1: Fledgling entrepreneur and future Panera Bread CEO Ron Shaich realized he had a problem: People don’t eat cookies for breakfast.
Ron was 26 and had just started the Cookie Jar in downtown Boston. The year was 1980.
“Every morning, I watched tens of thousands of potential customers pass me by without a glance,” he writes in his terrific book Know What Matters: Lessons from a Lifetime of Transformations.
“If I wanted some of them to come through my door,” he recalls, “I needed to sell them what they wanted to eat in the morning.”
Would French baked goods like croissants attract the morning crowd?
He decided to find out. “I found a small group of three French bakeries that had a great reputation for their baguettes and croissants,” Ron writes. “It was called Au Bon Pain, which means ‘place with the good bread.'”
Ron reached out to the company’s CEO, Louis Kane, and proposed his idea. Louis said yes, and the two men quickly hit it off.
“As an operator, you get to know your vendors quickly—and you know which are well-run businesses and which are not,” Ron remembers.
“As much as I liked Louis, Au Bon Pain was the most screwed-up business I ever dealt with. Sometimes deliveries showed up and sometimes they didn’t,” he writes.
“Sometimes I received a bill; other times I didn’t. In fact, I’ll bet I still owe those guys money for croissants they forgot to bill for.”
Au Bon Pain’s other challenge? It was leveraged with too much debt.
“Louis and his team had opened thirteen cafés across North America and quickly shut down ten of them,” Ron explains.
“Early in our relationship, I decided that despite the fact I was half his age and had limited business experience, I could fix Au Bon Pain.” he writes.
He made an offer to merge the two companies.
Louis was interested in the offer. His father, George Kane, not so much.
Ron’s dad was also suspect: “If it’s worth having, you’re not going to get any of it,” he pronounced. “And if you get any of it, it’s not worth having.”
The two sons and their fathers set up a meeting.
“Ron would be better off using his money to bet on craps in Vegas than doing this deal,” his father announced.
George Kane felt the same way.
“But in this case, the sons prevailed,” Ron writes, “and we struck a deal in which we merged my profitable cookie store with Louis’s three unprofitable French bakeries under the Au Bon Pain brand.
“I ended up with 60 percent of the new company, and Louis and his partners ended up with 40 percent. (Amazingly, this was the same corporate entity that I transformed multiple time, renamed Panera, and would end up selling for $7.5 billion in 2017.)”
2: What’s the key to a successful partnership?
Ron and Louis had complementary skillsets. “My weaknesses were his strengths; his weaknesses were my strengths,” Ron remembers. “Louis never saw a deal he didn’t like, and I never saw a deal I would do. He brought opportunities to the table, and I scrutinized them with a very skeptical eye.”
In all partnerships, there’s what Ron calls “an exchange of currencies. In me, Louis got a strategist and operator with the discipline and know-how to manage and grow the company.” Louis had other talents, including a large network of contacts.
He “might not have been great at running operations,” Ron observes, “but he had an unmatched ability to connect with people and snap up premier locations.
“Suave and movie-star handsome, Louis reminded me of Blake Carrington from the soap opera Dynasty,” he recalls. “One of the original alpha networkers, he was hardwired into the community. He knew everyone—from the mayor to the homeless guy protesting our café’s encroachment into the park in Harvard Square.
“It sometimes seemed that with just three calls, he could get to anyone in the world on the phone. When we were in Paris and needed reservations at an impossible-to-get-into restaurant, Louis just called up his old friend Julia Child, and she made it happen, He could—and would—do anything for his friends. People adored him.”
Ron believes that the best partnerships are formed between people who are opposites, who respect each other and allow the other person to focus on their strengths.
3: Ron was convinced he could make the two companies profitable.
“What was beckoning me was the chance to build the kind of food establishment that I wanted to visit as a customer and that I wanted to work in as an employee,” he writes. “And Louis Kane, to my eternal gratitude, gave me the space to do it—and in the process, to truly find myself.”
He spent the next two years paying off debt, hiring great people, shutting down an
unprofitable wholesale business, and solving a myriad of other problems.
“Within a couple of years, the company was above water again, but by no means out of danger,” Ron writes.
“The food business has a brutal mortality rate. Four out of five new concepts fail, and that wasn’t just a statistic to me—it was a truth I felt in the pit of my stomach every time I reviewed the P&Ls.”
More tomorrow!
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Reflection: Am I partnering with people who complement my strengths and weaknesses, and am I creating space for collaboration that lets everyone do what they do best?
Action: Identify one area where a partnership or team could benefit from more complementary skills—and reach out to collaborate or delegate for the best overall outcome.