Bread of Life: Panera and the Pay-What-You-Want Shebang

Bread of Life: Panera and the Pay-What-You-Want Shebang

Panera Bread Co.’s “You Pick Two” deal has never been so attractive.  As of last month, at a new location in Clayton, Mo., Panera customers can pick the same two selections they’d pick at any of Panera’s 1400 other domestic locations, and then only pay for one. Or none. Or six.

Customers determine how much they want to spend in the new, localized pay-what-you-want experiment. The St. Louis-based bread company hopes to expand the model nationwide, but is waiting to see whether or not the Clayton store can sustain itself financially. If it’s successful, Panera intends to open up similar stores in every community in which it operates within months.

In the upscale St. Louis suburb of Clayton, there’s a cashbox on the Panera counter where customers are directed to place their donations. No amount is too small or too large, but a motto hangs above the deli counter which Panera hopes its clientele will honor: “Take what you need, leave your fair share.”

Cashiers have reported that a lot of people still can’t quite make sense of the procedure, and that most customers still pay full price for their meals. Some take a discount of a few dollars or pay half-price, but it’s a obviously a difficult system to monitor.

Panera’s nonprofit organization is footing the new store’s bills, including staff salaries and rent. At the end of each month, the nonprofit will determine whether or not the donations cover the cost of food. Panera has already firmly indicated that it won’t bear losses if the experiment fails.

In a related vein, the band Radiohead made waves in the music industry by making their 2007 album In Rainbows available for download, and payment at the discretion of listeners. That particular pay-what-you-want paradigm was subject to critique for demeaning the market-based music industry when it was (and continues to be) so susceptible to piracy and illegal file sharing. Though Radiohead never released its profit statistics, one traffic-trafficking company estimated that 62 percent of those who downloaded In Rainbows did so without paying a cent.

The Panera model seems more intact. Its early success can be attributed to the fact that food is a more tangible product than music. People are accustomed to paying for their meals; taking food for free or for unusually low prices still feels like stealing in ways that downloading music for free does not, because of acculturation.

Also, Panera isn’t the first restaurant of this type. Its domestic and international predecessors have enjoyed a great measure of success with similar models.

Most customers at Terra Bite Lounge in the Seattle suburb of Kirtland, for example, don’t bother to pay when they order. Founder Ervin Peretz says people just tend to slip a 20-dollar bill in the donation box on Friday’s for a week of coffee. Salt Lake City’s One World Everybody Eats features a customer-operated credit card machine in addition to its “treasure box” for cash deposits.

In Melbourne, Australia, Shanaka Fernando has six locations for his pay-what-you-want chain, Lentil As Everything. The restaurants also provide a catering service and sponsor community service initiatives.

Radiohead’s pay-what-you-want experiment lasted three months before the band canceled the promotion and reverted to in-store sales. It’s been only a few weeks for the Clayton Panera. Only time will tell if the model is solvent.