When given a choice, not all people will make the right one. Panera cares is a g

Question

When given a choice, not all people will make the right one. Panera cares is a great concept but fundamentally relies on people choosing to do what is right. The problem is Panera Cares allows people to take advantage of the system and pay little or nothing when they can afford to pay more. This in turn has caused Panera to increase prices at other stores to counter the losses from Panera Cares.

Provide facts:

Briefly mention facts that confirm the problem. Depending on the problem, your program statement might include references to internal or external reports, staffing reports, statistics, customer demographics, national trends and information on company resources if they contribute to the problem. Avoid bogging down the statement with too many facts and figures. Include only key statistics that illustrate the severity of the problem. If you are unsure which facts to include, choose three facts that best support your argument.

Explanation / Answer

The US breakfast and lunch diner chain Panera Bread started with an experiment in 2010, called Panera Cares, which let’s customers determine themselves what they pay for the meal they choose. The idea is charitable by nature, aimed at helping US families that are struggling to piece together their daily bread. People who can pay a little more are requested to leave some extra cash to support people who are short some.

The program currently runs in 3 full-concept dedicated restaurants, serving about 3500 people a week. The results so far are very surprising: 60% of the customers pay the amount the cashier suggests them to pay, 20% pay more, and the remaining 20% pay significantly less. Each store has been earning its keep so far, covering its’ own expenses.

The “pay what you can” model just simply is not the revenue driver that will satisfy its’ shareholders. And, what it has come up with is a highly innovative revenue stream, which other organizations can use too, namely a stream that fuses consumption and charity.

Panera Cares cafe — which like two other cafes in the United States, functions under a "pay what you can" system — has not been as successful as the donation-based cafes in Detroit and St. Louis, recouping only about 60 percent of retail costs (compared to 80 percent in other cites).

Problem: Dealing with the pushback from skeptics. As a non-profit, Panera Cares just has to cover its expenses. But those expenses are real: real food costs, real professional employees, real overhead.

Problem: Overcoming the fears of their own team members, as well as their tendency to judge whether a guest was truly in need. It is important to profile people and judge whether they have the ability to pay.

There were people who tried to abuse the opportunity, such as the kid who ordered $40 worth of goods and told us to put $3 on Daddy’s Bank of America card.

Problem: How to make it comfortable for people who can’t pay, but are uncomfortable taking something for free?

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