Pay-What-You-Can Concept Enhances Panera Brand

The idea of running a pay-what-you-can organization is generally laughed at as a business model, but Panera is proving skeptics wrong. So far, the St. Louis-based company has three such eateries and they are turning a profit, according to the Chicago Tribune.

This week Panera opened its fourth pay-what-you-can Panera Cares location, in Chicago. Founder and co-CEO Ron Shaich tells the Trib that the neighborhood that it's the perfect community for such a business because it has “million-dollar townhomes and people on the street."

"When you walk in, it's the full Panera experience," Shaich, who hopes to open a new Panera Cares cafe each quarter, told the Trib. "When you go into a soup kitchen, the energy is so negative and the food is institutional and the experience is institutional."

The idea is simple: consumers who can pay more will do so while those who can’t pay at all can work for an hour in exchange for food. The pay-what-you-can stores all work under the Panera Bread Foundation umbrella, which allows it to not worry about turning a profit.

The proceeds, the Trib reports, don't go back into the company’s coffers. Instead, the foundation “gives the money to social service organizations that provide job training for at-risk youth,” who Panera then hire.

Back in February, one year after the first Panera Cares cafe opened in Clayton, MO, Shaich said in a Sustainable Brands presentation that about 20% of customers leave more money than the suggested donation with no pressure, while 20% pay less: