(Bloomberg) -- Ron Shaich created Panera in the 1990s. He co-founded the No Labels political movement in 2010. But it’s his investment firm, appropriately named Act 3, that’s made him a billionaire.

Shaich’s stake in Cava Group Inc., a Mediterranean fast-casual chain whose shares have skyrocketed 330% since its initial public offering in June 2023, is worth $970 million, giving him a total fortune of about $1.6 billion, according to the Bloomberg Billionaires Index, which is calculating his net worth for the first time.

He’s the biggest non-institutional shareholder in the company, whose market capitalization implies a valuation of about $31 million per location — a staggering figure that’s stirred angst among some Cava bulls.

“I’m not here to tell you what the value of the company should or shouldn’t be,” Shaich said, speaking from his Miami home office in front of a shelf lined with copies of his book, Know What Matters. Large investors are “saying that this has potential.”

He will, however, tell you his views on the upcoming US election, which No Labels sought to disrupt before failing to field a candidate. 

His focus on the far-off future dictates his investing, the way he eats, how he runs his businesses and an intense dislike of activist investors. It also sparked the 70-year-old former Democratic Party stalwart’s disillusionment with US politics, a view that only deepened as he watched Thursday night’s presidential debate. 

“There is no question that Joe Biden’s patriotic duty is to step down,” Shaich said in an interview the day after Biden’s tepid debate performance. “If our choices are Joe Biden and Donald Trump, it’s a sad statement for this country and it’s an injustice to the American electorate.”

Shaich, who once served as treasurer of Massachusetts’ Democratic Party, has donated to Biden in the past and said he’ll support him over Trump if the incumbent doesn’t bow out. 

Short-Termism

The concerns laid bare by Biden’s debate performance are symptomatic of the short-termism that’s plaguing American politics and strengthening the “oligopoly” that controls it, Shaich said. He sees its taint in capital markets too. At Panera, the sandwich and bakery restaurant he built into the country’s dominant fast-casual chain, he fought activist campaigns on two occasions. He sold the company to JAB Holding Co. in 2017 for $7.2 billion.

He funneled a chunk of the proceeds into Act 3 Holdings, his personal investment vehicle and advisory firm that is focused on hospitality and entertainment. Its bets include Tatte Bakery & Café, an upscale chain with a Mediterranean-inflected menu and Parisian ambiance, Cava and a social-gaming playground called Level99. 

In picking investments, Shaich again extols the virtue of long-term thinking. He chooses categories with sustained growth prospects and helps build the dominant brand in that niche. In the case of Cava, that’s Mediterranean cuisine: boldly flavored but not intimidating, lots of variety and healthful without being spartan. In the restaurant industry – unlike, presumably, politics —  domination is key. Think McDonald’s perennial edge over Burger King. 

Shaich is normally a skeptic of IPOs, saying in his book that letting Wall Street in deprives founders of the ability to control the vision for their business. His unease doesn’t extend to Cava, however, which he argues was ready for its market debut thanks in part to cornerstone investors such as T. Rowe Price. Brett Schulman, the chain’s chief executive officer, rehearsed quarterly earnings calls for a year and half before Cava went public, Shaich said.

In the years before the IPO, Shaich encouraged Cava to prove it resonated in the suburbs. He also pushed it to grow by proposing Cava acquire Zoës Kitchen in 2018, which meant Schulman went from overseeing 50 stores to 300 overnight.

Competitive Industry

A notoriously competitive and low-margin industry, dining hasn’t minted many billionaires. There’s the Subway founders, the Cathy family of Chick-fil-A, the Ilitches of Little Caesars, Lynsi Snyder of In-N-Out Burger and the guy Shaich refers to as “Howard” (as in Schultz of Starbucks). 

Those that reach the upper echelons tend to be founders, which he again chalks up to their long-term perspective. “Do I like value creation? Sure,” he said. “Is it what I’m really all about? No. It’s a byproduct of what I really love, which is creating a better alternative.” 

Shareholders haven’t always been supportive. Some Panera investors sued the company’s directors following its sale to JAB claiming that Shaich rushed the deal for his own financial benefit. A judge ruled in Shaich and the other directors’ favor. 

Panera was delisted after the sale. Since then, the once largest fast-casual chain in the US by sales has been overtaken by Chipotle Mexican Grill Inc. 

Panera backed off an attempt at going public again in 2022 due to “unfavorable capital market conditions.” It has taken steps to prepare for another try, including laying off 17% of its employees and moving to using frozen bread, which Shaich wrote in his book he’d never do.

A spokesperson for Panera declined to comment.

Shaich’s ardor for his brands is evident. A couple of days earlier, a guest approached to tell him about their mother, who had dementia, he said. All she wanted every day for the past three years was a Jerusalem bagel from Tatte.

“When we touch a chord, it’s beautiful,” he said. “To me, this is the closest I come to live performance art.”

--With assistance from Jef Feeley and Steve Stroth.

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