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.