Panera put its customers to the test with its Panera Cares Community cafe experiment which invited them to pay what they wanted (even nothing at all) for their meals. Would the cafes go bankrupt?
The program started when company founder Ron Shaich decided to give hungry people a place to eat with dignity, even if they couldn’t afford the listed prices. Would enough people pay the suggested price – or even give a little more – to cover free food given to those who couldn’t or did not want to pay?
The model has proven to be successful – the nonprofit cafes earn 70-80 percent of the revenue at the company’s standard for-profit cafes. Among customers, around 60 percent pay the suggested amount for their food, 20 percent pay less and 20 percent pay more.
The original St. Louis cafe experiment has now been replicated in four additional cities: Dearborn, MI; Portland, OR; Chicago and Boston. The cities and neighborhoods are carefully chosen for their food insecurity and the wide range of income levels of potential customers.
Now Panera is further blending the lines between its for-profit cafes and the Panera Cares Community Cafes. The company is offering one menu item at all 48 St. Louis locations on a pay what you want basis: Turkey Chili Bowls.
Panera calls the promotion the Meal of Shared Responsibility. Patrons who select the turkey chili bowl have three payment options: Pay the suggested amount, pay slightly more if they have the means to cover someone else’s meal, and “pay what you can.”
In a press release about the promotion, founder and co-CEO Ron Shaich said:
“We are launching the Meal of Shared Responsibility program because we know that one in six Americans – over 50 million people nationwide – are food insecure, meaning they have limited or uncertain access to adequate food. That includes more than a quarter million people in St. Louis. While this meal will obviously not eradicate hunger in St. Louis, we believe it’s a step in the right direction. We’re calling it our Meal of Shared Responsibility because we’re asking our communities to join together to share in the responsibility of paying it forward to help their neighbors.”
The Meal of Shared Responsibility program is not the first initiative from Panera since the company launched the Panera Cares Community cafes. Among other programs, the company also runs the Operation Dough-Nation program, which donates leftover bakery items at the end of the night to food banks. That program has been running since 1992.
An article on Inc.com recently expressed doubts about the viability of the pay what you want model. However, when implemented properly, the model can not only be successful – it can actually represent a competitive advantage in the very tight fast, casual food market.
Panera’s recent television commercial features a Rube Goldberg machine that turns lumps of bread dough into donations to food banks. This visual representation of the brand’s values distinguishes the company as one that cares, one that gives back – something we don’t see very often in this crowded market.
The integration of the nonprofit cafes’ “pay what you want” model into the company’s standard cafe demonstrates an exciting expansion of the profit-for-purpose commitment. Not only will the promotion raise awareness among St. Louisans about issues of poverty and food insecurity in their community, hopefully it will inspire patrons to give a little extra so that someone else can have a meal with dignity.