A prediction about Panera's non-profit store

You may have heard about Panera Bread’s special non-profit store that it opened last month in St. Louis. Instead of charging for food, the store lets people pay what they wish, similar to the bagel or coffee donation box you might see in an company’s office. It’s too early to know how successful this venture will be, and what kind of information about it Panera will make available, but here’s a prediction: It won’t be all that successful. People will offer to pay a fraction of what the food retails for. Say, less than 50 percent, probably closer one-third the retail price.

Why? These sorts of pay-what-you-wish arrangements work best when the product is specifically not associated with a standard market, and therefore where social norms are likely to apply more strongly. Panera is a for-profit business that operates in a market environment. Opening a single non-profit store won’t change that, and the consumers who visit know it.

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  • MITDGreenb

    I think the key words are “standard” and “social.” The former implies a low barrier to competition and, therefore, that price is a major competitive factor. Why be “forced” to pay $2 for a bagel there when you can “volunteer” $0.50 for the same (standard) item here? This inevitably leads to a Tragedy of the Commons where “here” goes out of business.

    The latter word — social — is also pertinent. Social norms are enforced more strongly among individuals. Panera is an (impersonal) incorporated entity and, as such, humans relate more poorly to it. You're more likely to feel guilt about under-paying the street vendor you see every day than the Panera non-profit (with ever-changing staff).

    But perhaps a useful experiment might be undertaken. Suppose Panera created two non-profits. One is branded “Panera Non-Profit” and the other is branded “Neighborhood Bake Shop.” (and staffed by the same people every day). Relative performance would then perhaps say something useful about people's ability to relate to people rather than corporations, even though the ownership is unchanged.

  • Anonymous

    I think the key words are “standard” and “social.” The former implies a low barrier to competition and, therefore, that price is a major competitive factor. Why be “forced” to pay $2 for a bagel there when you can “volunteer” $0.50 for the same (standard) item here? This inevitably leads to a Tragedy of the Commons where “here” goes out of business.

    The latter word — social — is also pertinent. Social norms are enforced more strongly among individuals. Panera is an (impersonal) incorporated entity and, as such, humans relate more poorly to it. You’re more likely to feel guilt about under-paying the street vendor you see every day than the Panera non-profit (with ever-changing staff).

    But perhaps a useful experiment might be undertaken. Suppose Panera created two non-profits. One is branded “Panera Non-Profit” and the other is branded “Neighborhood Bake Shop.” (and staffed by the same people every day). Relative performance would then perhaps say something useful about people’s ability to relate to people rather than corporations, even though the ownership is unchanged.

  • omwm

    http://www.lentilasanything.com/philoshophy2.htm

    This is an example of a similar idea in Australia. It has volunteers though.

  • omwm

    http://www.lentilasanything.com/philoshophy2.htm

    This is an example of a similar idea in Australia. It has volunteers though.

  • http://zixmailencryption.com/ zixmail pricing

    well, Shaich envisions a non-profit Panera Cares Café in every community … The general consensus seemed to revolve around the prediction

  • http://zixmailencryption.com/ zixmail pricing

    well, Shaich envisions a non-profit Panera Cares Cafu00e9 in every community … The general consensus seemed to revolve around the prediction

  • http://zixmailencryption.com/ zixmail pricing

    well, Shaich envisions a non-profit Panera Cares Café in every community … The general consensus seemed to revolve around the prediction