Building an Empire: Panera Bread's Ken Rosenthal

An encounter with a sourdough loaf on the West Coast sparked the inspiration for what would become a publicly traded restaurant chain.
September 10, 2012

It was 1987 and 44-year-old Ken Rosenthal was feeling restless. A longtime entrepreneur and owner of two women’s apparel retail shops in his hometown of St. Louis, he was ready for a new challenge. 

While looking for fresh business ideas, his brother invited him to his home in San Francisco to see European-style bakeries that were all the rage out west. Rosenthal booked a ticket and spent a week with his brother, visiting multiple shops, all which sold hard-crusted sourdough bread, an unheard-of product back in the Midwest. 

“There was a time back in the 50s where there were more than 500 neighborhood bakeries in St. Louis, but one by one they closed as grocery stores got into the bakery business,” he says.

Rosenthal thought consumers in St. Louis would gobble up fresh, artisan-style bread, so with $150,000 of his own money and another $150,000 from an SBA loan, he rented out a 2,500-square foot space in the St. Louis suburb of Kirkwood, Mo., and opened the first St. Louis Bread Company.

The Early Days

The first few months were tough for Rosenthal and his family. While his wife took over the family’s two retail shops (and sold them soon after), Rosenthal worked 18-hour days. Fortunately, consumers flocked to the eatery, happy for a reincarnation of the bakeries of yesteryear.

There would still be kinks to be worked out, starting with the act of bread making. Prior to opening, Rosenthal spent weeks in California bakeries, learning the process by observation and trial and error. When it was time to make his own, though, he wasn’t exactly Julia Child.

“My wife would sometimes look at the bread and ask me, ‘Are you seriously going to sell that?’” he remembers. “There was a huge learning curve.”

Consumers were forgiving and St. Louis Bread Company continued to prosper. That is, until everything came to a halt a few months later.

A Christmas Nightmare

Thanksgiving arrived and Rosenthal received a bevy of pre-orders. He filled every one but then Christmas came with many, many more. 

Employees worked day and night leading up to the holiday, but as morning approached on Dec. 25, Rosenthal realized he didn’t have enough bread to fulfill pre-orders and walk-in customers.

“It got to the point where associates refused to go to the front of the store because they didn’t want to tell another customer that there wasn’t any more bread to buy,” he says.

Some customers expressed agitation, others understood Rosenthal’s mistake as a bump in starting a business. The next day, he instituted new processes and procedures, including an order-taking form system.

Skyrocketing Growth

St. Louis Bread Company took off. Over the next six years, Rosenthal and partners opened six additional locations. Au Bon Pain acquired the company in 1993 for $24 million and Rosenthal stayed on for two more years to help launch 32 additional locations, many outside Missouri.

In 1997, Au Bon Pain changed the company to Panera Bread, a made up name combining the Italian words pane (bread) and era (time)—time of bread. Au Bon Pain then took Panera public and brought Au Bon Pain under the Panera umbrella (there are still Au Bon Pain locations today).

Rosenthal left the company in the mid 90s to open a Panera franchisee business titled Breads of the World. He now lives in Denver and operates 61 Panera locations throughout Ohio and Colorado. He does not hold any stock in the parent company.

According to Rosenthal, there are more than 1,600 Panera Bread locations throughout the U.S. and Canada.

Leadership and Customer Service Lessons

Rosenthal says he’s learned several customer service and leadership lessons along the way. 

It is important to treat every patron as if the act of entering your store is the most important thing happening that day, he notes.

“Well, really, it is the most important thing,” he says. “Once customers stop coming in, everyone loses.”

As for leadership:

“I really don’t have a philosophy beyond treating people well and not taking advantage of them,” he says. “It also helps to find people that are of the same mind and work ethic and appreciate the culture you are creating.”

Photo courtesy of Breads of the World