How Panera Bread Navigated Covid, the Labor Market, Inflation and More for Over a Decade
In early 2000, when Panera Bread was about to embark on a massive expansion, its CEO, Keith Murphy, and his staff were on an investor call. To his right was a reporter from Fortune magazine, and he wanted to know more about Panera’s business. Murphy was happy to provide the details without revealing his company’s new strategy. But when the reporter asked for a few days’ time to speak with the CEO, Murphy realized that if he told the reporter the company’s plans, he’d lose his job.
Murphy told his team he’d be unable to meet them. At the same time, Murphy went back to the investor call, and said that with the help of another executive, he was able to work out the details of the company’s new strategy. Murphy was the only member of the team who knew about the other executive, and he’d never heard of the executive. Still, he agreed to talk with the reporter, albeit on the condition that he not use the other executive’s name. They met up, and Panera was forced to reveal that his new business model involved paying high wages and firing many employees, then working until it lost money.
The CEO’s team did not know about the CEO’s new strategy, and they believed the new strategy was essential for a successful expansion. In retrospect, the story is hard to believe. In today’s fast-moving economy, if you’re going to change your business model, it’s probably a good idea to get a new CEO.
Over the years, Murphy continued to learn about the ways to optimize profits, and by 2010, the company was in a better place. In 2009, Panera’s revenue grew over 4,800 percent over the previous year, with the best growth coming from the company’s cafes, a segment Murphy and his team had targeted with great success for years. Today, the company operates over 650 retail locations—including Panera Bread, Fresh Market, Whole Foods, and Trader Joe’s—and employs more than 30,000 people.
Panera’s expansion was largely enabled by the company’s continued effort to increase profits. In 2000, Panera had sales of $6.2 billion;