Panera Bread Opens Donation Model Restaurant
Panera Bread Opens Donation Model Restaurant
During the peak of the recession we all read of many restaurants around the world attempting donation only promotions to draw in customers. This tactic was largely used as a publicity stunt which worked very well. The first reports of this I heard were from Europe and then a spattering of U.S.-based restaurants jumped on the free media bandwagon. When the media interest died down, so too did the notion of customers paying what they want.
Panera has reinvented this publicity tool in a smart way. By going 100% donations as a concept for the pilot – which they hope to expand – they have essentially created an ongoing tax shelter, publicity machine and powerful method of building their catering business.
Far too many restaurants are non-profit not by choice, but by circumstance. The average restaurant in the United States pulls down just 5% profit; which is not a large sum when you consider how capital and labor intensive the business can be. Leave it to a billion-dollar chain to figure out how to euthanize poor performing stores while simultaneously gaining free press and investor confidence.
Many will remember the punishment Starbucks took when they shuttered 600 under-performing units. Wall Street walloped the stock and a bruised Starbucks has yet to regain the former glory and favoritism among investment media. Imagine if instead of closing units though, they had converted select units to a pilot similar to Panera where units are community fund-raisers.
Panera can effectively convert low-performing stores into this new donation concept and instead of units looking like failures, they can look like corporate philanthropy attempts. The units are put in a non-profit classification, the losses are 100% tax deductable, the press flows in graciously (within a week of this story, I counted more than 300 national media press mentions for Panera on this story alone), and to top it all off, the new approach creates an angle to build relationships with powerful community organizations and allies (who later become some of the better catering accounts for the donation-model units).
I actually think this concept is brilliant. Congratulations, Panera. You were the first to figure it out. I am certain other billion-dollar-plus chains will watch closely and a few of them may actually see the greater long term potential of this concept. The off-shoots of this pilot can grow in many favorable and profitable directions. My head is spinning in contemplation of how much further this concept could be taken – both from the standpoint of actually helping communities as well as the standpoint of restaurant marketing strategies for large restaurant chains.
Aaron Allen
Restaurant Consultant
