Success for the Honor System

Panera’s pay-what-you-can experiment is a hit.

This just in: People are basically good.

At least according to an experiment conducted by Panera, which operates 1,400 franchised and corporate-owned bakery-cafes across the country. Since we called attention to a New York Times article on June 4th about the first pay-what-you-wish Panera – in suburban St. Louis – the company has decided to expand the honor bar concept to locations around the country based on results from the vanguard café.

Panera CEO and founder and Ron Shaich told USA Today in May that he’s “trying to find out what human nature is all about” with the new format, in which cashiers tell customers the suggested price of their order based on the menu, with the idea that those who could afford it would pay full-price or even extra, and those who couldn’t could get a cheap or free meal – and offer to volunteer if they felt responsible for making up the difference.

The model has had its critics, but according to an Associated Press article, about 60 to 70 percent pay in full for their meals, with 15 percent leaving a little more and another 15 percent paying less, or nothing at all. A handful of patrons so far have left big donations, like $20 for a cup of coffee. Shaich told AP that the restaurant took in $100,000 in revenue its first month – but didn’t identify the restaurant’s margins between costs and revenue. Still, according to the piece, Shaich predicts that the location will be able to cover its costs within months and eventually generate cash for charity.

If a pay-as-you-wish Panera moved to your neighborhood, would you subsidize someone’s lunch…or even volunteer your time?

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