

Panera lets customers pay what they want - landyman
http://www.msnbc.msn.com/id/37213165/?gt1=43001

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ABrandt
I worked at Panera (St.Louis Bread Co. actually) for three years back in high
school, and this new store is literally down the street from me.

Every one of their locations already donates a huge amount of baked goods to
local charities each and every day. I would say on average, my store either
threw away or donated 75-100 lbs. of food from our bakery every night (and
this is a low ball estimate). And that's exactly how a non-profit model
actually might work for them. They're shifting the burden of all of this waste
from the company, to the charitable consumer. Theoretically, pay what you want
pricing will drive up demand for their food and thus eliminate the amount
thrown away each day.

This certainly wouldn't work everywhere, but the Clayton neighborhood is
perhaps the most affluent in St.Louis. Bread Co. customers are already
accustomed to paying $3 for a muffin--the idea of sending all of that straight
to charity could be phenomenally successful for everyone involved.

~~~
wheels
I'm not sure it works that way -- the amount baked is basically one standard
deviation above expected demand on a given day so that people don't show up
and the shop is out of bread. It's stabalizing demand, not driving it up,
which would reduce waste and I don't see any way that this addresses that.

~~~
ABrandt
This is true, we did put quite a bit of effort into properly forecasting
demand. At the end of each day I'd count every piece of food we had left, feed
that into some software along with some variables such as weather, and try to
calculate what we needed to bake that night. Turns out even with an extremely
short forecasting horizon, it's damn near impossible to accurately predict how
much fresh bread people want in any given day at a particular store. (I'm not
sure if we did use one standard deviation, and if we did that would only
account for 68.3% of variation anyways). I've literally been screamed at for
not having any whole-grain bread left 10 mins. before closing time.

If I was to manage this non-profit store, I wouldn't bake according to
expected demand. In this particular scenario, a reasonable amount of stock-
outs would mean that you have more money left at the end of the day to donate
to charity rather than covering the production costs of waste. (Of course you
would want to avoid creating ill-will with _too much_ stock-out).

But the real reason this makes sense for Panera is that they're already
donating a ton of goods to charity everyday. For this store, instead of
donating bread, they'll be donating cold hard cash that people fork over.
Great PR and great for the community.

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bia
Ron Shaich, Panera's chairman says he's “trying to find out what human nature
is all about”:
[http://stlouis.bizjournals.com/stlouis/stories/2010/05/17/da...](http://stlouis.bizjournals.com/stlouis/stories/2010/05/17/daily21.html)

Not sure if this is a reference to how employees and customers will behave in
the context of the new store or to whether or not the store will manage to
stay afloat at all.

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samd
I'd think this would be more successful if you didn't have a national brand
behind it. Nobody feels guilty taking things from a big corporation.

~~~
logic
From the article:

"The first location bears the name St. Louis Bread Co. Cares"

I suspect detaching themselves from the national chain brand will help;
really, I think branding and location choices are going to end up being the
primary success factors here.

This will be very interesting to watch.

~~~
tricky
not sure if you know this, but all Panera's in St. Louis are branded "St.
Louis Bread Co."

~~~
sachinag
All stores were originally St. Louis Bread Co's (at least as far away as
Chicago/Evanston back in 1996 or 97 or so), but they adopted the Panera name
outside the area as they expanded.

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mortenjorck
I have to imagine this business model must have existed in various ways
throughout the history of commerce, but it's fascinating to see it
experimented with again by a business in a traditional industry. Particularly
so now that we've seen it expand throughout the tech world, in both the
passive "donate button" form and the active form popularized by Radiohead.

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BrianAnderson
I am wondering how many people are like me and see this as analogous to the
the codesketch marketing model where you give something away for free in order
to generate increased exposure, pr, etc?
(<http://news.ycombinator.com/item?id=1359313> \- btw I think it is a
brilliant idea)

If panera was experimenting in a vertical they were not firmly entrenched, I
maybe would have a different opinion, but why would Panera really be
interested in building a national competitor to their branded stores?

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mattblalock
A question I'm wondering is how this works with credit cards... do they offer
a credit card payment option?

From the article: "...Frierdich tried to hand him $12 in cash, but he directed
her to put it in the donation jar."

Seems like an opportunity for a new tech that would allow a "customer" to make
a credit card donation of an amount they choose. Maybe on exit? Or... idk.
Could be an interesting project for someone with a little credit card industry
knowledge.

~~~
po
…and can you make change for yourself out of the donation jar?

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_delirium
Very strange hybrid of models. The non-profit food "seller" with flexible
payment/donation policies is taken straight out of the traditional hippie and
anarchist food co-ops model (though one thing they often have that this seems
to be missing is the ability to volunteer some labor in lieu of monetary
donation). But in this case it appears to be merged with Panera's branding and
some sort of raise-money-for-charity goal, and stuck in an upscale suburb.

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invisible
The tricky part is staying above the cost. I know it's relatively low, but I
have no idea how much a loaf of bread costs Panera from wheat-to-customer.

I wish more food stores operated on a minimum charge as opposed to pay nothing
or whatever you want. I suppose that loses the "give a lot" mindset.

~~~
sliverstorm
> I suppose that loses the "give a lot" mindset.

I personally think it's the part where you _could_ pay just a penny- the store
makes themselves vulnerable. If you charged a minimum, people would just pay
the minimum, simple as that.

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Batsu
I like how it looks on the outside as an experiment, but it obviously can't be
sustained without rules -- surely they won't let someone come in, take
everything for a penny, and leave?

It has the stench of a publicity stunt, but it seems well intentioned
nevertheless.

~~~
Gormo
Do you think prescriptive rules are necessary, or is it better to handle these
kind of situations on a case-by-case basis?

Most social systems seem to be based on a maximin decision rule, and try to
minimize the impact of imagined worst-case contingencies (there was an
interesting thread on HN last week discussing this) - but perhaps we would
realize our objectives more effectively and minimize the entropy that
accumulates by too often adding new rules if we instead optimized the system
to the general case, and dealt with outliers (as catastrophic contingencies
necessarily are) specifically and individually.

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robryan
While I can see this as a valid experiment in the digital world where each
additional copy doesn't cost you anything, it doesn't make much sense when
each item has a cost to produce.

~~~
lsc
I can see why it might not work because each item costs something to produce,
but that doesn't make it an invalid or uninteresting experiment.

My expectation would be that the experiment will fall with the current model
(put some money in a jar) - I would guess they would do better with something
less anonymous, with more room for social pressure.

On the other hand, four is shockingly cheap when bought in bulk, and service
workers are also not particularly expensive, so it's quite possibly they'll be
'facebook profitable' and if you've got a large corp willing to cover your
CapEx, that's good enough.

~~~
robryan
An interesting side effect of money in the jar though is that people are
socially pressured not to take change from the jar, meaning they may pay say
$5 instead of the $3 they normally would because they had the note.

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duairc
Did anybody else misread this as "Pantera"?

