Panera Opens “Pay What You Want” Restaurant
Something tells me this idea isn’t going to work:
CLAYTON, Mo. (AP) — Panera Bread Co. is asking customers at a new restaurant to pay what they want.
The national bakery and restaurant chain launched a new nonprofit store here this week that has the same menu as its other 1,400 locations. But the prices are a little different — there aren’t any. Customers are told to donate what they want for a meal, whether it’s the full suggested price, a penny or $100.
The new store in the upscale St. Louis suburb of Clayton is the first of what will Panera hopes will be many around the country. Ronald Shaich, Panera’s CEO until last week, was on hand at the new bakery Monday to explain the system to customers.
The pilot restaurant is run by a nonprofit foundation. If it can sustain itself financially, Panera will expand the model around the country within months. It all depends on whether customers will abide by the motto that hangs above the deli counter: “Take what you need, leave your fair share.”
It’s an interesting concept, but I honestly can’t see it being anything other than a loss-leader and a publicity stunt on the part of a corporation that generated $ 364 million in revenue in the First Quarter of 2010. If it did expand this beyond the demonstration store stage, I imagine Panera would learn the same lesson that Red Lobster did a few years back with it’s “all you can eat” specials:
One of Red Lobster’s key marketing planks–all-you-can-eat seafood–will be scaled back in the future, the company said.
Darden Restaurants CEO Joe Lee told analysts that Red Lobster will rely less on such promotions in order to protect profitability.
“We’re going to be doing less of those kinds of promotions and less of the all-you-can-eat,” Lee said. But he quickly added, “We’re not going to discontinue them.”
Red Lobster currently runs an all-you-can-eat shrimp promotion and occasionally does the same thing with Alaskan crab. The company found last summer that consumers ate more crab than anticipated, denting margins.
Who would’ve thought that making something essentially free means people eat more it ?