Corporate Social Enterprise: The Next Frontier?

The social enterprise movement has gone mainstream. What was once a niche category for Goodwill stores and the Girl Scout’s annual cookie sale is now a place bursting with activity. But while new, philanthropically minded enterprises are popping up left and right, corporations – which have all the resources necessary to launch social enterprises – have been slow to make a move in the social enterprise space. If corporations have the business expertise, knowledge of local markets, and funding to launch social enterprises – why aren’t more companies doing it?

Although many socially and environmentally responsible companies exist, the goal of making money remains paramount.  By contrast, social enterprises sell products or services with a primary focus on providing benefit to society. This differs from an organization like Patagonia, which is a socially-responsible business that sells sustainably designed products, but whose primary objective is to make money.

So what’s keeping corporations from joining the social enterprise movement? For one, scaling social enterprises has shown to be quite difficult because of the tight connection back to the local community and the special needs inherent in running a business to benefit society rather than to primarily benefit shareholders. One solution to this problem could be in leveraging the resources of large, national corporations, to start similar social enterprises. The Panera Cares cafes are great example of this model.

Panera Bread Co. began testing out whether they could turn their popular for-profit franchise into a social enterprise that benefits the community in May 2010. Leveraging their Panera Bread Foundation they opened the first Panera Cares in Clayton, MO to operate as a nonprofit “pay what you can” café. The model they leveraged is a common social enterprise model that relies on patrons to pay what they can afford. Panera quickly opened two more cafes after the initial launch and has plans to announce a further expansion this spring.

All signs indicate that Panera Cares is a success.  Panera estimates that 20 percent of customers leave less than the suggested amount, 20 percent leave more, and 60 percent leave the suggested amount. They seem to be breaking even, which makes it a sustainable social enterprise. After the initial one-time investment on behalf of the foundation, these stores can operate self-sufficiently forever and in doing so ensure there is always a delicious hot meal for those in need.

This is a great example of how a corporation can leverage their core business skills, in this case operating a restaurant, to help the local community and gain some positive brand associations at the same time. Panera is feeding those in need who can’t afford to buy their own meal and showing their regular customers that Panera is doing something to improve their local communities. It’s a win-win!

Which brings us back to the question, why doesn’t this happen more often? It might be lack of awareness of how to run a social enterprise – or maybe some companies find it too risky, or  so the question really is: who’s up for the challenge?

Image Source: Panera Bread