You may have seen the news that Panera, a U.S.-based bakery and restaurant chain, has launched a new nonprofit store in St. Louis that will operate in exactly the same way as its other stores will. EXCEPT, it doesn’t offer any prices. Customers are told to donate whatever they want for their meal. It could be one cent, or ten dollars or 100 dollars. The company hopes to open additional nonprofit, pay-what-you-like restaurants if this one succeeds.
Now, there are community kitchens that have been run like this before, and certainly this idea has been gathering a little steam in the nonprofit sector. But this is the first time that a well-known chain has attempted to develop this kind of business model.
I’m very curious to see how this succeeds because it raises a number of issues related to philanthropy and fundraising. For starters, donors often need to be challenged in their giving. Ask a donor what they can give, and often times they won’t know. They won’t have a sense of what needs to be done and what of money it will take, or how much they can truly afford. Which is why we as fundraisers set out guidelines for them, such as giving options and giving clubs, or we inspire and challenge them to make a major gift that will have a significant impact on the cause. While donating money for your lunch is set more in the for-profit realm, I wonder how the restaurant will do without any sort of guidelines or “challenges” with regards to pricing.
On the other hand, the interplay between customers as they’re paying will be interesting to see as well. Knowledge of what others have given can affect a donor’s gift and will often result in an equivalent or larger gift. Similarly, if one customer sees another customer paying more, will he or she be inspired to pay more as well, or less?
There’s another issue too: how customers feel about what they’re doing. While this model is nonprofit, initial revenues will go to keeping the restaurant going. Any profits will be ultimately given to charity—at least that seems to be implied by what I’ve read. So will customers think it’s for-profit or nonprofit? If they pay more for the meal than what it might usually cost, will they think of that cost as charitable or philanthropic? Will they feel like they’ve been philanthropic? Or will they feel a bit confused and perhaps cautious about how Panera will use their money?
It’s an interesting business model that has many questions. I wish Panera the best with it. Perhaps it’s a model for future for-profit/nonprofit collaborations. What do you think?