A heartfelt thank you

Team,

On January 1, 2018, I will step away from my position as CEO at Panera and serve solely as founder and Chairman of our company.

Transitioning out of the CEO role reminds me of when my son Michael was standing at the edge of a high diving board for the first time. Terrified, he stood there for several minutes, willing himself to leap, but afraid to spring forward. I finally yelled up at him, “Michael, just jump.”

 I’ve been thinking about Michael and his diving board a lot lately. For me, the act of stepping away from the CEO role is like standing at the edge of the high diving board – alternately exciting and disconcerting. Virtually all of my energy for nearly four decades has gone into building and running Panera. While I always knew that someday this leap would come and while I am confident that the journey I am undertaking will bring new avenues for my creativity and new ways to make a difference in the world, the reality is that, as I stand here at the edge of my metaphorical high diving board, I am feeling a range of very deep emotions.

I want to begin by sharing with you the pride and, indeed, awe I have been feeling as I contemplate what we have accomplished together. Helen Keller once said, “Alone we can do so little; together we can do so much.” Keller’s words speak to the essence of teamwork – the shared effort towards a common goal, the shared pain, the shared understanding and the shared joy when success is in sight. Indeed, the ultimate measure of a team is when it can exclaim, “We did it!” And the fact is … we did it. We have literally redefined the restaurant industry as we grew Panera. Our 36-year history is one of transformations and “smart, long-term bets.” Decades ago, we recognized the potential of a bakery-café, versus simply a bakery, and this led to the original development and growth of Au Bon Pain. We then conceived in Panera a new way to eat – based on real food, associates that cared and an environment that engaged people. Our approach came to be known as “fast casual” – now a $40 billion “segment” of the restaurant industry. When it became clear Panera had the potential to be a nationally dominant brand, we sold ABP and all our other businesses. By doing so, we were better able to focus our limited financial and human resources and insure Panera had the opportunity to fulfill its potential. During the booming dot.com years, we remained disciplined, and when the Great Recession hit, we held to our contrarian nature: We invested in the guest experience just as our competitors were ripping costs from their P&L. As a result, we drove strong comps throughout the recession and we simultaneously expanded our development and built some of the highest ROI cafes in our system.

And yet, I believe that over the past six years we have done our best work ever. We’ve again transformed Panera, ensuring it is a better competitive alternative with expanded runways for growth. And in doing so, we have – once again – transformed both our business and the industry. The themes we bet on – digital, clean, loyalty and omni-channel – are reshaping the restaurant landscape as others race to adopt them. And we are leading. Our technology team is one of the best in the industry. Digital sales are now 29% of sales, or $1.2 billion in annual sales. We were the first national restaurant company to commit to and achieve a 100% clean menu. Our MyPanera loyalty program is the largest in the industry with 28 million members, representing more than 50% of our transactions. Delivery is now available in 56% of our system. And catering sales are growing at a double-digit rate. As a result, we saw 6% company comps in 2017 and outperformed the industry by an impressive 720 basis points, when compared to the Black Box all-industry composite.

The  byproduct of all these “smart bets”  is that Panera has been the best-performing restaurant stock of the last 20 years, delivering a total shareholder return up 86-fold from July 18, 1997, to July 18, 2017, when Panera became a private company. Indeed, that equates to performance 40 times better than the S&P 500 during the same time period. What’s more, Panera’s stock generated annualized returns of 25% over the last two decades, besting even the performance of Warren Buffet’s Berkshire Hathaway. The reality is…we did it.

There is great satisfaction in looking back…and realizing how much we’ve accomplished together. But the richness of the memory comes in recalling THE WHOLE STORY – the lows as well as the highs. If we are willing to tell ourselves the truth, we also must realize that to have accomplished what we did, we had to weather real difficulties and indeed real pain. Moving Panera forward took a willingness to share in a dream. And it took countless hours of assessing, reassessing, iteration and tough decisions.  Along the way we sold divisions and bakery-cafes, cut G&A, and postponed initiatives to give ourselves air cover. As well, we endured the uncertainty of committing to long-term initiatives in a short-term world. We had to face down our own personal demons. And we did. Together, we persevered. Together, we proved the naysayers and critics wrong and overcame our own doubts.

In future years, I know I will reflect often on our time together at Panera. While some details of our business success may dim, what will last for the rest of my life is my memory of you. I have always been so moved by your capacity to care for each other. I will also never forget your willingness to entrust your careers and the financial future of your families in my hands as I attempted to lead this company into a future that was always uncertain. But more than anything else, I will forever appreciate your willingness to share your lives with me…to let me know your dreams and struggles as we worked side by side on our shared dream for Panera.

In recent weeks, many people have reached out to me with their best wishes and to thank me for all I have given them. However, know what I believe: You all have given me far more. You have deeply impacted my life and the lives of my wife Nancy and our children Michael and Emma. You have given me a home and a community that allowed me to be my authentic self. You have also given me the space to learn, iterate, grow and laugh. In addition, you gave me a launching pad to put my little dent in the world. Indeed, you gave me exactly what I most sought nearly 40 years ago when I founded my first cookie store – an opportunity to do work with meaning along with people that mean so much to me. And while it is impossible for me to thank each of you individually, I want you to know how profoundly grateful I am.

With JAB as our lead investors and Blaine at the helm of the best leadership team we have ever had, I am confident that our future will be as bright as our past. As chairman and one of Panera’s largest individual investors, I promise you that I will do whatever is requested by Blaine and the team in the future. Expect to see me out there helping JAB with strategic initiatives that will strengthen our business, while at the same time trying to use my credibility, voice and capital to battle the short-termism that is so pervasive in our public markets. And always know I will be cheering you on as you continue to make Panera an ever-better competitive alternative with long runways of growth – profoundly thankful for the dream we’ve brought to life and certain you will keep the promise of the future.

With that, I will thank you one last time for your confidence in me, perseverance in our mission and the contributions you have made to my life.

In closing, I send heartfelt wishes to you and your loved ones for a healthy, meaningful and prosperous 2018. I implore you to keep working on the dream… both your own dreams and our collective dream for the kind of company Panera has been and can continue to be.

Know that I believe in you.

All my best,

Ron