Photo courtesy of samantha celera.
Bagels in Clayton, Missouri, have never been so interesting. Headlines about the Panera that now allows each customer to "take what they need and leave their fair share" have been all over Twitter, Facebook and my Google Reader. It's definitely been a PR win so far, with people calling it "genius," "cool," "novel" and "awesome." And it's an interesting experiment to see if they can actually cover their costs, and even end up in the black by appealing to people's good nature - but I hardly think it's a good model for a nonprofit, and I'm not sure I understand the point.
The pay-what-you-can or pay-what-you-want model has been used by theater groups hoping to spread the word about a new play opening in a community and musicians trying to discourage piracy and fill concert seats, but it's not often adopted as a permanent business model. In 2007, Radiohead made a big splash by announcing its fans could set the price for their latest album "In Rainbows," and their gamble payed off, as they sold more albums and tickets than ever before - but even this successful foray into pay-what-you-want sales ended after a few months, when the band announced the download option would be shut down in favor of traditional outlets.
Any money raised, above what it takes to sustain the restaurant, could be used for community causes. They haven't determined what those causes might be, and unfortunately, I don't think they'll have to. If I took a field trip to Clayton right now, I would probably try to donate roughly the cost of my sandwich, give or take a dollar. If nothing else, social pressures would keep me from giving myself a big discount, but I wouldn't be motivated to donate a significant amount over the cost of my sandwich because, as I understand it, the money is either going to make up the margin being left by someone who doesn't pay their fair share (whether they are able to or not) or to an unknown cause. I just can't see that inspiring many people to give extra very often. So, if no money is raised for community causes, what's the gain?
In a New York Times article, Stephanie Strom points out that similar cafes in Ohio, Washington New York have either gone under or had to change their models due to the confusion, skepticism and less than altruistic attitude of some customers. But it can work. Salt Lake City's One World Everybody Eats, for example, has been operating since 2003, but the complexity of making the pay-what-you-want cafe work seems to require planning and strategy that I'm not sure Panera has put in so far.
Ron Shaich, who served as Panera's CEO until recently and still serves as its chairman, said it himself in the St. Louis Business Journal: "It's a real test of humanity," he says. "It's not a charity; it's a cafe of shared responsibility." I agree. While technically it is receiving tax benefits, it's not really a nonprofit. It's an experiment. And it's a marketing win. But is it something that's really going to make any difference in the Clayton community - or the other communities around the country that could find their own nonprofit Paneras popping up if this pilot store succeeds?
Don't get me wrong. I love bagels. Even more than bagels, I love bagels that taste like candy. But I have to wonder what the point of this "nonprofit" is, other than literally not making any profits. The nonprofit Panera is reporting that transactions (as I read that, it does not necessarily mean dollars) are up 20 percent over last week, when it was a for-profit restaurant. This isn't surprising given the media attention they've received this week. And I imagine that Panera's for-profit restaurants will also reap some brownie points and financial benefits from the publicity around this nonprofit venture, but is that enough?
What do you think? Will the nonprofit Panera last? And will it really benefit the community?