Panera's 'Pay What You Want' Restaurants Are Working

from the how-about-that dept

Earlier this year, we noted that Panera Bread was testing out a "pay what you want" concept restaurant in St. Louis. It was set up as part of a non-profit charitable foundation, rather than as part of the corporate Panera structure. However, at the time, I noted that I wasn't sure how well it would do, since "pay what you want" for scarce goods seems like a much more dangerous idea. I also pointed out that while I was sure many people would pay the "recommended" prices, and some would obviously pay much less, I doubted many would pay more than the recommended prices to make up for those who paid less. I did note that I hoped to be pleasantly surprised by the results... and now I should admit that I am.

Declan points us to the news that the company is actually expanding the effort, with an expected "pay what you want" opening in Portland. That article also notes that the company has said the original one has been a success. As I expected, the majority of people do just pay the recommended price, with another 15% paying less (or even nothing). But, a separate 15% actually do pay more than the recommended price.

I'm still not convinced this kind of offering works that well in all cases, especially with scarce goods, but I think we're beginning to see scenarios under which it can work. For example, we did recently discuss a study that found "pay what you want" appears to work much better with a charitable component, which is definitely the case here. Separately, we've seen that it can work if you really connect with people, and apparently Panera worked hard to really connect with the local community to make this restaurant work. It'll be worth watching to see if it can replicate that success elsewhere.

Filed Under: food, pay what you want, restaurants
Companies: panera

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  1. identicon
    rec9140, 3 Nov 2010 @ 2:33pm

    Re: Pity it's Panera being so successful with this

    "Their food is just absolutely awful.Their food is just absolutely awful."

    Well you must just have the one bad apple of the chain. I've NEVER been to one that did not have good food, and impeccable service.

    Plus the eye candy at lunch and dinner at most is a bonus.

    Its not a "star/rated" restaurant its a place to get some great bagels, great pastries, juice and if like it coffee. The sandwiches and soups are great.

    Just made my at least once weekly pilgrimage to my local store.

    I also take the office at least once a month a nice batch of bagels. The French Toast and Cinnamon Crunch ones! YUMMMY NOM NOM NOM NOM NOM! I get my own so the office doesn't take my favs..

    Then theres those egg, bacon, cheese sandwiches in the AM.... NOMNOM. I wish they served those all day!

    No one is ever disappointed at the Paneras I've been to in several states. No one... Along with the fine eye candy....

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