Panera founder cites short-termism in sale to JAB Holding
Ron Shaikh sold Panera to JAB Holding to escape public market pressures that hinder long-term investment. He previously drove the company’s growth by focusing exclusively on the Panera brand and expanding during the Great Recession.
Ron Shaikh, founder of Panera, sold the company to German private equity firm JAB Holding, making it a private company again. Shaikh stated the decision was driven by the need to make long-term transformative bets, which he argued were impossible under the pressure of public markets. He noted that while he held 17% of the stock and had credibility to resist short-termism, his departure would leave the company vulnerable to market pressures that favor cost-cutting over long-term value creation. Shaikh, who is 64, stepped down as CEO toward the end of 2017 and is currently chairman of Cava.
Shaikh’s leadership was defined by a contrarian approach to capital allocation. In 1999, he proposed selling three of Au Bon Pain’s four divisions to fund Panera’s growth, a move that faced significant board resistance. Panera had been acquired in 1993 as the St. Louis Bread Company for $23 million. During the Great Recession, while competitors cut costs, Panera expanded aggressively, opening a new store every three to five days as real estate and construction costs dropped by 20%. This strategy helped the stock rise from approximately $3.50 to $315 per share before the sale. An investor who put $7,000 into Panera stock in 1999 would have over half a million dollars by 2017.