Greetings from Panera’s Free Community Café
posted by Miriam Cherry
Thanks to everyone here at Concurring Opinions for hosting me as a guest blogger this October. I’m writing this blog post on my laptop at the Café, here in downtown Clayton, Missouri, a suburb of St. Louis. You may have heard about the rather unusual business model of this Café; it runs on a type of “honor system” where it is left up to the customer to decide what to pay (the menu lists suggested amounts). You decide, however, how much to put into the donation box or tell the cashier how much to put on your credit card.
I paid the (suggested) amount for my lunch, and everything was exactly the same as it would at any other Panera chain, so in my mind, it’s an identical experience. But what are other customers doing? According to a recent story in the St. Louis Post Dispatch, 65% of customers leave the retail price, 10 to 15 percent leave more, and the remaining 10 to 20% leave less. The same story reports that the store is breaking even, with the company’s hope that start making a modest amount of money soon.
According to another news story, some people love the café, leaving a little extra to bring themselves “good karma,” and there are needy people who have made this a regular stop, bringing in money when they can afford it or volunteering an hour or two to help out at the café. But others are skeptical. Some don’t want to put in more money than the suggested amount because there is no means testing and it’s unclear where the money is going. The proprietor of a local (cheap) diner is complaining that with the charitable mission of the restaurant, it’s cutting into her segment of the market. Some people have expressed puzzlement that the café would be located in a well-off business district, instead of a place where there might be more need for free food.
My guess is that in order to sustain itself, the Café needs to replicate the experience at other Paneras as closely as possible; it doesn’t want to change the “feel” of the restaurant. As former CEO Ron Shaich said, “it’s a fascinating psychological question . . . There’s no pressure on anyone to leave anything. But if no one left anything, we wouldn’t be open long.” I guess the question is whether they need to make a profit in order to stay open – as a new friend commented to me the other day, the café is generating a lot of goodwill for Panera.
I’m curious to see how the business model fares and I’ll definitely return to the café. I’ve had many thoughts about corporate social responsibility (CSR) in business recently, due to a paper I’ve been working on, and you’ll see several other posts from me on this theme.
October 16, 2010 at 6:58 pm
Posted in: Corporate Law, Psychology and Behavior
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Responses (2)
Ken Rhodes - October 17, 2010 at 5:06 am
Marginal Revolution is a blog by economists Tyler Cowen and Alex Tabarrok. A few months ago Tyler Cowen posted his interview with Salon.com in which he discussed this same topic. The interview was interesting and informative, and the extensive comments were also interesting and insightful. Here is a link to that post:
http://www.marginalrevolution.com/marginalrevolution/2010/06/interview-with-tyler-cowen-payasyouwant-restaurants.html
Mriam Cherry - October 17, 2010 at 6:39 pm
Thanks for your comment, Ken, with the additional link with interesting comments! The restaurant opened some months ago, but I thought I was being original having actually visited it (oh well). It’s difficult not to be “pre-empted” in the blogosphere… Cheers, Miriam
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