Panera Bread CEO Says Pay What You Can

One in six Americans live in so-called “food insecure” homes.  That means one in six Americans is seriously hungry, likely under-nourished or malnourished, and doesn’t know when they’ll have their next meal.

When Panera Bread Founder and CEO Ronald Shaich learned this, he thought about how Panera Bread opens two restaurants every week and employs 60,000 people, and he knew Panera’s resources could have impact on America’s hunger problem.  He personally set out to help, pitched his board (with a lot of respect and credibility under his belt), created a foundation, and the result is a new kind of chain restaurant: pay-what-you-can Paneras. 

Shaich’s vision was to create a restaurant where anyone could eat a meal with dignity, a place far removed from the institutional food of most soup kitchens, where the hungry too often line up with their heads held low.  

“In place like that all you’ve got are people in pain around you,” Shaich said today as he told his story in a moving talk at Sustainable Brands 2011.  “You see it and you feel it, and you get to the institutional food that you ate in third grade.  Sure it feeds your belly but it leaves you no dignity.”

Panera Cares shops look like any other Panera Bread, but the prices are just suggestions.  If you can pay, you do. If you can’t, you don’t. If you can pay more, you’re welcome.

More than one year into the program, Panera Cares has restaurants in St. Louis, Detroit, and Portland, and the shops will serve between 500,000 to 1 million meals this year.  Each restaurant must generate enough revenue to be self-sustaining, and so far, all of them are.  One out of five customers leaves more than the suggested donation; three in five leave the suggested donation; and one in five customers leaves less or nothing, usually because they have real need. 

“People get it, people feel it, and people appreciate it,” the CEO said.

Shaich explained blatantly that Panera Cares is not a business model, it’s a community building model that has a mission of building dignity: “As the foundation, if we self-sustain, and get communities to pay for bills and the workers, we’ll survive.  As a non-profit, all we have to do is cover our expenses,” he said. 

While this happens to be good for Panera Bread’s reputation, it’s not the mission, and if brand reputation was the point, Shaich implied, people wouldn’t buy it.  In fact, he said later after his talk, he’s hesitant of media attention, because he’s afraid it will cheapen the impact of the Panera Cares work.

He noted why the Panera Cares model is able to serve its mission:

  • The shop creates a dignified experience for every customer.  “This is about sharing and not treating those in need as separate from us,” Shaich said.
  • The foundation builds trust through transparency.  “The fundamental reason this can work is that people trust us,” he said, and the foundation reports on results every month to their communities.
  • The model gives people the opportunity to make a difference in the world.
  • Humanity is good.  “People are fundamentally good,” the CEO said adamantly at the end of his talk. “Given the chance, most will do the right thing.  Some people will take advantage of it, but we need to build our society for the people who are good, not the others.”

Imagine a world in which Wal-Mart is doing food bank distribution, Shaich said at the end of his talk. Imagine energy companies that are as focused on energy-reduction programs as they are on profits.  Imagine companies all using their core competencies to make the world a better place.

He closed, “We as corporate America have a responsibility larger than our profit and our earnings per share,” and then he got a standing ovation.

To see Panera Cares in action, watch clips from CBS, NBC, and MSNBC.