Will they succeed? Penera Bread red diaper, tree hugging, pink commie style!

[verytwistedmind.livejournal.com]

"I'm trying to find out what human nature is all about," says Shaich, 56, who has converted a former Panera-owned restaurant in an urban area of St. Louis into a non-profit restaurant dubbed Saint Louis Bread Company Cares Cafe.

"I'm trying to find out what human nature is all about," says Shaich, 56, who has converted a former Panera-owned restaurant in an urban area of St. Louis into a non-profit restaurant dubbed Saint Louis Bread Company Cares Cafe.

http://www.app.com/article/20100518/BUSINESS/100518019/Panera-Bread-experiments-with-Take-what-you-need-pay-what-you-can-store-model

What do you think? Will they succeed? I like this story, there us a certain defiance about it. A rich corporate big wig doing exactly what he wants with his store and his money. The libertarian in me loves this. The capitalist in me is doubtful.  

This reminds me of the Bagel Man story in the book Freakonomics: http://pricetheory.uchicago.edu/levitt/Papers/WhatTheBagelManSaw.pdf

Not the same moral lesson but such out of the box thinking in regards to retail sales. It also shows what happens when people have the option not to pay for something..

It also reminds me of the story of Thanks Giving.

The colony's leaders identified the source of their problem as a particularly vile form of what Bradford called "communism." Property in Plymouth Colony, he observed, was communally owned and cultivated. This system ("taking away of property and bringing [it] into a commonwealth") bred "confusion and discontent" and "retarded much employment that would have been to [the settlers'] benefit and comfort."

The most able and fit young men in Plymouth thought it an "injustice" that they were paid the same as those "not able to do a quarter the other could." Women, meanwhile, viewed the communal chores they were required to perform for others as a form of "slavery."

http://www.heritage.org/Research/Commentary/2005/11/Pilgrims-Beat-Communism-With-Free-Market

Are there any examples of such a business working?

p.s. For those who take umbrage with the title, it was meant in jest.

Comments

[someidiot.livejournal.com]

Aww, I really hope this succeeds, but I have my doubts. I'll visit when I'm back in STL.

[omnot.livejournal.com]

Erm. "Lentil as Anything" (http://www.lentilasanything.com/philoshophy2.htm) is a different model, being a non-profit community organisation, but they provide a fantastic smorgasboard which diners select from and payments are just dropped into a box. How much diners pay depends on what they can afford and what they think is appropriate.

[green-man-2010.livejournal.com]

Well, if he succeeds, I shall be glad . however, i don't really think that capitalism can be abolished, only regulated. I think we ought to keep track and see what happens.

[rasilio.livejournal.com]

What makes you think this is not Capitalist?

The whole essence of Capitalism is trial and error to find the best ways of accomplishing things.

This move by Panera is as Capitalist as it gets because they are working along several lines to maximize their profit.

First, this is a trial, if it loses enough money it will be closed.

Second, the positive press and goodwill engendered by it alone is worth more than a years operating costs from a single store and so there is no real risk of loss. At worst, if the store fails to earn a dime they will have invested less in the effort than they would have had to spend in an marketing campaign to get the same level of market penetration and customer goodwill.

Third, they have identified a market demographic which this type of experiment is perfectly suited to and located it there. You will note that they did not locate the store in one of the poor neighborhoods of St Louis where there would be few people able to contribute a significant amount for their meal and a large number who would simply be unable to contribute anything.

Fourth, a commonly misunderstood thing about Capitalism is that it's goals are not the maximization of profit in the short term at any cost. It is about finding a way to offer a good or service that others are willing to pay for an earning a profit from that. Preferably a profit that is comparable or better than other options you could have made the same investment in but as long as you are making a profit you are being a successful Capitalist.

Fifth and most importantly, it is voluntary. Nobody asked them to do this, no one is forcing them to do it. One of the nice things about a Capitalist economy is that it tolerates voluntary Socialism within it quite easily. The same cannot be said about voluntary Capitalism within a Socialist Economy. If someone wants to set up a company along Socialist principals and can find a way to make it work and be profitable (or at least break even) then good for them and most people will respect them for it.

[verytwistedmind.livejournal.com]

An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.

Key word in that statement is 'profits gained'.

Now if we go back to the article "St. Louis into a non-profit restaurant dubbed Saint Louis Bread Company Cares Cafe".

I would not call this a capitalist venture. But I do think it's an expression of free markets. His money and he can do what he wants with it.

[rasilio.livejournal.com]

The individual store is not capitalist, the effort to create and support it by the parent company however is.

[rasilio.livejournal.com]

I think this can succeed reasonably well, especially given where they located the store. Had they chosen a poor neighborhood it would be a different story however.

This is not to say poor people are any worse than rich people, they simply have less money. In a rich neighborhood people can afford to worry about appearances as well as being able to afford to be generous and will therefore be far more likely to "overpay" for their meals and far less likely to contribute significantly less than the production cost of it. In a poor neighborhood however there would be few people who had the spare cash to pay extra and many people who had little choice but to use the store as a form of soup kitchen and contributing little or nothing to their meals.

Given the demographics of the location I think it is possible, especially since the store is setup as a non profit and therefore will not have to pay taxes and have far lower operating costs in other ways (for example using day old baked good from other Panera stores in the area) that this could end up being at least as profitable as a typical Panera store.

What I do not think would be possible however would be to roll out such a business model on a large scale, as in an entire chain, because such locations would be magnets for the dishonest people who would eventually discourage at least some of the participation of the honest ones. One or two locations per city however as an adjunct to the main chain could turn out to be quite profitable.

[verytwistedmind.livejournal.com]

Good points. I showed this article to 3 of my liberal female friends and they swooned over it. They said they'd go and pay extra. So you may be on to something.

[gunslnger.livejournal.com]

Also, they may say that they would, but I would bet $20 that they wouldn't do so consistently.

[gunslnger.livejournal.com]

A small issue with the BagelMan article. If he didn't put a price out (even a suggested one), then it's not white-collar crime to take one and not pay anything. He was/is giving out bagels for free and then asking for donations. (I can't tell if he did this or not, it doesn't say.)

With Panera, it sounds like they're at least telling people the expected value of the meal and then letting them choose how much to pay. And since you're still interacting with a clerk, it's a little different mental mindset.