My first thought was along the lines of, “what a ridiculous idea.” Having a background in business, I couldn’t imagine how something like this would work, far less during a recession. Yet, the community has proven initial critics like me wrong.
So what exactly is making this model work you ask?
An honor code.
Yep, the same honor code that some of us had to abide by in high school, requiring us to sign the top of exams and major papers to signify that we had not cheated. We all know that there were always individuals who cheated; however, the point is that the majority of students respected the honor code.
Likewise at Panera. There is an understanding that if you have the means, you will pay. There will always be those individuals who try to game the system (and there have been), however Panera has reported that on average customers pay 90% of the retail price.
Of course this great experiment hasn’t gone without some criticism. Neighborhood mom and pop shops are bearing a significant burden. As one store owner put it, “how do you compete with free?” I know I personally would become a very local customer to a store that is willing to provide me with food/service even when I am low on funds. It would be the first place I’d spend – and overspend – my money.
What I love most about this experiment is the change it offers for the community. Individuals with limited income are able to provide their families with food at a price they can afford. In the Economist article entitled “Sandwich Philanthropy” there is an unemployed gentleman who wrote a letter stating, “Thank God for the Bread Company,” because he is able to bring his kids in for a discounted snack every week.
The pay-what-you-want model also provides opportunities for those without any income to work in exchange for food. According to the New York Times, “About 15 to 20 of the roughly 60 meals it serves each day are given away to needy customers, some of whom wash windows, sweep or break down boxes for an hour or so in return.” This saves the organization from having to pay individuals for these services and allows the volunteers to feel as though they have earned their meals.
Lastly, any net income earned from operations will apparently be used to fund community programs. I can’t think of a single do-gooder who wouldn’t place this kind of shop high on their list of places to support.
Panera seems to be looking to expand this model based upon the success of the St. Louis pilot. While I’m sure there are some cities that this will work better in than others, I would really love to see this concept thrive.