Imagine that instead of charging set prices, your local restaurant simply asked you to pay what you feel your meal is worth. How would that change your spending behavior? Are the meals you eat out worth what you pay for them? And how would your payment decision change if you knew that an overpayment would help those who are less fortunate?
That's the concept behind a not-for-profit store operated by Panera Bread Company in Clayton, Missouri (a suburb of St. Louis). The company's store, called "St. Louis Bread Company Cares" is operated on an honor system where you can pay as much or as little as you choose for your meal (Panera, which was started in St. Louis, is still known there under its original name, St. Louis Bread Company). It's an intriguing concept. The idea is that those who can afford to pay more will, so that those less fortunate are able to eat at a price within their means. After that, any net income from the store will be used to fund community programs.
Having read a great deal of press on the store, I was naturally curious to visit. I stopped by on a recent trip to my firm's home office in Clayton. It was executed well. Upon entering the restaurant, you are greeted by an employee who explains the system to you. The menu items are identical to those at other Panera Bread Company stores, but instead of prices, the menu boards list "suggested donations." You order your food, and then put your payment into a donation box like the ones you see at convenience stores. You are free to pay more or less than the suggested donation, no questions asked. Panera's former CEO, Ron Shaich, has called it "a hand up, not a handout."
According to a recent Time Magazine story about the store, the concept is working. People are paying an average of 90% of the retail price, with overall volume higher than comparable locations. Customers regularly pay more than the suggested donation to help others. Given the success of the store, the company is said to be planning additional locations. After being there, I can see why it's popular – you get a good meal that you can feel good about buying.
Could it be the start of a trend? Will other restaurants follow Panera's example? I guess that remains to be seen.
Forward Franchising 