Four Leaders You Need To Know

Staying Flexible

Ron Shaich

Panera Bread
Richmond Heights, Missouri

Ron Shaich can't resist the opportunity for some guerrilla market research.

It's 9:30 in the morning, and the chief executive and chairman of Panera Bread is having coffee in one of his company's bakery-cafes in suburban Boston. At the cash register, a silver-haired retiree is buying a copy of The Panera Bread Cookbook, just released. Shaich, who introduces himself to the customer as someone who "works for Panera Bread," wants to know why.

"We love Panera," the woman tells him. "We come here every day, and I thought I'd get this as a gift for my daughter." Shaich chats with her a bit, and then insists on whipping out his American Express card and paying for the cookbook.

One reason Shaich spends so much time in the company's 701 stores -- about a third company-owned, the rest franchised -- is to find out what's on the minds of his customers. Panera is one of the country's hottest "quick service" food concepts. Before Panera, Shaich had been a founder of the Au Bon Pain chain of bakeries, a concept that works best in major urban areas. With Panera, he felt he was onto something much bigger, a Starbucks-style "third place" for people to gather, sip coffee, eat sandwiches made on bread baked fresh in the store, and log on to the free Wi-Fi network with their laptops.

But two years ago, when Shaich started hearing customers talking about the Atkins diet, he realized Panera would have to expand its menu offerings -- fast. In an industry known for formulas and rigid rules, maintaining flexibility is paramount to Shaich.

In 2003, customers in focus groups told him they were in fact paying more attention to the carbohydrate, sugar, and fat content of foods than they had in the past. Panera's master bakers developed low-carb breads, bagels, and a breadstick at the company's test kitchens in St. Louis, and rolled out the new products last May. "We were wary of rushing it," Shaich says, "because we wanted to get not just the recipe right, but the supply chain too."(Panera delivers freshly made dough from its own plants to its stores.)

After slowing, Panera's same-store sales growth took off again in the second half of last year. But Shaich believes that the Atkins craze -- which has since faded a bit -- is just a piece of a larger puzzle.

"We see it as part of a deeper trend," he says. "People want food they can trust, not food that's heavily processed."

So Shaich has continued to explore ways to improve the menu. Last fall, Panera started serving hormone-free, humanely raised chicken in its salads and sandwiches, and this year will begin offering breads made with 100% whole grain.

Shaich says that many restaurant chains fall into the trap of believing they've perfected a formula, and then let it calcify. (What does he think of the Krispy Kreme shop across the street? No comment -- at least that we can repeat here.) Shaich says that Panera has nailed only 80% of its concept; there's more work to be done. But Panera's reaction to the Atkins disruption is typical of his approach to running a company. "As a CEO, you try to bring reality into the business from outside," he says. "You try to figure out what's noise, and what's a deep trend, and prepare the company for that."

Bringing It Home

Elisabeth Robert

The Vermont Teddy Bear Co.
Shelburne, Vermont

The sales managers at ABC Television are always a bit surprised to find themselves negotiating for advertising spots with Elisabeth Robert. "They're used to dealing with some media buyer from an ad agency," says Robert, the chief executive of the Vermont Teddy Bear Co. But Robert herself takes part in haggling for ad time on The View -- and as a result, her team gets better rates and better ad placement.

While many CEOs are exploring every way they can outsource work to networks of inexpensive suppliers around the world, Robert (her last name is pronounced "ro-bear") is taking the opposite tack. "We're the quintessential in-sourcer," she says. She's hunting for processes the company can bring in-house to exert more control over quality and, in some cases, even improve margins.

When Robert became chief executive of the company in 1997, she shifted its focus from simply making and selling teddy bears to "BearGrams" -- stuffed bears dressed in costumes as gifts for special occasions. Now the company also offers PajamaGrams (elaborate packaged PJs for women) and TastyGrams (fine foods from cheesecake to Maine lobster). Revenues in fiscal year 2004 were $55 million, up 39% after Vermont Teddy Bear acquired Calyx & Corolla, a catalog retailer of high-end flowers and plants.