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An interview with Panera's Ron Shaich

Health care reform may be costly for the restaurant industry to implement, but it’s the right thing to do, said Ron Shaich, chief executive and chairman of Panera Bread Co.

In an interview Friday with Nation’s Restaurant News, Shaich touched on health care legislation, menu labeling and how Panera has thrived during the economic downturn while other restaurant companies suffered.

Shaich, who has been with the Richmond Heights, Mo.-based company for nearly three decades, is stepping down this month as chief executive, though he will remain executive chairman.

Shaich stressed that health care reform is important to do now and for the future. Though he agreed it would be costly, he said business operators would be able to “take the costs and add them on."

"This is the right thing as a country for us to do," he said. "It does have huge issues -- cost containment needs to be addressed. We can’t have the most expensive health care [system] and be [ranked medically] 33rd in the world. That has got to be confronted within the next three years as this begins to play out.”

As for how health care reform will affect his own business, Shaich said Panera has offered health benefits to employees for years. In addition, the chain began voluntarily disclosing calorie counts on menus at company stores last month.

"I think our industry is silly [in having resisted menu labeling]," he said. “The most fundamental thing we have with our customers is trust and we want to do everything we can to build that trust.

"We looked at [menu labeling] five years ago, saying if there’s something we’re embarrassed about, let’s fix it,” he added.

Panera, which operates or franchises 1,380 bakery-cafes, was able to build sales and expand during the recession, a time when many other chains were struggling with falling traffic and shuttering underperforming units. In its most recent fourth quarter, Panera reported a 7.4-increase in same-store sales at company units and projected comps to grow between 8 percent and 9 percent in the first quarter.

Shaich said a decision to remain true to the brand and not cut corners or offer deep discounts helped the chain stay strong during a difficult period.

“Even though this was the so-called great recession, we didn’t respond to it,” he said. “When everyone zagged, we zigged. We invested more in the customer experience. There were no value menus, no drops in prices. Our thinking was that 90 percent of people were still employed and we wanted to be a better alternative for them."

In 2009, Shaich said, average weekly sales at new cafes were at their highest levels in six years and that the company hired 20,000 people.

“It has been the best time to develop, and we’re hiring," he said. "We saw team member engagement go up; we saw our people were very appreciative of what we were doing.”

Contact Elissa Elan at [email protected].

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