Ep.67- Entrepreneur Lessons From How Ron Shaich Built Panera Bread

Read Time: 5 Minutes.

Thanks to Christian Wilson, I was recently introduced to a Podcast, How I Built This With Guy Raz from NPR. This podcast interviews entrepreneurs about their journey of building their companies from scratch. Without a doubt, it has become my favorite podcast of all time.

One of my favorite episodes so far is how Ron Shaich built Panera Bread/Au Bon Pain. Today I would like dissect the story and share my learning through a framework that touches on five factors that contributed to the company’s success: paper (money), person, period, place, and product. I call it Entrepreneur 5Ps.

Based on the interview and my best personal judgement, I will also assign a percentage on how much I personally believe each factor contributed to the company’s ultimate success. This is entirely subjective.


PAPER (25%):

In 1980, Ron raised a total $100K, with 25% from his own savings and 75% from family inheritance. That is about $325k adjusted for inflation in 2018. This is not an insignificant amount of money in 1980 or the present. Ron’s relatively easy access to large capital through family inheritance is a crucial factor to jump starting a business that’s often unavailable for present-day aspiring entrepreneurs.

PERSON (30%)

Ron strikes me as a hybrid tactician and strategist with these three top qualities: a calculated risk-taker, a reflective learner, and an adaptive opportunist.

  1. Calculated Risk-Taker: Ron only takes smart bets, which are educated guesses he personally understands.

    1. Ron’s Expertise in the First Business: Ron did not take on the risk of starting a random business based on hype. He leveraged his district manager experience at the Original Cookie Company to start his cookie jar company in 1980. This past experience allowed him to identify the opportunities that exist outside of the mall. In Ron’s words, “for me, the cookie store was not an end but a means to take me to the next place.

    2. Ron Averted the 2008 Financial Crisis: Panera grew 300% during the 2008 financial crisis, partially due to Ron’s ability to only take on calculated risks. Specifically, contrary to prevailing views, he did not believe in leveraging up while everyone else was. Without leverage for debt, his company was relatively safe from the bubble.

  2. Reflective Learner: Ron is a constant learner who seems to reflect a lot.

    1. Ron spent two years on the road studying the deeper trends that could make his product successful. What he found was that there was a need for fast casual space for specialty bread. Panera does the job of filling that niche.

  3. Adaptive Opportunist: Ron is good at identifying opportunities and adapting constantly.

    1. In the early 1980s, Ron adapted his Cookie Jars business by adding in baked goods from Au Bon Pain when he realized no one was buying cookies before noon.

    2. In the 1990s, he adapted to create a fast causal concept with space, later known as Panera.

    3. In the early 2000s, he further adapted by selling off everything else to focus only on Panera, as he realized that Panera was the real winner out of all four of his sub-divisions.

PERIOD (25%)

The backdrop of the 1990s and 2000s provided the wave Ron was riding, as there was a vacuum between fast food and fine dining. This is now known as fast casual. Ron summarized the ‘90s perfectly with this quote:

You fast-forward 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 their noses when they went into fast food. They wanted more than a lot of food cheap.

PLACE (10%)

Ron initially built the concept of a Bakery Café in the urban setting for people with white collar jobs. For example, he built his first store in Copley Square in Boston, which I frequently visited when I worked at my first job after college. It was a great proof of concept, as he was validated with the long line of people on the first day of opening his store. Personally, I witnessed a similar scene when Boloco first opened in Copley Square in 2011.


Ron essentially built a fast casual bakery café as a platform for groups to meet. The food is between down and dirty fast food and fine dining. The space is similar to Starbucks in the sense that groups can come in and study or meet. In Ron’s words, he describes the product as follows:

it's the kind of place you really do want to sit and do an interview. It's a kind of place that - for a Bible study group or a team meeting. You can fit six, eight, 10 people at a time.

Panera Bread's 5Ps


In my opinion, Ron was the biggest asset of the business, hence I am contributing 30% of Panera’s success to him.

I don’t think he created the wave, but he was able to identify and ride the wave of fast casual.

Ron was also in a privileged position to have access to 75% of $100K from family inheritance in 1980. Without access to large amounts of capital, his Cookie Jars business may not have started.

Lastly, I think the product and the place both played a moderate to minor factor in the success of Panera, as the product is innovative, yet posed lower barriers to entry, and the market for white collar workers was vibrant and readily available.


This is my favorite quote from the episode. It compares finding opportunities to riding waves.

You know, you get out far enough away from shore. You start to watch the waves come in. And then you choose a wave, and you think that's going to be a powerful wave. And then you get on that wave, and you see where it takes you. And you start to navigate and negotiate your way to shore.

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