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Buy a Meal at Panera, Pay What You Want

This article was written by in Economics, Featured. 5 comments.


In the movie Clerks, the convenience store cashier, Dante, occasionally takes a break from manning the counter. Rather than ensuring every customer paid for his or her items, he leaves a sign: “Please leave money on the counter. Take change when applicable. Be honest.” Dante believes customers assume they are being watched and will leave the correct amount.

While this scenario is just a movie, the upper-scale fast food chain Panera is experimenting with a similar approach. The company may not have been inspired by Clerks; more likely, they are taking a page from museums or parks where admission may be free but the facilities list a suggested donation. At one location in Missouri, Panera is taking the “non-profit” approach. The idea is customers pay what they can for a meal, based on the suggested price. In theory, rich people pay more and poor people pay less — or nothing at all.

According to the restaurant, 60% to 70% of customers pay the suggested price, 15% pay more, and 15% pay less or take their meals for free. The store does not seem to be attracting the area’s poor in large numbers as one might expect from an establishment offering basically free food, like a soup kitchen.

The store has not covered its costs yet, but the management expects it will within months. “Non-profit” doesn’t mean that the company doesn’t earn money above its expenses. An organization needs to make money to survive. Is a non-profit fast food restaurant a sound business idea? If you are a business owner, would you take the chance of giving your services for free by allowing your customers to pay what they wish?

Panera is taking the chance, relying on honesty and on the kindness of rich strangers to subsidize the poor or those who just don’t want to pay. They will be opening more of these restaurants where diners are free to leave as much or as little as they want in exchange for their meals.

Photo: bgottsab
Panera to open more pay-what-you-wish restaurants, Christopher Leonard, Associated Press, June 2010

Updated July 3, 2010 and originally published July 1, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 5 comments… read them below or add one }

avatar Kevin

I’d probably only give my services away for free in the beginning to get the word out. If it did end up working then I’d keep that model. I’d say most people are honest though because they do think people are watching.
If I went into a restaurant that essentially gave away food I wouldn’t feel comfortable going unless they had suggested prices. I wouldn’t know what to give so I just wouldn’t go.
But it is a great concept and I’m glad to see it spreading to a national company.

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avatar Candide

Radiohead did pretty much the exact same thing with their album In Rainbows.

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avatar Ryan

Thanks for leaving this comment, Candide. You really know how to contribute to intelligent discussion; my only addition is that Radiohead sucks and is – by FAR – the most overrated band of all time.

=)

But hey, thanks for posting something relevant to Panera.

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avatar Doug Warshauer

It’s an interesting concept, but Panera is pretty pricey. I happened to go there for lunch today and my salad cost about $9.50 – seems high for a sandwich shop. Don’t know how many people would pay that much if they can set their own price.

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avatar Eric

Exactly Doug.

My Panera down the street needs to get on this. I never go because their food is ridiculously overpriced. If I can pay my own “reasonable” value, then I would frequent more often perhaps.

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