Social Experiment or Great Marketing?

It is not unusual to hear about a social experiment as it rapidly becomes a popular trend, fueled by advancements in technology and distributed widely through social media.

Panera Bread Company has followed suit by launching the Pay-what-you-can cafe.  The company converted a handful of locations into non-profit restaurants that encourage donations in lieu of charging for food and beverages. To date, the concept has been a moderate success, with the nonprofit stores managing to cover costs and donating profits to local initiatives. The new model not only garners visibility at the local level but also provides a substantial brand boost. Panera’s stock has been the best performing in the restaurant sector over the past decade.

Newman’s Own, founded by late actor Paul Newman, has been donating 100% of its post-tax profits and royalties to charities since its establishment in 1982. Originating as an experiment involving Newman selling homemade salad dressing, the food company adopted the philanthropic values of its namesake and to date has donated over 300 million dollars. The charitable effort, paired with Newman’s own branding as a celebrity, has afforded the company a steady brand image that sees its products amongst the best sellers in supermarkets across the country.

Ventures such as these require a great deal of both reputation and capital to start and operate, but as evidenced by the responses to both, can be worthwhile in terms of return in brand value.  In the case of the Panera experiment, the ‘pay-what-you-want’ business model illustrates how placing costs in the hands of customers can lead to profitable and charitable success.

Whether a social experiment or a marketing strategy, the experience transcends merely buying food; it becomes an investment in one’s community. One of the converted Panera cafés is located in a St. Louis suburb, in Missouri, recently devastated by tornadoes. How much would you pay for a sandwich if it could help rebuild your neighbor’s house?

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