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March 08, 2022

Will pay-what-you-can cafes ever catch on?

Is converting existing a few restaurants into a nonprofit pay-what-you-want eateries a gimmick or a good way of helping to feed the needy and raising money for charitable work?

Ron Shaich, who heads up the popular Panera Bread chain in the United States, certainly thinks it's the latter. The chainm's few pay-what-you-can spots look like a typical Panera location, except when you hit the checkout.

The menu board lists "suggested funding levels," not prices. Payments go into a donation box, though the cashiers provide change and handle credit card payments.

In many ways, "it was a test of humanity," says Shaich. "We didn't know if people would help each other or take advantage."

The company estimates that about 20% of patrons give more than the suggested donation, about 20% give less or nothing, and about 60% leave the suggested amount.

On average, the cafes are breaking even, taking in about 80% of the retail value of the food, according to recent reports.

The model has been so successful that the company is now expanding the concept to other cities nationwide, hoping to open one of the pay-what-you-want outlets every quarter if the economics work out.

So far, no Canadian chain has taken up the challenge although restaurants in Montreal have tried to do something similar on a sporadic basis.

Would you patronize such an establishment? Have you seen any such initiatives where you live? Are things working out?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...