Friday, May 27, 2011

ARTS ECONOMICS: Pay What You Can Dining!

Alright, it's the culinary arts, but here's what Panera is doing:

After a year, Panera Bread's experiment with "pay what you can" restaurants seems to be working. The cafe chain now has three locations using the donations-only model (Clayton, Mo., Dearborn, Mich., and Portland, Ore.), out of its nearly 1,500 locations nationwide.


Most patrons, it finds, drop the entire retail cost, or more, into the voluntary donation box, in essence subsidizing a meal for someone who can't pay the full amount. Panera says about 60 percent leave the suggested amount; 20 percent leave more; and 20 percent leave less. The largest single payment so far? One person paid $500 for a meal.

Two important things to note, before you run off and try this yourself:
  • Most people pay the retail cost because, I would guess, they know what the suggested price is and know that it's within reason.
  • The person who paid $500 probably did so because he felt like this was an important venture, and he wanted to cast a big vote for it succeeding. The more saturated your market is the less likely someone will feel that compulsion.