Shaich at the helm, these ventures promise to revolutionize the dining experience and the entertainment space and leave a lasting impact on the restaurant industry and quite possibly the world we live in.
Can you share an overview of your new book, Know What Matters? What inspired you to write it?
I’ve been working on it for the better part of 10 years. I wanted to come from the perspective of “How do you actually do it?” The book was originally written, in essence, for my kids.
I also had in mind the companies that we own, entrepreneurs of the next generation who are building companies, and even folks who are running large organizations.
I sought to combine both the sharing of our story and providing the lessons of how to do it.
Then, most importantly, I wanted to address the human element in all of this—how it feels going through it and then what you experience as you lead folks through a transformation.
And you know, what I didn’t want here was another self-congratulatory book filled with platitudes.
I wanted to provide real substance for real people who are running real organizations, small, large, private or public.
I was fascinated by your post-mortem strategy.
You need to read the book! The post-mortem is just one piece of the puzzle that helps you locate yourself into the future. I think about the future a lot with a process called Future Back.
What about the role of creating or controlling the future?
There may be a slight misunderstanding, because I begin by talking about the many things I’ve learned from life that apply to business.
What’s important is that I don’t see major differences between business and life, they’re not different. What makes good sense works in both.
I begin by talking about the deaths of my parents, and realizing that there is a judgment day. I can tell you that I watched people with chronic illnesses fear a judgment day.
It gives you great perspective on your own life. It teaches you how to respect yourself. For me, that kind of process led me to say to myself, “I don’t want to do it in the ninth inning with two outs.”
The time to do it is in the seventh, or even better in the fifth. I began by asking myself a question: “Where do I want to be in five years?”
I continued to do this for one week every Christmas break, in terms of my own personal relationship with my body, my health, my work, my finances, my family, my kids, my relationships and my own spirituality.
And then I broke it down into annual key initiatives. I identified and prioritized the projects that are closely tied to those key initiatives. Each quarter I would review myself against that.
I could start to understand that’s very much how we want to think about running a business. What is it we’re going to respect in this business five years from now?
When I read a Wall Street Journal article, or a piece in The New York Times, I see that a lot of what we do in business is ceremonial or reactive to our competitors. But the real question is what’s going to matter?
Then what is going to get us where we want to get to? The book then goes into a differentiation among means, ends and byproducts.
The understanding is that financial value creation is a byproduct—not an end—and can’t be forced to happen any more than I can create happiness.
Is your suggestion that you win by controlling the processes?
It’s more about staying focused on being a better competitive alternative. A better competitive alternative in this crazy little business of ours is getting people to walk past competitors and choose you.
With that comes true value creation. If you’re not doing that, you’re wasting your time ‘dirt farming’ and creating no value.
How do you get people to walk past your competitors and come back to you?
It depends on who your target customer is and begins by understanding their needs in a more fundamental way (What is it they really want? What is it they really need?) and continuing to make adjustments to deliver that.
How were you able to accomplish that at Panera?
The whole book is about that. There were four massive transformations in 37 years, each of which had a means to an end and a byproduct. Here’s a good example.
A friend of mine is a type one diabetic. He told me that his goal is to stay alive as long as I. So, what does he do? He focuses on blood sugar control between 80 and 180 (the end) by using the means at his disposal: diet, exercise, and insulin. If he does that, he lives (the byproduct).
Thinking of business, you know, Panera had extraordinary value creation over the last two decades as a public company, it was the best-performing restaurant stock—twice Starbucks, four times Chipotle—and delivered returns 44 times better than the S&P with 25 percent annualized shareholder returns over those same two decades.
But again, that was not what I was shooting for. It was a byproduct. We transformed the company four times. Panera started out as a basic cookie store that morphed into a French bakery.
While operating as a French bakery, we heard customers say they didn’t want the bread and croissants but really wanted sandwiches. We took the bread and croissants and created sandwiches, thus we became a bakery café.
That transformation made us very hot and took us to an IPO by ‘91.
The second big transformation in the early ‘90s was the emergence of what became fast casual. The lesson for us was about listening and learning.
How do you discover today what’s going to matter tomorrow? We could feel the needs of 30 percent of our target customers, who felt lost between fast foods and fine dining.
We could see that if somebody could come along and offer them an alternative that actually elevated their self-esteem instead of depleting it, that it would be powerful.
Our thinking was that if we could create food that people really wanted, actually loved, served by people who cared in an environment that could engage them, we could change the currency from what had existed as fast food.
The secret was to elevate the dining experience with our food at a price point that made sense. That was a powerful learning in the early ‘90s that led to the fast casual segment, which is today a $300 billion-plus business. Panera Bread became the poster child for identifying a need and fulfilling it.
The third transformation sprang out of a conversation I had with a couple of friends while sitting on a beach in 1999. I was lamenting the fact that Panera was one of four divisions in a large public company.
Somebody said that Panera had the potential to be nationally dominant. I realized that it would be a colossal waste to have this gem in Panera and not feed it right by giving it the financial and human resources it deserved.
With that I realized that we needed to take all of our capital and bet it on Panera.
With that realization, what was the next step to make it happen?
I moved to St. Louis, where the company was headquartered. I spent the worst year and a half fulfilling my new vision. I sold off every other business we were in except for Panera.
We changed the name of the public company and off we went. By 2010 we built it out to 1,500 restaurants generating $4 billion.
Talk about the next chapter after Panera?
I stepped down as CEO in 2010 to go do political work and take a lot of the lessons I learned about long-term thinking to civic society.
One weekend, I sat down at my computer and started writing a memo to the new CEO about how I would compete with Panera if I weren’t invested in Panera.
I imagined a world in which we would use digital access—rapid pickup, ordering at the table and digitally-enabled delivery—as the key to the future of the business.
I began thinking about how we would evolve to craveable wellness and clean food. Little did I realize what was about to happen.
Shortly after I delivered the memo to the then-CEO, he told me he had a personal problem that would prevent him from traveling.
We ended up switching jobs: I became CEO once more, and he became Executive Vice Chairman, and took care of what he needed to take care of.
I took our vision for the future with takeout and delivery and put it into effect. This fourth transformation took six rollercoaster years.
During these years we were under attack by activists. And when you’re going through transformation, people quit. You never know if you’re going to get to the end of the road.
Nothing’s proven until it’s done. Funny, everybody says that all of our ideas became the themes of the restaurant industry. But when I was going through it, it sucked.
Can you create this vision, like you’ve created, while being in the middle of operating a restaurant every single day?
Let’s be clear, I started with one restaurant. My focus now is on Cava, which just went public. I’ve done this with three iconic brands.
You may know of Tatte, which is in Boston and D.C. and is finding success. This is a terrible business. I call it ‘dirt farming’ when all you’re getting is your market share.
If that’s the case, go home or go into a different business. It can be miserable. If you can come up with a better competitive alternative, a reason that people are going to seek you out, then maybe you have a shot.
Are you in the real estate or restaurant business?
I mean everything starts and ends with the customer. Customers don’t come for real estate, right? They come not just for the food but the totality of the experience.
I would argue the restaurant industry is the second oldest profession. You can have delivery and it can be 20 percent of your business. But people still want community, and you need to have bricks and mortar to accomplish that.
We used to co-locate next to Starbucks. People would walk into Panera and say, “I’ll have the ‘bagel and beverage’, hold the beverage.”
Then they would walk into Starbucks and say, “I’ll have the ‘bagel and beverage’, hold the bagel.” It’s all about authority and not real estate.
I mean, no matter what Starbucks does it’s never going to do food because its system doesn’t lend itself to food.
You had better figure out where you want to locate and at what costs. How does that affect your business? Real estate is simply another piece of the puzzle.
Burgers and fries have been a staple of fast food/quick serve for generations. Is there any interest in healthier fare?
I think it’s an opportunity because people want to eat better. I think anybody who’s able to create food that people feel good about eating and tastes good will win.
I don’t think it’s a bet on healthiness, it’s a bet on fast casual. We are now seeing the growth of specialty fast food with our Cava brand that features Mediterranean fare.
It is the leading diet in America, bold with flavors, and Cava is the dominant brand in that category.
That’s what we’re doing with all of our investments. We’re investing in powerful categories. Within each of those categories, we know how to help build the dominant brand.
This is an industry in multi-units in which the winner takes all. Look at McDonald’s, Burger King, Chipotle, Qdoba, Panera, and Corner Bakery. You don’t want to be number three in this industry, because number one gets all the margin.
In the book, you talk about spirituality. Is there a place for work life balance?
I don’t know that I do. What I say is actually the opposite. I don’t think there’s such a thing as work/life balance.
I think there are tradeoffs, and you’ve got to decide what matters to you. What mattered to me in my life was my kids, family and work. Maybe I didn’t exercise enough; I’m doing more of that today.
I look back and think about when three executives quit on us in one day, how I felt when my daughter was little and wanted me to drive an hour to put her to bed. No complaining because we have to make our choices.
It comes down to what is the criteria for what will matter to us in three, five, and seven years.
That’s what we mean by future back. I actually think the biggest fallacy in the world is there can be perfect balance. You cannot have it all, my friend.
You mentioned that your bandwidth goes beyond the restaurant industry?
I’ve been doing it for a long time. I’m one of the cofounders of No Labels, the group running, potentially, a third party to offer an alternative to Biden and Trump.
I believe a lot of the principles that I offer up in this book are applicable much more broadly to civic society.
What do I mean by that? Just think about this, right? I talk about long-term thinking in this book and making plans for three and five and seven years out.
Then I speak a great deal about knowing what’s going to matter over the next five years, and what are the two or three things you’ve really got to get done?
And I speak about the fact that if you’re going to know what matters, you had better tell yourself the truth. And then if you know what matters, because you’ve told yourself the truth, you’d better get it done.
Really get it done. I can only tell you that we are competing against the Chinese with 20-year and long-term plans. We are challenged to agree on a budget for 20 months.
Now, tell me how that story ends, and where does that end up for this country?
How did we get to this point?
I think it’s a much broader question, which you will see if you go online to the No Labels website. We have structural issues that are fused by a media that’s become an echo chamber.
We’re hearing what we want to hear and that’s polarized us. We have an environment, quite frankly, in which 365 of the 465 congressional districts have been gerrymandered.
Where 365 of those districts voted red or blue at a rate of 60 percent or greater in the last election. What does that mean? That means the election occurred in the primary, and there’s far more ability for the extremes to get control of the primary.
You end up with this situation in which Congress is far more polarized than the American people. The reality is that 70 percent of America agrees on the top five issues.
They actually agree that these solutions have to be thoughtful, but they understand the solution. You can’t just maintain social security and never cut taxes.
It ‘ain’t gonna’ happen, that doesn’t work. Something’s got to give and it starts with people who are willing to get in the room and work it out. It’s not about making the speeches and blaming the other guy.
You and I just spent half an hour talking about hospitality. Where does it fit in when we are challenged to be civil to each other?
It’s the great question of what’s happened to us as a country and as a people, isn’t it? I think we’ve gotten harsher; it’s gotten incremental, we’ve given permission for that kind of behavior to be acceptable.
It’s a sort of sense of absolutism, in which I’m right and you’re wrong. The problem begins by delegitimizing whomever we’re talking to. It continues because we attack their intent and who they are as opposed to challenging their ideas.
To conclude, is the restaurant business a lousy business today?
No, I didn’t say that. Let’s get it clear. So first, I said it’s an amazing business. It’s entrepreneurial, it’s continuing to change. It’s got low barriers to entry.
It’s an amazing business and I’ve spent most of my life in it. I love it. You need to care for your restaurant business the right way. If not, what ends up happening is that you do what everybody else is doing.
You end up looking sideways, as opposed to into the future. You need to have a reason for existence that makes you differentiated and special.
But is this industry going to be here? Yes, and forever because it’s a huge percentage of the economy. Within this industry, some people are going to win, and some will lose.
We keep winning. Why? We choose the categories that will have tailwinds in five years, and then we help to build the dominant brands in each category. It’s not complicated. You know what to do, but it’s just a bitch to accomplish.
To learn more about Ron Shaich and his book, visit his website.
