4 ms·

Panera bread tries a "pay what you want" model

39 points by derwiki 15y ago

Vivtek 15y ago
I'd heard about this when they instituted it - great to see some statistics about its success!
mikeknoop 15y ago
Trivia for those who don't know, Panera was originally called "St. Louis Bread Company". I am curious, because the article is light on details, how the company defines "success". Presumably, the company is taking a 100% loss on everything sold with all donations being passed on. Is "success" defined as accumulating donations approximately equal to to the cost of running that location? With all the good will advertising on top?
- amock 15y ago
  The article says "Overall, the cafe performs at about 80% of retail and brings in revenue of about $100,000 a month. That's enough to generate $3,000 to $4,000 a month above costs, money being used for a job training program for at-risk youths." so it sounds like success includes being profitable. It doesn't seem like Panera is as quite as charitable as you thought.
  - jcampbell1 15y ago
    And, it doesn't sound like much of a success. If they just donated the profits from that store to charity, the charity would presumably receive $24k per month. That being said, it is nice to know that a little faith in humanity doesn't result in a disaster.
    - Natsu 15y ago
      > And, it doesn't sound like much of a success. If they just donated the profits from that store to charity, the charity would presumably receive $24k per month. That analysis appears to forget the charity given directly by the store to those people who weren't able to pay for all of their food, but were able to have birthday meals and whatnot they could not otherwise have afforded. I understand the thinking, but there's something to be said for not optimizing everything away.
edwardy20 15y ago
I wonder if homeless people take advantage of the cafe? What do they do about that?
- lionhearted 15y ago
  The first time I saw "pay what you want" at a cafe was in Salt Lake City, UT. It was right next to the Utah College of Massage Therapy in an upper-middle class neighborhood. I went in there a few times. Most people actually overpaid a little bit, throwing in like a $10 when they got a coffee, main course, and a snack (this was 10 years ago, would've cost maybe $7 to $8 at the time normally). Some people did take a meal and only put in $1 or whatever, but not too many and that's probably more than compensated by people who overpay a little. The key is probably where your location is.
  - juiceandjuice 15y ago
    Downtown, around 300 E and South Temple? That's not really upper middle class per se, it's really just mixed, but it can seem like that. I lived two blocks away in a one bedroom apartment which rented for $400/mo. On the flip side, I know the apartments across the street are one or two bedroom and rent for about $1000+/mo. Just saying, if it's where I think it is, that's a fairly mixed neighborhood, and about 3 more blocks to the north/northwest you start getting into Rose Park. It's kind of like calling the Mission in SF upper middle class... I mean it is, but it's not.
- erikpukinskis 15y ago
  It's partly an effort to feed the needy, so homeless people who eat there aren't taking advantage, they're helping fulfill the mission.
- briandon 15y ago
  I wondered about this too. It wouldn't take many bedraggled homeless people to drive out the paying-near-or-above-retail customers, so my guess is that there aren't very many homeless and/or extremely visibly poor people in Clayton (or at least the neighborhood where the Panera store in the article is located). WP says (in the demographics section of the article on Clayton, Mo) that Clayton "In the St. Louis region, Clayton is well known for housing a wealthy and educated young professional, often dual-income population" and "About 5.0% of families and 7.7% of the population were below the poverty line, including 9.5% of those under age 18 and 3.2% of those age 65 or over.": http://en.wikipedia.org/wiki/Clayton,_Missouri http://en.wikipedia.org/wiki/Clayton,_Missouri Also, I think that having a staff member positioned at the door explaining the payment procedure ("cheery employee Terri Barr greets everyone at the door and spells it out") and having employees watching you while you pay might deter long-term poor and homeless people from even stepping inside.
aneth 15y ago
> Generally, peer pressure prevents that sort of behavior, he said. "It's like parking in a handicapped spot," Shaich said. > "The lesson here is most people are fundamentally good," Shaich said. "People step up and they do the right thing." Interesting contradiction here. Is it peer pressure or fundamental goodness?
- sanswork 15y ago
  If people weren't fundamentally good would there be peer pressure to give more than you need to?
  - makmanalp 15y ago
    I'll play devil's advocate: Damn right they would. Your argument assumes that if they aren't good, they must be evil. This is plain wrong. Many people are neither, and just float in between. Society and peer pressure in general serve to drag people towards the more honest side of the spectrum. Arguably, it's the reason society exists at all. We gather together and make up some rules (that ostensibly make us give up some things) in order to make life and relations more predictable and tame. ---------- Slightly related tangent with devil's advocate level 2: In contrast, if people aren't fundamentally evil, why can't we do without society?
- Goladus 15y ago
  It's not really a contradiction if you think in terms of equilibrium and system dynamics rather than an over-simplified quote from USA Today.
zach 15y ago
Panera is run by the founder-in-effect of the Au Bon Pain chain well known to Cantabrigians. At one point he decided to leave behind Au Bon Pain and switch horses, kicking off Panera's nationwide expansion: http://www.businessweek.com/magazine/content/11_07/b4215092151745.htm http://www.businessweek.com/magazine/content/11_07/b42150921...
hncommenter13 15y ago
I grew up in Clayton, MO, and this is the former St. Louis Bread Co (now Panera) that I have been going to since the early 90s. I live in SF, but I go back there several times a year, and I have been to this store since it went to its current pay-what-you want model. A few observations: 1. As the article indicates, the system is really confusing. People who haven't been there before have no idea what's going on. They ring up the total amount as if you were purchasing the food normally, and then it's up to you what to do. If you decide to pay, they can make you change. For example (IIRC), your sandwich is $7.50, you put $10 into a little donation box, and they give you change of $2.50. The first few times I went I wasn't sure what to do. 2. It's in a fairly nice area of St. Louis (right across from the county courts+jail as well as several small high-rise office towers). There isn't a huge homeless problem like you would have in downtown SF, where it would effectively be a soup kitchen. 3. The neighboring businesses hated it--they viewed it as a big chain driving them out of business by undercutting prices on lunch. One business on the same block posted a big sign in its front window protesting the move. I don't know if any competitors have actually closed as a result, but they certainly didn't like the idea. 4. This location of BreadCo/Panera has always had low-price day-old bread and pastries available, iirc. They are now pay-what-you-want, which means mostly free. They keep bags of them by the door, and I have seen folks (most of whom look like they need it) take them. Having been there a few times and as a fan of STL Bread Co, it's hard for me to believe that this would work on a large scale.
- westicle 15y ago
  Observation 1 is disappointing. It seems like it should be the easiest thing in the world... pay what you feel. There is a chain of places that operate under the same model here in Melbourne, Australia but without any suggested prices or cashiers ringing up the "bill". I've been there a few times and it always seems straightforward - drop the cash in the box on your way out. (http://www.lentilasanything.com/index.html http://www.lentilasanything.com/index.html) I'm sure some patrons are financially struggling but I can never tell who they are. Many of the staff are newly arrived refugees and I imagine one of the goals of the chain is to provide meaningful work experience and social integration opportunities.
- briandon 15y ago

39 points by derwiki 15y ago

I'd heard about this when they instituted it - great to see some statistics about its success!

Trivia for those who don't know, Panera was originally called "St. Louis Bread Company". I am curious, because the article is light on details, how the company defines "success". Presumably, the company is taking a 100% loss on everything sold with all donations being passed on. Is "success" defined as accumulating donations approximately equal to to the cost of running that location? With all the good will advertising on top?

amock 15y ago
The article says "Overall, the cafe performs at about 80% of retail and brings in revenue of about $100,000 a month. That's enough to generate $3,000 to $4,000 a month above costs, money being used for a job training program for at-risk youths." so it sounds like success includes being profitable. It doesn't seem like Panera is as quite as charitable as you thought.
- jcampbell1 15y ago
  And, it doesn't sound like much of a success. If they just donated the profits from that store to charity, the charity would presumably receive $24k per month. That being said, it is nice to know that a little faith in humanity doesn't result in a disaster.
  - Natsu 15y ago
    > And, it doesn't sound like much of a success. If they just donated the profits from that store to charity, the charity would presumably receive $24k per month. That analysis appears to forget the charity given directly by the store to those people who weren't able to pay for all of their food, but were able to have birthday meals and whatnot they could not otherwise have afforded. I understand the thinking, but there's something to be said for not optimizing everything away.

edwardy20 15y ago

I wonder if homeless people take advantage of the cafe? What do they do about that?

lionhearted 15y ago
The first time I saw "pay what you want" at a cafe was in Salt Lake City, UT. It was right next to the Utah College of Massage Therapy in an upper-middle class neighborhood. I went in there a few times. Most people actually overpaid a little bit, throwing in like a $10 when they got a coffee, main course, and a snack (this was 10 years ago, would've cost maybe $7 to $8 at the time normally). Some people did take a meal and only put in $1 or whatever, but not too many and that's probably more than compensated by people who overpay a little. The key is probably where your location is.
- juiceandjuice 15y ago
  Downtown, around 300 E and South Temple? That's not really upper middle class per se, it's really just mixed, but it can seem like that. I lived two blocks away in a one bedroom apartment which rented for $400/mo. On the flip side, I know the apartments across the street are one or two bedroom and rent for about $1000+/mo. Just saying, if it's where I think it is, that's a fairly mixed neighborhood, and about 3 more blocks to the north/northwest you start getting into Rose Park. It's kind of like calling the Mission in SF upper middle class... I mean it is, but it's not.
erikpukinskis 15y ago
It's partly an effort to feed the needy, so homeless people who eat there aren't taking advantage, they're helping fulfill the mission.
briandon 15y ago
I wondered about this too. It wouldn't take many bedraggled homeless people to drive out the paying-near-or-above-retail customers, so my guess is that there aren't very many homeless and/or extremely visibly poor people in Clayton (or at least the neighborhood where the Panera store in the article is located). WP says (in the demographics section of the article on Clayton, Mo) that Clayton "In the St. Louis region, Clayton is well known for housing a wealthy and educated young professional, often dual-income population" and "About 5.0% of families and 7.7% of the population were below the poverty line, including 9.5% of those under age 18 and 3.2% of those age 65 or over.": http://en.wikipedia.org/wiki/Clayton,_Missouri http://en.wikipedia.org/wiki/Clayton,_Missouri Also, I think that having a staff member positioned at the door explaining the payment procedure ("cheery employee Terri Barr greets everyone at the door and spells it out") and having employees watching you while you pay might deter long-term poor and homeless people from even stepping inside.

aneth 15y ago

> Generally, peer pressure prevents that sort of behavior, he said. "It's like parking in a handicapped spot," Shaich said. > "The lesson here is most people are fundamentally good," Shaich said. "People step up and they do the right thing." Interesting contradiction here. Is it peer pressure or fundamental goodness?

sanswork 15y ago
If people weren't fundamentally good would there be peer pressure to give more than you need to?
- makmanalp 15y ago
  I'll play devil's advocate: Damn right they would. Your argument assumes that if they aren't good, they must be evil. This is plain wrong. Many people are neither, and just float in between. Society and peer pressure in general serve to drag people towards the more honest side of the spectrum. Arguably, it's the reason society exists at all. We gather together and make up some rules (that ostensibly make us give up some things) in order to make life and relations more predictable and tame. ---------- Slightly related tangent with devil's advocate level 2: In contrast, if people aren't fundamentally evil, why can't we do without society?
Goladus 15y ago
It's not really a contradiction if you think in terms of equilibrium and system dynamics rather than an over-simplified quote from USA Today.

zach 15y ago

Panera is run by the founder-in-effect of the Au Bon Pain chain well known to Cantabrigians. At one point he decided to leave behind Au Bon Pain and switch horses, kicking off Panera's nationwide expansion: http://www.businessweek.com/magazine/content/11_07/b4215092151745.htm http://www.businessweek.com/magazine/content/11_07/b42150921...

hncommenter13 15y ago

I grew up in Clayton, MO, and this is the former St. Louis Bread Co (now Panera) that I have been going to since the early 90s. I live in SF, but I go back there several times a year, and I have been to this store since it went to its current pay-what-you want model. A few observations: 1. As the article indicates, the system is really confusing. People who haven't been there before have no idea what's going on. They ring up the total amount as if you were purchasing the food normally, and then it's up to you what to do. If you decide to pay, they can make you change. For example (IIRC), your sandwich is $7.50, you put $10 into a little donation box, and they give you change of $2.50. The first few times I went I wasn't sure what to do. 2. It's in a fairly nice area of St. Louis (right across from the county courts+jail as well as several small high-rise office towers). There isn't a huge homeless problem like you would have in downtown SF, where it would effectively be a soup kitchen. 3. The neighboring businesses hated it--they viewed it as a big chain driving them out of business by undercutting prices on lunch. One business on the same block posted a big sign in its front window protesting the move. I don't know if any competitors have actually closed as a result, but they certainly didn't like the idea. 4. This location of BreadCo/Panera has always had low-price day-old bread and pastries available, iirc. They are now pay-what-you-want, which means mostly free. They keep bags of them by the door, and I have seen folks (most of whom look like they need it) take them. Having been there a few times and as a fan of STL Bread Co, it's hard for me to believe that this would work on a large scale.

westicle 15y ago
Observation 1 is disappointing. It seems like it should be the easiest thing in the world... pay what you feel. There is a chain of places that operate under the same model here in Melbourne, Australia but without any suggested prices or cashiers ringing up the "bill". I've been there a few times and it always seems straightforward - drop the cash in the box on your way out. (http://www.lentilasanything.com/index.html http://www.lentilasanything.com/index.html) I'm sure some patrons are financially struggling but I can never tell who they are. Many of the staff are newly arrived refugees and I imagine one of the goals of the chain is to provide meaningful work experience and social integration opportunities.
briandon 15y ago