Pay it Forward Becomes Pay-If-You-Can

Panera1PANERA BREAD PROVES GIVING IS BETTER THAN RECEIVING…

Brands often go right up to the edge of outright altruism without falling over it, out of fear of letting some sort of cat out of the bag that they won’t be able to get back. But Panera is finding that its experience with a handful of “pay-as-you-go” stores is only getting better over time.

Panera Bread already had emerged as a stout competitor to Starbucks for a crowd that likes to hunker down for a while with a cup of coffee, a scone and WiFi and just harness the ambience of a place. So it faced a lot of skepticism when the St. Louis-based chain took the risk of sharing some of its values more explicitly three years ago by opening a handful of pay-as-you-go cafes in some economically hard-hit cities including its hometown, and Detroit.

The idea was that customers wouldn’t have to pay set prices, that amounts for donations would only be suggested, and that ultimately patrons of these stores could just pay what they wanted to — or not pay at all. In the midst of the Great Recession, Panera’s gambit seemed like a worthwhile risk and at least a way to obtain broader engagement with American consumers in the Participation Age.

In fact, Panera’s effort has been reminiscent of the success that Hyundai enjoyed four years ago with its Hyundai Assurance program. Seeking a way to elevate itself from the pack of car brands, at a time of keen economic anxiety among Americans in early 2009, the Korean company promised to pick up the loan or lease payments of any new Hyundai customer who subsequently lost his or her job. The gambit ended up costing Hyundai very little in dollar terms and almost single-handedly transformed its brand into that of a truly sensitive partner of its customers.

At Panera, “People came up to me and began talking about the fact that they had been customers for five to 10 years and had lost their jobs,” Panera Chief Executive Officer Ron Shaich told the Wall Street Journal in an interview this week. “And how appreciated it was. There were occasionally people who tried to beat it, or game it. So ultimately it was a test of human nature.”

And apparently, human nature has won. Panera figures it will service more than one million Americans in its five pay-as-you-go cafes this year. About 20 percent of those customers leave more than the suggested donation, Shaich said; about 60 percent leave the suggested donation; and 20 percent leave what they can “but often significantly less.”

Panera forges ahead. It has begun testing one pay-what-you-can item, turkey chili in a bread bowl, at its for-profit stores in St. Louis in hopes that the idea will expand to its 1,700 outlets.

If good will is infectious, turkey chili in a bread bowl may be carried on a tide of it to Paneras across the country.