• This is a partial transcript from Your World with Neil Cavuto, November 14, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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    NEIL CAVUTO, HOST: Making Dough! Panera Bread. It watched its profits rise 73 percent in the latest quarter, earning 17 cents a share.  That's a penny better than what Wall Street was expecting. Sales shooting up 41 percent. Now if you got into this one a year ago in this lousy market, you'd be up 43 percent.

    What's the company's secret ingredient to success? Let's find out from the man cooking up these profits, Ron Shaich, he is the CEO of Panera Bread.

    Ron, good to have you back.

    RON SHAICH, PANERA BREAD CEO (PNRA): Good to see you, Neil.

    CAVUTO: What's the deal with you guys? McDonald's and Burger King, they've kvetching and saying, life is miserable, we can't get enough of these things out. And you are making money hand over fist. What are you doing?

    SHAICH: Well, I think it really goes right back to the bread. People want real food. They want it served by real people in an environment that engages them. And it's our bread that roots our ability to do that. I mean, this real bread, done in an authentic way, and, following traditions of bakers that have done this for hundreds of years, on stone deck ovens.  It's really that simple, Neil.

    CAVUTO: You know what's interesting, Ron? I guess it's like a cult.  I mean, when I used go in Starbucks in its early days, it was like a cult following with that and you could see how it would grow and grow and grow, your place kind of like a cult deal here. I know the bread is terrific, and it's hot and warm and all that other stuff. But they keep coming back. You don't do a lot of fancy things there, no offense to you. It's just the bread. I mean, you haven't branched out into a lot of other things. Ever tempted to do that?

    SHAICH: No, I don't think so. You know, Neil, I just came back from touring through the southeast, Winston-Salem, Raleigh-Durham, Tampa, Orlando, and I was just struck by everywhere I went the way people reacted to Panera Bread. They love it. And all I would say to you is go in, eat it, try it, you will know the difference.

    CAVUTO: People say, open up, more sandwiches, the kind of specialty items that you can go way beyond just that, you have not been intrigued to do that, when a lot of people say you could fatten your profits a little more. Why not?

    SHAICH: Well, we have grown the earnings that are compounded at annual growth rate of 78 percent over the last four years. We have a system today that is three quarters of a billion dollars that will be a billion dollars in 2003. And yet we are only in 60 percent of states in this country. We have modest market penetration in a number of states. We are only 439 bakery cafes and the analysts say it could be 1500 or more. I think we've got a ton of opportunity ahead of us. I think that by staying consistent with what we are doing, not following every fad by doing what we do, with commitment and passion, the consumer seems to react and we are going to continue to do that.

    CAVUTO: What's the deal with the people who shop or go to your stores, they are all thin? Normally, you're plowing down this much bread you would think you are going to be big. But, what is the deal there?

    SHAICH: We are attracting all kinds of folks. The truth of the matter is that there is way too much fast food in this country, way too much supply, people want something more special, they want something that feels right to them. And across the country, fat and thin, old and young, they all understand what's real. And they seem to move in that direction.

    CAVUTO: One of the things that you have avoided, Ron, at least at this point, is kind of the price wars that some of the fast food guys are getting into, the one dollar sandwiches at McDonald's, and the value meals at some of these others, from Burger King, and Wendy's and Taco Bell. You haven't gone that route, so people are gladly, I guess, paying this premium, I guess, the average person spends, $6 to $8 in visit to you guys, versus a third to half that at a Burger King. Can you keep doing that?

    SHAICH: You know, it's actually interesting. The average fast food establishment is north of $4, we are at $6.10, and casual dining at just slightly over $10.

    CAVUTO: So you are right in between.

    SHAICH: Right. And the truth of the matter is, is that if I don't want it, if it isn't worth going out of my way for, whatever you sell it to me for it is not worth having. If it is something I crave, if it is food I really want, I'm going to find that I'm going to go out of they way. And if it is 50 cents, a dollar more, I'm going to pay for it. It's really not all that complicated. It is about the food. It's about the bread. It's about the people that work there. And it's about environments people want to sit in.

    CAVUTO: But it is a cult, Ron, you have to admit, it's become a cult.

    SHAICH: Well, we are excited to hear you refer to it as such.

    CAVUTO: Ron Shaich, thank you very much, good seeing you again, Panera Bread CEO.

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