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A gentle nudge helps Panera Cares fulfill mission, get paid

Experiment in pay-what-you-can menu turns a corner
by: CHRISTOPHER ONSTOTT Customers line up at Panera Cares cafe in the Hollywood district  
ready to pay...whatever they want. The idea is that the needy can get free or reduced-price meals, but locals abusing the program have forced ownership to restrict the number of free meals individual customers can get.

As a seasonal reminder of the fundamental goodness of people who sometimes need a little nudge, the Panera Cares café in the Hollywood District apparently has turned a corner, if not a profit. The Tribune reported in September about the café’s noble concept to provide a meal to just about anyone at a reduced —and sometimes free — price. The nonprofit offshoot of the Panera Bread Co. offers the same food and ambiance as the other 1,450 Paneras nationwide, but with a different price structure. Customers are told they can pay whatever they want, from nothing to more than the retail price of their meal or snack. The idea here and in the two other Panera Cares — one in Dearborn, Mich., and the other in St. Louis — is that some people will pay extra to support the needy who can come in and get a free or reduced price meal. As of September, the idea seemed to be working in Michigan and St. Louis, where donations were enough to keep the operations running. But in Portland, donations were much lower and not enough to sustain the café. Ron Shaich, founder and board chairman of Panera, flew to Portland in September, worked a shift at the Portland store and promised to make changes. He has, and the changes appear to be working, Shaich reports. The big problem Shaich discovered on his trip here was an abundance of customers at the Portland store who were taking advantage of the Panera Cares concept. Shaich says his company expected homeless people to take advantage of the restaurant’s policy, but not to excess. Some people were coming in for meals nearly every day. Others were nearly camping out in the café, piling belongings next to tables and sticking around. Because the idea of the café is that the needy can be supported by their better-off neighbors willing to frequent the café and pay full price or more, the “sense of entitlement” that Shaich referred to among some of his disadvantaged customers had the potential for killing the entire community café concept. A solution was found, in great part, by hiring a “community outreach associate” who takes it upon himself to gently inform non-paying customers that they should limit their free meals to one a week, and no, they can’t spread out their belongings and stay all afternoon. The result has been a surge in the restaurant’s revenue. Shaich reports that “donation levels” have risen above 80 percent, about what the Michigan and St. Louis stores are getting. Translated, that means the café is taking in 80 percent of what it would if everybody just paid the retail price for their food and drinks. In September, the Portland Panera Cares was taking in about 60 percent of retail. Keeping track of stuff Late on a recent Friday morning, every table at the café was full and there was very little evidence that this Panera was different than the others nationwide. Dave Roberts, who meets there regularly with a group of friends, said the change in recent months has been subtle, but noticeable. “I have seen fewer interactions with people who are not respecting the café,” Roberts said. Roberts and his group have been major supporters of the café since its opening last spring, and the atmosphere never reached a point where they would have considered leaving. Nearby, Michael Burdick and Alison Thompson were enjoying an early lunch or late breakfast, and they were thankful for the less hectic environment, but from a different perspective. The couple said they had been experiencing hard times and that, usually, eating at Panera was their best meal of the week. Burdick, who said the couple always pay something for their meal, noted that he was getting used to seeing more paying customers around him, and fewer who were just there for a free meal. “It’s a lot nicer in here,” Burdick said. Both noted that Sam Sachs, the café’s community outreach associate and a former Multnomah County corrections deputy, was responsible for much of the change in ambiance. “Sam’s doing a really good job,” said Thompson. “He makes sure if someone comes in twice a week they pay or volunteer. Sam keeps track of that stuff.” Feeling optimistic For his part, founder Shaich says the change has been gratifying. “The people of Portland have responded to this concept,” he said. But they may need to respond a little more. The two other Panera Cares cafes are making enough to pay their bills; the Portland store has incurred extra overhead in its attempt to overcome the initial problems, Shaich says. So, even at 80 percent revenue, it isn’t yet breaking even. “It’s a gift to the community, but it has to sustain itself,” Shaich said. Shaich is so encouraged by the turnaround in Portland that he is close to announcing the opening of Panera Cares in other cities. “We’re feeling considerably more optimistic,” Shaich said. “We’re not over the hump, and we’re not going anywhere. We’re committed to making this work.”