Restaurant Pricing: Pay What You Want

Same decor, same frontega chicken panini and banana nut muffin tops, same youthful, chipper cashiers. Panera’s newest bakery/cafe is identical to its other 1,400 locations with one exception: here the menu has no prices.

Apparently there is such as thing as a free lunch.

The not-for-profit location announces its price-less policy with a sign at the entrance: Take what you need, leave your fair share. Panera’s founder and former CEO is running the venture through the company’s philanthropic arm. He hopes that the operation will be both self-sustaining and will inspire volunteerism as the suggested alternative for payment.

Panera’s goals are especially ambitious, but it is not the first restaurant to try this.

One World Cafe began in Salt Lake City but has expanded into five states with additional locations in various pre-opening phases. The menu comes with suggested prices, but payment can take many forms other than cash. Patrons have brought in everything from food donations to bathroom fixtures to miles from frequent-flyer accounts. Alternatively, they can head into the kitchen to wash dishes at the end of a meal.

There isn’t even a cash register at Denver’s SAME (So All May Eat) Cafe. Meals are priced at one hour of volunteer labor or whatever customers choose to drop in the honor-system cash box. Somehow it works, and patrons represent a true cross-section of city residents. A slideshow features customer dining profiles? what they ordered and what they paid.

Pay-what-you-want works well in the not-for-profit setting. A few cheapskates will exploit the altruism of others, but many more customers are willing to shell out a little extra to cover meal costs for the truly needy. Results are more mixed when the pay-what-you-want model meets the for-profit dining world.

A Washington, D.C. bagel vendor stumbled into his own, personal study of human behavior and the honor system. A one-time statistical analyst with a doctoral degree from M.I.T. (who has chosen anonymity to protect his customers’ identities), he grew disenchanted with the cubicle life of research institutes and started a bagel-delivery business. Each morning he delivers bagels and cash baskets to office break rooms, retrieving leftovers and payments each afternoon. For more than 20 years, he has measured cash receipts against bagels taken, analyzing factors like economic events and company characteristics. You can read about his findings and conclusions in What the Bagel Man Saw.