How are Panera’s nonprofit pay-what-you want outlets doing?
- Tue, January 18 2011
- Filed under: Cause-related marketing
Last summer, I blogged about Panera’s first pay-what-you-want, nonprofit restaurant near St. Louis. Customers are asked to pay what they can afford (their “fair share”) in donation boxes, and any profits go to charity. The chain, which called this a “test of humanity” has since opened Panera Cares community cafes in Detroit and, this week, Portland.
I predicted it would work because of social norms. So how’s it going - right or wrong? Are more people gaming it or are more people giving?
About 20% of visitors to the first two locations leave more than the suggested amount, 20% leave less and 60% pay the suggested amount. They generate on average 80% of the retail price and in St. Louis, they are generating more revenue than cost while serving 4,000 people per week. They partner with local charities to put the donations into the community, and they have more volunteers than they can handle.
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Comments
That’s extremely good to hear. I remember when I first read about Panera’s risky venture, I thought it would totally fail. I guess I had too little faith in humanity!
I wonder if the 20% who pay less…is some of that charity in itself? I would like to hope that some of those people might have trouble affording a meal in the first place and are therefore benefiting from Panera’s philanthropy just in that meal. (Or maybe not, but that would be ideal would it not be?)
Great observation Cheryl - I wonder if Panera reaches out to the smaller unfortunate communities to let them know of this program.
Cheryl - I think that’s how it works… So yes, paying less is part of the social service.
I had not heard of this experiment, and it is neat to hear the results. Very interesting. I have heard that a “freewill” or “goodwill” donation pulls better profit than charging a specific amount, but it’s nice to see it play out here with actual figures.