A CEO on the Advantages of Running a Private Company

In the video below we hear from Fedele Bauccio, founder and CEO of Bon Appetit Management. His company has built its reputation on locally sourced, seasonal, healthy foods, and is actively involved in sustainability issues affecting every aspect of the food industry.

Bauccio explains that keeping Bon Appetit private and finding the right partner has allowed him to pursue the company's values and build sustainability without having to put the bottom line first at every turn.

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Audience Member: Could you talk a little bit more about the private versus public company discussion? You mentioned some great public companies that I think are exemplars; certainly Whole Foods (NASDAQ: WFM  ) has done some wonderful things for their employees.

As a public company, that's probably beneficial for other companies to see. Can you talk about why private? You mentioned to David [Gardner, Motley Fool co-founder], your thoughts on being private versus public, and what are the benefits of being private?

Fedele Bauccio: I know you guys are analysts and so forth, but it was really tough to try to explain, when I was with a public company, to an analyst, what this contract business was all about. The only thing that mattered was did you make your quarterly earnings.

I felt that, in order to create... I'm in a business that's hard to understand. Our margins are very, very thin. You need a lot of volume. We're not sexy like the restaurant. Chipotle's (NYSE: CMG  ) out there, and they're in the public's eye. I'm behind the scenes at a university like University of Pennsylvania.

People really don't know who Bon Appetit is, or I'm behind Google (NASDAQ: GOOGL  ) , if you will. It's Google's food service, but it's Bon Appetit doing it. We're not a retail company, in that sense. For me to get the analyst to understand that, and to understand how we work, was a whole different world for me.

I also felt strongly that if I was going to create change...

First of all, let me back up and tell you that I took money from [angel investors]. This was not venture capital money. My own money, and angels'. And I did feel I had a fiduciary responsibility to get them a return. The way I felt that I could maximize that return for them was not to go public.

I really felt that selling the company, or an exit strategy for me, was to find the right partner and the right company that would leave us alone, that I could tap into their resources when I needed to but to leave our brand -- because I wasn't ready to give the brand up -- leave our brand alone, and learn from our best practices for their own good.

I found that partner in Compass. They have been terrific. They've been the best partner in the world. It's because we march to our drummer and we pick and choose what we think is right, that they can give us.

We were able to maximize, in a strategic buy, maximize those returns for my investors, that I felt that I had a responsibility to. I wasn't sure I could do that in the public forum, or the public market, and I didn't want to have to fight going through making people understand what we stood for.

Becoming a sustainable company is not easy. You've got to really work at it, and it's a journey. It doesn't happen overnight. You've got to continue to keep fighting. To me, that's just as important as making money, if not more important, because I want that brand to be solid and strong.

If we do that, then the bottom line will follow. I don't want to have to worry about the bottom line first. I want to do this other thing first.

Audience Member: Any other questions? All right.

Isaac Pino: I think that wraps it up. I really appreciate you being here. Thanks for coming as well, but thanks a lot, Fedele, for joining us today.

Bauccio: It was great. Thank you very much.


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