Interesting article about Panera founder: short-term profits vs. stability

[Gil Bang 26069]

https://www.newyorker.com/business/currency/the-founder-of-panera-bread-explains-the-economic-forces-that-led-to-trump?utm_source=twitter&utm_medium=social&utm_social-type=owned&mbid=social_twitter&utm_brand=tny

 

The North American sandwich chain Panera Bread began as a single cookie shop called the Cookie Jar, which opened in downtown Boston in 1981. The next year, the shop’s founder, Ron Shaich, merged the Cookie Jar with a struggling French bakery called Au Bon Pain. In 1985, the combined restaurants started selling homemade soups and sandwiches made with freshly baked baguettes. At the time, the weekday-lunch landscape was limited mainly to fast-food chains such as McDonald’s, and formal sit-down restaurants. Shaich’s elevated-sandwich concept fit right in the middle, serving office workers who were in a rush, but also increasingly health conscious. By the nineteen-nineties, the company had expanded to include four different divisions, including a new bakery-café franchise called Panera Bread. At the time, the food industry, which had previously been dominated by mass-market brands such as Coca-Cola, Budweiser, and Maxwell House, was being taken over by companies like Vitamin Water, Sam Adams, and Starbucks. Shaich believed that the burgeoning category of higher-end restaurant chains, which came to be known as fast casual, was about to explode. “When the world is changing, you need to transform,” Shaich, who is sixty-four and bright-eyed, told me recently, over coffee in Manhattan. “But transformation doesn’t occur in thirty minutes.”

The company went public in 1991 and continued expanding at a brisk pace. In 1999, Shaich decided to sell Au Bon Pain to focus on Panera, which he felt was best positioned to take advantage of the direction in which the industry was moving. His goal was to build a chain of restaurants that served food that customers could eat without guilt, in cozy cafés where they could hold meetings or Bible-study groups. “They wanted food that they felt good about, they wanted environments that engaged them, they wanted people that cared,” Shaich said. “Basically, they wanted to feel respected by their food. And what fast food had become was a commodity. It had become nutritional cocaine.” Shaich said that when he told people what he was trying to do, they were skeptical, “because whenever you’re going through transformation, nothing is proven until it’s done.”

By 2010, Panera was opening a new store approximately every three days, and had more than a billion dollars in annual sales. But the financial crisis had made consumers more cautious with their spending. To keep them coming, Shaich developed a system for digital ordering, a catering and delivery service, and a loyalty program. These programs required significant investment, but they paid off. By 2017, Panera had become one of the most successful restaurant chains in the United States, and much of the industry adopted its innovations. It now has more than two thousand locations, and more than a hundred thousand employees. It also has one of the industry’s best-performing stocks. “I made an awful lot of money, personally,” Shaich told me.

 

 

Ron Shaich believes that the fixation on short-term profits is jeopardizing the future of American business.

Photograph by Peter Foley / Bloomberg / Getty

Over the last few years, however, Shaich has come to believe that the current business environment is far less amenable to the process of building companies like his. Wall Street has embraced the idea that companies exist solely to serve the holders of their stock. Under this way of thinking, managers of companies should focus their actions on driving short-term value for their shareholders, and should pay far less (or no) regard to other constituents who may have a stake in the business, such as employees, customers, or members of the community. Shaich partly blames activist hedge funds, many of which buy shares in companies with the aim of pushing their management to make decisions that drive their stock prices up within a few months. According to Shaich, this makes it more difficult to invest in long-term projects, and create sustainable jobs.

Panera had its own encounters with activist investors. In 2007, the Shamrock Activist Value Fund bought a stake in the company, and, in 2015, Luxor Capital did the same thing. “I had activists twice—I almost lost this company,” Shaich told me. Panera was still in the midst of its transformation, and was spending a hundred and fifty million dollars to develop new technology for online and mobile ordering. The efforts hadn’t shown results yet, but the investors wanted him to outsource the project or shut it down. They also wanted him to step down as C.E.O. “When you have activists attacking you, the very things you’re sworn to protect—the vision, the organization, other shareholders—your ability to protect them, like your children, are at risk.” Almost all public companies now face similar pressure, though Shaich points out that the most successful new businesses, such as Facebook and Amazon, have stock structures that make it difficult for hedge-fund investors to buy shares and tell the managers what to do. In 2017, Shaich took Panera private to protect it from short-term pressures, and sold it to a European fund called JAB Holding Company, which also owns Pret A Manger, Krispy Kreme, and Keurig Dr Pepper. He believes that the fixation on short-term profits is jeopardizing the future of American business, and creating social instability that has contributed to our current state of political polarization.

In the summer of 2017, Lynn Paine and Joseph Bower, two Harvard Business School professors, published a piece in the Harvard Business Review arguing that the idea that profits are all that should matter to a company’s leadership is a relatively new one. They trace it to an essay by the free-market economist Milton Friedman, which ran in the Times Magazine in 1970. In the piece, Friedman outlined what he called the “Friedman business doctrine,” which holds that ideas of corporate social responsibility, which had become popular in the business world, were undermining the American way of life. “The businessmen believe that they are defending free enterprise when they declaim that business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscience’ and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers,” he wrote. Instead, he went on, “They are preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these last decades.” The article caused a sensation, and Friedman’s idea that managers of companies were nothing more than “agents” of shareholders was taken up by economists and business school professors, who helped build it into the dominant attitude in the United States and beyond. In their article, Paine and Bower argue that this theory is “rife with moral hazard.” Stock owners have no public accountability for what the company does, and no responsibility, as executives do, to place the company’s interests above their own. The costs of prioritizing shareholders’ interests are borne by the company, and by society as a whole, which is robbed of innovations, jobs, and tax revenue.

The tension between long-term and short-term economic interests has become a favorite topic in policy circles in recent years, but the election of Donald Trump, in 2016, brought the implications into clearer focus. Much of Trump’s base is made up of white, rural voters; many of them have seen jobs disappear from their communities, while wages have stagnated for those still working. In the midterm elections, Democrats won at least thirty-eight additional seats in the House of Representatives (as of Wednesday), gaining a majority, but Republicans performed better than many people expected; high-school-educated voters came out, once again, strongly in favor of the party of Trump. According to Shaich, the resentment that these voters feel is a direct result of the quick-profits-over-all ethos that dominates economic thinking. “When we live in a world where we view value creation as the end, and not as a by-product, which is what short-term thinking lends itself to, we end up doing great damage to every other constituency, and that’s what ultimately drives back to the kind of ‘let’s rip down the establishment’ nihilism that in my view is at the core of Trumpism,” he said. “Trump is, ‘Hey, this isn’t serving me. I’ve been sitting here in Michigan and Wisconsin and Ohio, I thought I’d have a middle-class life if I went to work, and my kids can’t pay their student debt. I lost my manufacturing job and I’m making twelve dollars an hour in a service job. And these guys are closing every plant and squeezing every nickel out of the thing, and Wall Street gets rich. And I’m still living a tough life.’ ” He added, “Trump is a human hand grenade to blow up a society that isn’t working for big swatches of America.”

Last year, when Shaich took Panera private, he also stepped down as the C.E.O. (he is still the chairman of the board), to focus on a pet cause: warning the world about the dangers of short-term thinking. He has been travelling the country, giving speeches and talking to business leaders and policymakers, about the urgent need to return to the tradition of investing for the future. Some people are starting to listen. Tech titans including Reid Hoffman and Marc Andreessen have financially backed the creation of a new investment framework called the Long-Term Stock Exchange, which would give shareholders greater influence over a company the longer they hold shares. “We all believe the system is bigger than us, and we can’t fix it,” Shaich said. “But, if we don’t take control of that system, it’s misserving us in powerful ways.” He also founded an investment fund called Act III Holdings, which offers capital, with fewer time constraints, to entrepreneurs in the restaurant industry. (The Mediterranean chain cava is one of his investments.) “We’ve ended up in a situation, to the detriment of all of us, where our public companies are not able to do the things we want in the economy,” he said. “We say we want G.D.P. growth, but G.D.P. doesn’t come simply from a sugar high of tax cuts. G.D.P. growth only comes from innovation and productivity increases. And innovation and productivity increases occur because people make commitments and they make transformative events.” He added, “This system doesn’t serve the American people. There is an opportunity to ask ourselves, is this what we want?”

 

 

[DanRydell 799]

It may not be technically inaccurate but that’s a really bizarre way to present the history/founding of Panera.

Panera was just a re-branding and expansion of St. Louis Bread Co., which already had 20 locations when it was acquired by Au Bon Pain.

[Guest]

so he got his...and now he's out...

 

telling the world he has regrats?

Edited November 24, 2018 by slorch

[Bevo 13608]

20 minutes ago, DanRydell said:

It may not be technically inaccurate but that’s a really bizarre way to present the history/founding of Panera.

Panera was just a re-branding and expansion of St. Louis Bread Co., which already had 20 locations when it was acquired by Au Bon Pain.

Plus there was plenty of competition. Atlanta Bread Company started in 1993. McAlister's was founded in 1989. Jason's Deli was founded in 1976. Plus, there have always been a whole host of mom and pop sandwich shops that are higher end such as Katz's. What I have found interesting about McAlister's is that I pay less there than Jimmy John's or Jersey Mike's or Schlotsky's. Intuitively, that business model doesn't make sense as they have much lower throughput than the fast food sandwich chains.

Edited November 24, 2018 by Bevo

[Errestaurants 2570]

thanks for the article. Panera came out of nowhere very fast and really changed the game for corner bakery, jason's and the like.  they really were the first to put substantial investment in technology. 

[kibbles 70]

Jason's deli is the best

[Neonmoon 38130]

Panera Bread sucks

[Clintonaldo 2577]

McCallister’s is the king of rice krispy treats. No more questions. 

[Neonmoon 38130]

Panera Bread is middle class food. Which is fine, but it’s not even good middle class food. It’s fast casual for secretaries. It’s dry bullshit 

[Nice Guy Eddie 13530]

Not sure why a company feels beholden to short term gains for the short term stockholder.    How long did Bezos refuse to care about the amazon profits and stock price.  Instead just pump revenue back into the company.   What ever happened to buy.com?

[Guest]

If a CEO conveys a 'vision' of significant stock price growth, most shareholders and employees alike are going to buy in, although the employees generally bear the brunt of the load with regard to productivity increases and 'waste reductions,' see also- fewer resources.

In the grand scheme of things, people want to win now.  Look at all of the coaching discussions going on right now in college sports.  Very few fanbases and administrations have the patience or resolve to make the long play, similar to your Bezos scenario.  Business is the same way, except often with significantly different equities being invested.

Edited November 25, 2018 by slorch

[bluto 4944]

14 hours ago, kibbles said:

Jason's deli is the best

It was but they started skimping on quality a few years back (buddy was corporate there). Used to eat it ~weekly for lunch now it's maybe quarterly. 

[WhatTheBuck 28822]

10 hours ago, Neonmoon said:

Panera Bread is middle class food. Which is fine, but it’s not even good middle class food. It’s fast casual for secretaries. It’s dry bullshit 

It's shit food masquerading as good food through price and packaging/marketing. It looks like a place that should have good food. Everything about the experience, including the price, suggests you're going to get a good meal. And then you sit down to eat it and it sucks and you realize you just paid way too much for shit food. 

[WhatTheBuck 28822]

31 minutes ago, bluto said:

It was but they started skimping on quality a few years back (buddy was corporate there). Used to eat it ~weekly for lunch now it's maybe quarterly. 

I've been to Jason's Deli once, about 5-6 years ago. I wasn't impressed. Their sub buns were unremarkable and the quality of the meats and other toppings was pretty mediocre. I never went back. I didn't know at the time that it was a national chain.

There's a DiBella's not far from me. I like their buns made fresh in the store. Their meats and toppings suck. It's no surprise they refuse to sell the buns by themselves because no one would have a reason to buy a sub otherwise. They'd be forced to turn into a bakery. I can get better meats, cheeses, lettuce, pickle, onion, etc. at the grocery store. I can't eat there but I'd buy their buns to make subs at home if I could. 

[kibbles 70]

1 hour ago, bluto said:

It was but they started skimping on quality a few years back (buddy was corporate there). Used to eat it ~weekly for lunch now it's maybe quarterly. 

It'll give me the runs 15% of the time.  Cleansing and delicious

[Underdog 28823]

37 minutes ago, WhatTheBuck said:

There's a DiBella's not far from me. I like their buns made fresh in the store. Their meats and toppings suck. It's no surprise they refuse to sell the buns by themselves because no one would have a reason to buy a sub otherwise. They'd be forced to turn into a bakery. I can get better meats, cheeses, lettuce, pickle, onion, etc. at the grocery store. I can't eat there but I'd buy their buns to make subs at home if I could. 

Everything you just typed is wrong and stupid*.  Take a time out.  

 

* Their sub buns are outstanding and it’s a shame they won’t sell them on their own. 

[WhatTheBuck 28822]

3 minutes ago, Underdog said:

Everything you just typed is wrong and stupid*.  Take a time out.  

 

* Their sub buns are outstanding and it’s a shame they won’t sell them on their own. 

I don't understand. Are you saying their sub buns are bad? And their deli meats are good? Because that's the opposite of what I said. So if everything I said was wrong then that must be what you're saying. 

I would buy their sub buns by themselves if I could and make my own subs at home. How is that wrong?

[Underdog 28823]

The asterisk was to indicate that everything was wrong with your post with the exception of your comment on their buns, no surprise if I did that wrong.  DiBella’s is the best sub chain in America. 

[Brisketexan 105478]

1) Panera is chick food.  It's okay, but nothing special.  That said, when I am traveling with female colleagues, and there is a Panera in the airport, or near our destination, we often end up in one.  I much prefer Jason's deli.

2) BUT, I think the thesis of the article is spot-on, and it addresses a much bigger problem we have -- the false dichotomy that is often boiled down to "that sucks, it's socialism, capitalism rules!"  Which, in its application, actually means "anything that doesn't favor immediate yield/profit should be disdained as anti-capitalism!"  As I've aged, and gotten a lot more real-world experience and perspective, I've become a lot more critical of Milton Friedman and what turned out to be simplistic views.

A business and its place in an economy is a complex system.  Reducing it to two simple measures - max money yield in minimum time - is not just simplistic, it's WRONG if your overall goal is actually a high-functioning economy.  In simple metaphor terms, the short-term approach demands that all businesses plant crops that can be harvested in 60-90 days, so there's the shortest interval of time before you realize profits.  That approach does not allow for anyone to plant trees, which will take 25 years to mature. 

That's folly, for several reasons (let's keep with the metaphor): on an annualized basis, the timber crop can yield profits greater than the short-term crops; the timber crop does far less damage to an important asset of any farm: the land; the long growth period of the timber crop allows the business to turn its attention to other things that may be profitable (leasing the land for hunting, maybe acquiring more land for different crops that can be grown on a shorter time-frame, thus diversifying the business, etc.).

There are dozens of things that a business or society does that seem to be shouted down with "socialism!" simply because they don't yield an immediate profit.  That leaves little room for long-term investment, which is necessary for a healthy, functioning economy.  I remember as a kid, reading the economic cautionary tales of the Soviet Union, where they could grow great potato crops, but they'd rot in the barns because the Soviets hadn't invested in the necessary infrastructure to get the crops from farms to cities/market.  Highways and bridges are a GREAT example of a long-term investment that costs money and doesn't yield direct profits.  Yet, they are the lubricant that helps the rest of the economy flow, and are a force multiplier.  Of course I haven't done the math, but it seems obvious that we end up with something that looks like "for every $1 spent on roads, $100 in commercial activity travels on that road over its lifetime."  Simple public health measures have a similar calculus -- $1 to vaccinate a kid yields $100 in productivity that we don't lose because a parent has to stay home with a sick kid.  Sure, it seems like a feel-good socialism thing to do, but it is actually a no-brainer economic move.

Wages are another "investment."  If you look at our "golden age" (around 1945 to 1975), you'll see steady wage growth.  That allowed an American consumer class to grow, with real purchasing power, which pumped those wages back into the economy, leading to unprecedented growth in the American consumer goods industry (cars, tvs, etc.).  An economy that invests in workers is an economy that creates consumers, which are the fuel for production.  It's a long-term, collective benefit. 

It's like maintenance on property, a real-world economic activity (and man, do we see short-term investors cut corners on that).  It costs money to do regular roof maintenance, but it keeps me from suffering interior structural rot.  It costs money to replace worn out plumbing, but it keeps me from suffering a devastating flood.  In the short term, by reducing the expense side of the ledger, I can show high profits from rental income.  But the value of my core asset will actually be depreciating -- but what do I care, I increased profts by 7% this quarter, I got my bonus, and I'll be gone when the music stops and someone is stuck with a broken-down property that's worth far less than it would have been had it been maintained (in fact, the long-term investment yield of a well-maintained property can exceed the short term profits on an annualized basis).  And we could  go on, and on, and on with different examples and thoughts.

Bottom line, we need to plant more trees.  We need to invest in the things that yield long-term benefits, and contribute to the economy across the board.  Will those things often make things better for people in general in the short term?  Sure.  But just because it's good for people doesn't mean it's socialism.  We need to realize that good things are also good for business, if you take the long-term view of things.  So, not socialism, but actually the opposite -- responsible and wise capitalism.  I'm interested in reading more about Shaich's movement.

Edited November 25, 2018 by Brisketexan

[NeverMarryAStripper 21996]

I actually read the above tl;dnr post and agree with it.

[ocugolf 1215]

I first read this thread title to say Pantera founder instead of Panera. I was really excited to see Phil Anselmo’s ideas about short term profits vs stability.

[Biff Tannen 45753]

Thanks to Brisket who appears to be one of maybe two people who responded on this thread that read the actual article.

The idea that every quarter must be profitable or your business is bullshit is, quite frankly, bullshit.  Bezos, Musk, etc are showing this and they are changing the world.  

[Errestaurants 2570]

Say what you want about Panera's food but Ron's strategy into tech, digital, delivery and branding were right on at the right time. At the same time Corner Bakery was really the only "national" player in corporate catering--early 2000's---lots of large regional players like Jason's, Cosi, Paradise, etc but for the most part it was fractured.  That business has been turned upside down with the influx of third party delivery sites like Uber Eats, Doordash, etc----Now everyone can "cater" and "deliver". Ultimately Ron's long term strategy worked because he had lots of short term wins--sales growth and stock price appreciation. 

[Kyle 207]

20 hours ago, Biff Tannen said:

Thanks to Brisket who appears to be one of maybe two people who responded on this thread that read the actual article.

The idea that every quarter must be profitable or your business is bullshit is, quite frankly, bullshit.  Bezos, Musk, etc are showing this and they are changing the world.  

Agreed. This is among those 100 ideas that I think almost everyone agrees with but for some reason no one can really implement. I guess because people. I think most realize this, but when we started tying executive compensation to stock price, things fell apart. That is one of those 100 ideas that sound really good in the classroom and makes sense theoretically, but no one ever thinks through the long-term consequences. Again, because people.

[Trey3216 15380]

On 11/25/2018 at 12:04 PM, Brisketexan said:

1) Panera is chick food.  It's okay, but nothing special.  That said, when I am traveling with female colleagues, and there is a Panera in the airport, or near our destination, we often end up in one.  I much prefer Jason's deli.

2) BUT, I think the thesis of the article is spot-on, and it addresses a much bigger problem we have -- the false dichotomy that is often boiled down to "that sucks, it's socialism, capitalism rules!"  Which, in its application, actually means "anything that doesn't favor immediate yield/profit should be disdained as anti-capitalism!"  As I've aged, and gotten a lot more real-world experience and perspective, I've become a lot more critical of Milton Friedman and what turned out to be simplistic views.

A business and its place in an economy is a complex system.  Reducing it to two simple measures - max money yield in minimum time - is not just simplistic, it's WRONG if your overall goal is actually a high-functioning economy.  In simple metaphor terms, the short-term approach demands that all businesses plant crops that can be harvested in 60-90 days, so there's the shortest interval of time before you realize profits.  That approach does not allow for anyone to plant trees, which will take 25 years to mature. 

That's folly, for several reasons (let's keep with the metaphor): on an annualized basis, the timber crop can yield profits greater than the short-term crops; the timber crop does far less damage to an important asset of any farm: the land; the long growth period of the timber crop allows the business to turn its attention to other things that may be profitable (leasing the land for hunting, maybe acquiring more land for different crops that can be grown on a shorter time-frame, thus diversifying the business, etc.).

There are dozens of things that a business or society does that seem to be shouted down with "socialism!" simply because they don't yield an immediate profit.  That leaves little room for long-term investment, which is necessary for a healthy, functioning economy.  I remember as a kid, reading the economic cautionary tales of the Soviet Union, where they could grow great potato crops, but they'd rot in the barns because the Soviets hadn't invested in the necessary infrastructure to get the crops from farms to cities/market.  Highways and bridges are a GREAT example of a long-term investment that costs money and doesn't yield direct profits.  Yet, they are the lubricant that helps the rest of the economy flow, and are a force multiplier.  Of course I haven't done the math, but it seems obvious that we end up with something that looks like "for every $1 spent on roads, $100 in commercial activity travels on that road over its lifetime."  Simple public health measures have a similar calculus -- $1 to vaccinate a kid yields $100 in productivity that we don't lose because a parent has to stay home with a sick kid.  Sure, it seems like a feel-good socialism thing to do, but it is actually a no-brainer economic move.

Wages are another "investment."  If you look at our "golden age" (around 1945 to 1975), you'll see steady wage growth.  That allowed an American consumer class to grow, with real purchasing power, which pumped those wages back into the economy, leading to unprecedented growth in the American consumer goods industry (cars, tvs, etc.).  An economy that invests in workers is an economy that creates consumers, which are the fuel for production.  It's a long-term, collective benefit. 

It's like maintenance on property, a real-world economic activity (and man, do we see short-term investors cut corners on that).  It costs money to do regular roof maintenance, but it keeps me from suffering interior structural rot.  It costs money to replace worn out plumbing, but it keeps me from suffering a devastating flood.  In the short term, by reducing the expense side of the ledger, I can show high profits from rental income.  But the value of my core asset will actually be depreciating -- but what do I care, I increased profts by 7% this quarter, I got my bonus, and I'll be gone when the music stops and someone is stuck with a broken-down property that's worth far less than it would have been had it been maintained (in fact, the long-term investment yield of a well-maintained property can exceed the short term profits on an annualized basis).  And we could  go on, and on, and on with different examples and thoughts.

Bottom line, we need to plant more trees.  We need to invest in the things that yield long-term benefits, and contribute to the economy across the board.  Will those things often make things better for people in general in the short term?  Sure.  But just because it's good for people doesn't mean it's socialism.  We need to realize that good things are also good for business, if you take the long-term view of things.  So, not socialism, but actually the opposite -- responsible and wise capitalism.  I'm interested in reading more about Shaich's movement.

The thing the paper in the article doesn't address about Friedman's opinion is the very basis of his opinion.  They claim that it opens corporations up to severe moral hazard, which if taken idly, it does.  But it isn't a static opinion.  Friedman's reasoning for glossing over the moral hazard of profit pursuit is the very reason why capitalism does work.  If you make mistakes of moral turpitude, if you give up on trying to improve, you will be punished the old fashioned way, by both the consumer and a competitor.  

Competition will overcome moral hazard in almost all permutations, unless it's in a functionally ambiguous space in the economy that has too many state actors invested.  Statism will always result in corporations being held up when they should be castrated and destroyed.  

[Trey3216 15380]

20 hours ago, Biff Tannen said:

Thanks to Brisket who appears to be one of maybe two people who responded on this thread that read the actual article.

The idea that every quarter must be profitable or your business is bullshit is, quite frankly, bullshit.  Bezos, Musk, etc are showing this and they are changing the world.  

This is also true.  Every quarter doesn't need to be profitable at maximum and growing rate.  But the pursuit of profits is not inherently evil.  The key lies in innovation and investment.  

[AUS-97HORN 11825]

my issue with Panera is their god-awful commercials.  

[Brisketexan 105478]

6 minutes ago, Trey3216 said:

If you make mistakes of moral turpitude, if you give up on trying to improve, you will be punished the old fashioned way, by both the consumer and a competitor.  

Competition will overcome moral hazard in almost all permutations, unless it's in a functionally ambiguous space in the economy that has too many state actors invested.  Statism will always result in corporations being held up when they should be castrated and destroyed.  

A very good point.  But I think it's important to understand that the heavy hand of the state can be used to push down either side of the scale.  Friedman had in mind the heavy hand pushing down on the "social justice" side of the scale - forcing green policies, etc. etc.  And that's a concern with some merit.  But likewise, when the heavy hand of the state has been co-opted by corporate interests to push down on the other side of the scale -- such as enacting legislation that shield corporations from the consequences of their bad actions (think tort reform and similar philosophies), that SOCIALIZES costs that should be borne by the single bad-actor business.  That jacks with the proper order both because society as a whole bears the costs that the single business should bear, and because that cost has now been removed as a powerful dis-incentive for bad behavior.

A balanced hand, allowing for the market and all mechanisms of the people to function healthily, is necessary.

5 minutes ago, Trey3216 said:

This is also true.  Every quarter doesn't need to be profitable at maximum and growing rate.  But the pursuit of profits is not inherently evil.  The key lies in innovation and investment.  

And this is both the good and simple truth.  It may simply come down to the quarterly measuring stick being craptacular and being ultimately harmful.  I know I'd sure hate to have my productivity measured in 15 minute intervals.  I'd have to answer to my shareholders for that 15 minute gap every morning where my productivity goes in, well, the crapper.  And my productivity is REALLY lousy from that 11:00 pm to 7:00 am timeframe.  Even though for my long-term performance, those downtime intervals are kinda important.

I don't know how you unring that bell, but that alone may go a long way.

[GringoSalado 1652]

 

53 minutes ago, Trey3216 said:

This is also true.  Every quarter doesn't need to be profitable at maximum and growing rate.  But the pursuit of profits is not inherently evil.  The key lies in innovation and investment.  

This is what gets me, stock price is discounted value of all expected future cash flows, so as soon as the market thinks your growth rate is zero, or will be, you take a big hit. But we have an unhealthy obsession w/ market cap growth; we seem to expect it to be infinite (which is impossible).

 

At some point your sandwich chain, or whatever, has reached its perfect size and you should just cash flow it. Nothing wrong with that.

[DaysOff 7988]

Panera Bread sucks

Their salads are ass and there isn't really any health food in the building.

Activists investors at public companies isn't anything new. Even airlines deal with it. Did this dude not see Wall Street?

[pearlandhorn 3275]

On 11/25/2018 at 7:25 AM, Nice Guy Eddie said:

Not sure why a company feels beholden to short term gains for the short term stockholders.

The industry I’m in (not food) is guilty of this. Analysts in my industry look at just a few numbers and matrices on a quarterly basis and then get dumbfounded at year end when they look at the companies as a whole and wonder “WTF happened!?!?”

[bernorange 8367]

Quote

According to Eater, after nine years of being in business, Panera Bread's socialist pay-what-you-want restaurant, Panera Cares, will officially be closing shop on February 15 due to the business model's unsustainability.

While Panera Cares billed itself as a "non-profit" restaurant designed to feed low-income people, the business model was anything but. Rather than create a charitable organization that distributes food to needy families or a discount outlet or even a $1 menu (like every other fast-food restaurant), Panera tried to create a socialist system in which meals were offered at a suggested donation price. That means some people would pay more while others would pay less based on what they felt like or could afford. By not simply offering food at a low price (hat-tip, Dollar Tree), Panera completely removed any incentive for patrons to meet even the lowest standards of consumer/retailer exchange. The result: some people paid their fair share while others enjoyed a "free lunch."
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Panera Cares went on to open five locations in cities like Dearborn, Portland, Chicago, Boston, and St. Louis. None of the restaurants were self-sustaining, with some locations reportedly being "mobbed" by students along with homeless people looking for a free meal.

"The Portland-based Panera Cares was reportedly only recouping between 60 and 70 percent of its total costs," reports Eater. "The losses were attributed to students who 'mobbed' the restaurant and ate without paying, as well as homeless patrons who visited the restaurant for every meal of the week. The location eventually limited the homeless to 'a few meals a week.'"
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https://www.dailywire.com/news/43105/paneras-socialist-pay-what-you-want-restaurant-paul-bois

Yeah, so that's not a bit from The Onion.  I had never heard of these Panera Cares restaurants. 

[Brisketexan 105478]

11 minutes ago, bernorange said:

https://www.dailywire.com/news/43105/paneras-socialist-pay-what-you-want-restaurant-paul-bois

Yeah, so that's not a bit from The Onion.  I had never heard of these Panera Cares restaurants. 

Counting entirely on the goodness of people -- either on the seller side or the consumer side -- is a recipe for disaster.  It's why businesses should charge a fair price for their services.  It's why consumers should have the ability to make businesses answer for wrongdoing if they rip the consumer off or injure him.  Those are basic guardrails.  Pure communism fails because it eliminates the incentive for the masses to produce.  Pure capitalism fails because it incentivizes the upper echelons with the capital to take advantage of everyone else.  Reasonable guardrails are the way to go.

And, back to the main thread topic, so is managing a business for the long-term as opposed to immediate results.

[DanRydell 799]

They shouldn't have put suggested donation prices on the menu. At that point it feels transactional for the customer. If I understand a restaurant is subsidizing free/discounted food for people who can't afford it, I may go in and toss $20 in the jar for a sandwich. But if I'm looking at a menu that says the sandwich is $6.95 and there's an asterisk or fine print saying it's a suggested donation, I'm gonna give you $6.95.

[bernorange 8367]

Without a set pricing, I'm trying to figure out how they policed skimming from the cashier ranks when people did pay (with cash). 

[ztejas 43605]

Panera serves shitty food but they make up for it by overpricing everything

[Brisketexan 105478]

23 minutes ago, ztejas said:

Panera serves shitty food but they make up for it by overpricing everything

Hell, it was just a few years ago that I realized there were Paneras that weren't inside of airports.

[clapclapclap 9000]

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"The Portland-based Panera Cares...The location eventually limited the homeless to 'a few meals a week.'"

Panera Occasionally-Cares

[Sbbruin 21904]

On 11/25/2018 at 3:27 PM, Biff Tannen said:

Thanks to Brisket who appears to be one of maybe two people who responded on this thread that read the actual article.

The idea that every quarter must be profitable or your business is bullshit is, quite frankly, bullshit.  Bezos, Musk, etc are showing this and they are changing the world.  

We made a fortune capitalizing on a major public company's desire to boost their stock price by selling us a big piece of land and leasing it back.  We got it near the bottom of the cycle and have renewed them at significantly higher rents.  They would have been much better off owning it themselves, but the boost in stock price from the one-time influx of capital drove their decision making.