Tuesday, May 18, 2010

Panera Bread Opens “Pay What You Want” Store

This should be an interesting study in human behavior. 

CLAYTON, Mo. (AP) — Panera Bread Co. is asking customers at a new restaurant to pay what they want.

The national bakery and restaurant chain launched a new nonprofit store here this week that has the same menu as its other 1,400 locations. But the prices are a little different — there aren’t any. Customers are told to donate what they want for a meal, whether it’s the full suggested price, a penny or $100.

The new store in the upscale St. Louis suburb of Clayton is the first of what will Panera hopes will be many around the country. Ronald Shaich, Panera’s CEO until last week, was on hand at the new bakery Monday to explain the system to customers.

The pilot restaurant is run by a nonprofit foundation. If it can sustain itself financially, Panera will expand the model around the country within months. It all depends on whether customers will abide by the motto that hangs above the deli counter: “Take what you need, leave your fair share.”

(13) Comments
Posted by Owen at 2143 hrs
Culture + Economy

  1. ...the upscale St. Louis suburb of Clayton….

    Yeah, try it on 12th & Walnut in Milwaukee and see what happens.

    As Mark Belling often says, “there is a lot of profit to be made running non-profits.”  Maybe Panera is examining that notion.  I’m leery.  And if it’s being “run by” a nonprofit, how much are they paying the employees?  I’ll believe what they say only if they publish the income statements, cash flows, and balance sheets from that individual store.

    Posted by .(JavaScript must be enabled to view this email address) on May 18, 2010 at 2206 hrs


  2. St. Louis has upscale suburbs???

    Posted by .(JavaScript must be enabled to view this email address) on May 18, 2010 at 2208 hrs


  3. Probably won’t work near UWM either.

    Posted by .(JavaScript must be enabled to view this email address) on May 18, 2010 at 2210 hrs


  4. David, TerryN-
    You think there’ll be a difference by geographic region in what people will be willing to pay? I’m not sure I follow. And why 12th & Walnut and/or “near UWM”?

    My guess is the thing will go bust. Just ask the band that released an album on a “pay what you want” basis a couple of years ago. They didn’t make much money, if memory serves.

    Posted by Mike on May 18, 2010 at 2244 hrs


  5. You think there’ll be a difference by geographic region in what people will be willing to pay? I’m not sure I follow. And why 12th & Walnut and/or “near UWM”?

    I was eluding to the discretionary buying power of the surrounding neighborhood.  But now that you ask, it made me think:  maybe they would do better in a 12 & Walnut kind of area.  Presumably there are no other Paneras there (or stores like Panera).  Would the surrounding neighborhood offer a greater sense of fairness in a pay-what-you-wish establishment than an upscale suburb?  Panera should try it in both locations (but secretly) to observe the differences.

    Posted by .(JavaScript must be enabled to view this email address) on May 18, 2010 at 2256 hrs


  6. As Mark Belling often says, “there is a lot of profit to be made running non-profits.”

    And as Mark Belling often does, he cherry-picks a couple of examples and makes a broad and grossly inaccurate generalization.

    The overwhelming majority of non-profits aren’t enormous, quasi-corporate operations like the United Way, for example.  Most operate on shoestring budgets with staff that are generally underpaid and generally okay with that because they believe in what they’re doing.  And of course, it makes as much sense as a non-profit to pay for quality leadership as it does a for-profit.  Non-profit doesn’t refer to the employees, after all - it refers to the company.

    Owen’s right, this is certainly a study in behavior, but it’s hardly a unique study.  Panera wouldn’t be doing this if it didn’t suspect the behavior was predictable based on its own analysis.

    As far as concerns about reporting requirements, David should remember that the government generally requires the same or more disclosure from non-profits than it does from publicly traded for-profits.

    Posted by Recess Supervisor on May 18, 2010 at 2256 hrs


  7. Panera is using its nonprofit foundation to support the restaurant and any future locations. The foundation will pay the new restaurant’s bills, including staff salaries, rent and food costs. At the end of each month, the foundation will tally donations to see if they cover food costs. The Panera parent company won’t bear losses if the experiment fails.

    So - donations just have to cover food costs?

    Posted by Randy on May 19, 2010 at 0012 hrs


  8. Wonder who the nonprofit is…?

    Posted by GAMazy on May 19, 2010 at 0043 hrs


  9. Here’s more info from the Panera site about Operation Dough-Nation:  http://www.panerabread.com/about/community/

    Posted by GAMazy on May 19, 2010 at 0050 hrs


  10. There was another restaurant which tried this model a few years ago and failed miserably (but a part of it too was the poor management and record keeping of the company).

    Posted by hsgbdmama on May 19, 2010 at 0640 hrs


  11. Mike, knowing many poor hungry college students I thought it would be a bad idea to offer pay what you want food near any campus.  Sorry you didn’t see the humor.

    I don’t believe there’s any comparison between pay what you want for music and pay what you want for food.

    Posted by .(JavaScript must be enabled to view this email address) on May 19, 2010 at 0852 hrs


  12. In a perfect world there would be nobody who takes advantage of this to practice gluttony for fifty cents.  But we live in a fallen world and I can see where this sort of idealism will fail under the realities of folks who are looking for a free meal.  A guy who I used to know would take advantage of this in a heartbeat—and he was a pastor.  Cheapest person that I’ve ever met.  I hve no doubt that he and his wife would be regular at a place like this even if it meant a 30 mile ride to the bad part of town.  They’d probably invite guests out to dinner there!  “Order anything you want!  It’s on us tonight!”

    Posted by .(JavaScript must be enabled to view this email address) on May 19, 2010 at 0935 hrs


  13. A marketing stunt, it grabs publicity and makes people aware of the new location.

    Posted by .(JavaScript must be enabled to view this email address) on May 19, 2010 at 1034 hrs


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