Name the price on your sandwich

Jaclyn Giovis Jan 14, 2011

By Jaclyn Giovis

Pay whatever you want for a sandwich. It’s a concept that’s catching on for Panera Bread, an upscale, fast-casual restaurant chain.

Panera’s non-profit organization, The Panera Bread Foundation, on Sunday opened a Panera Cares Cafe in Portland, Ore. At this location, and the two others just like it in Clayton, Mo., and Dearborn, Mich., paying is optional.

Here’s how it works: Panera posts a “suggested donation,” and customers pay what they want. Any funds leftover – after the cafe has covered its operating costs – are funneled into other local charitable projects run out of the cafe.

So far, about 60 percent of its customers pay the amount suggested, said Panera spokeswoman Kate Antonacci. Another 15 to 20 percent of patrons give more than the suggested amount, while the rest pay significantly less or nothing at all, she said.

The Panera Cares Cafe model appears to be working successfully, for now. One reason is because the locations were converted from Panera restaurants to non-profit operations, so the company didn’t incur any expenses building them from the ground up. Plus, many customers already knew what to expect from the Panera brand and had visited the location, Antonacci said.

Analysts say the cafes have another force working in their favor: guilt. Patrons start feel cheap if they order food and then skimp on the donation. (After all, there are collection bins, and cheerful employees standing to take your order.)

“You feel really guilty if you go in and say, ‘I’m going to pay a buck for it,’ and you can really afford it” at the suggested donation price, said Joe Pawlak, vice president of Technomic, a Chicago-based food industry consulting and research firm.

Guilt, or something like it, was what prompted customer Rachel Epstein to pay $5.79 for a Greek salad, when Panera Cares opened its first location in Clayton.

“If I paid less, I would be cheating,” Epstein said, in previous interview with Marketplace. “I did think about the fact that lettuce and olives and onions don’t come to $6 when you add up all the ingredients. But that’s what you expect when you come to a cafe.”

Panera Cares also offers meal vouchers for customers want to work off their lunch, Antonacci said. “We have some people that are very uncomfortable getting a meal without paying for it,” she said.

The non-profit restaurant model has generated a lot of consumer and industry buzz, Pawlak said. But so far no other major restaurant chain appears interested in following Panera’s lead.

It’s even unclear how committed Panera is to the growing the cafes beyond the three locations.

Panera currently does not have plans to convert another restaurant into a Cares cafe, Antonacci said. In the future, it may explore whether it’s financially feasible to open a brand new location under the Cares cafe format, she said.

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