Monday, May 24, 2010

We're not built for pay-what-you-want restaurants

Posted By on Mon, May 24, 2010 at 2:00 PM

click to enlarge Is your instinct to take a penny or leave a penny?
  • Is your instinct to take a penny or leave a penny?

A new cafe run by Panera Bread in Clayton, Missouri, is attracting a lot of attention for its unique payment option: "Take what you need, leave your fair share" in a lock-box at the front of the store. Panera hopes the restaurant can cover expenses from diners' donations while providing meals for those in need.

As Ron Shaich, the chairman of Panera, told The New York Times, it's a bit of a social experiment:

"It's a test of human nature," said Shaich. "The real question is whether the community can sustain it."

The concept of pay-what-you-want is not groundbreaking (remember Radiohead's album in 2007), but the potential for rapid expansion courtesy of a large corporate partner is a new concept. Panera has the distribution network and cost efficiencies that make it easier for the venture to break even. And yet, I still don't think this concept can work in today's society.  

It's been nearly a century since Kansas City tried its own its own "pay what you want" experiment. As Charles Ferruzza reminded me this morning:  

Don't forget that Kansas City had attempted the very same idea in 1906 when the founders of Unity, Charles and Myrtle Fillmore, opened the city's first vegetarian restaurant, the Unity Inn. It operated as a free-will offering restaurant: "Freely you have taken and freely you shall give" or something like that. Anyway, the idea didn't last long and soon there were set prices and no more "free will."
By testing that free-will model, Panera is essentially a scaled-up version of take a penny, leave a penny. Outside of gas stations, I don't see many take a penny, leave a penny jars these days. And the times I do notice them are usually when the cashier is grabbing a penny because I don't have change.

The pay-what-you-want model won't work for two main reasons: We don't have a realistic concept of what our food should cost in America, and restaurants are too focused on the individual dining experience. Americans want a have-it-your-way kind of dining experience, not a help-pay-someone-else's-way. Besides, the prevalence of dollar and value menus means that we've come to expect our chain food to be cheap.

I'd like to be wrong, but I don't see an American economy ready to embrace Panera's take-a-sandwich, leave-a-sandwich model. 

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