Panera pulls the plug on pay-what-you-want chili

More than a month ago, Gene Cumberland began a daily habit of ordering the turkey chili at St. Louis Bread Co.’s downtown location.

He liked the taste of it. But he liked the price even more: whatever he could afford.

For the homeless man, the experimental pay-what-you-want program — which allowed customers to pay more or less, or even nothing for a hot bowl of chili at all of its local stores — provided what was often his only meal of the day as well as a peaceful respite from the streets.

“I try to pay what I can,” he said earlier this week. But on that day, he didn’t have any cash to contribute.

Starting today, however, Cumberland will be looking for another place to eat. Panera Bread Co., which operates locally as St. Louis Bread Co., has pulled the plug on what it billed as the “meal of shared responsibility” after launching the innovative program 15 weeks ago. But the company is working on a plan to bring back the program for a limited time next year.

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The program was to build on the Sunset Hills-based company’s efforts to help feed people in need and raise awareness about food insecurity. In 2010, Panera opened in Clayton its first nonprofit bakery-cafe, a concept that’s been expanded to four other locations nationwide.

At the nonprofit stores, there are suggested prices, and patrons can pay whatever they wish for any item.

But unlike those stores, the meal program failed to gain as much traction.

“It didn’t do badly,” said Ron Shaich, Panera Bread Co.’s chief executive. “We just didn’t feel we were making as much of a difference as we would have liked.”

A handful of locations — such as those in downtown and the Delmar Loop — saw heavy usage. But Shaich said the program was not being utilized much in the vast majority of its stores.

Shaich emphasized that the program was sustaining itself, so the decision to end it wasn’t based on costs. But after the first six weeks, it began to lose momentum, and both donations and usage started to decline, he said.

Food industry analyst Ron Paul wasn’t surprised by the program’s termination.

“It’s a tough concept to pull off,” said Paul, president of Chicago-based Technomic. “We haven’t seen this idea spread, which by definition says it isn’t working that well or others would be doing it.”

At the same time, Panera, as a publicly traded company, is facing constant pressure to boost sales and to keep its stock going in an upward trajectory, he added.

“Something has to give,” he said. “It’s a matter of balance.”

The “meal of shared responsibility” was first rolled out in late March at the chain’s 48 bakery-cafes in the St. Louis region. The hope was that it would extend the reach of the pay-what-you-want model to people in need who don’t live near one of the five nonprofit locations.

If the program had been successful, the chain might have expanded the concept to other regions, Shaich said as recently as May.

During the span of the program, the chain sold about 15,000 turkey chilis. That averages out to more than 142 meals a day and includes people who paid at least some of the suggested price. Donations above the price were used to sustain the program. Any excess funds were to be funneled toward hunger-fighting charities.

The program was off to a strong start in the first six weeks.

But Shaich said one of the challenges was that it needed a lot of explanation and took up a lot of valuable space on in-store signs. After a while, the company needed that space to advertise its new summer salads.

So once the program’s signs came down, usage and donations both began to trend downward.

“We weren’t talking about it every day,” he said. “So it became relatively immaterial — immaterial in helping and immaterial in people helping to pay it forward.”

Haim Mano, a marketing professor at the University of Missouri-St. Louis, said in-store signs are valuable real estate. Many of a customer’s final decisions as to what to order are heavily influenced by what’s on those signs, which can drive impulse purchases or a willingness to try out a new item.

“Whether it is a sign or the color, everything in the store is very critical,” Mano said.

Still, Panera is not abandoning the pay-what-you-want model. Its five nonprofit cafes remain in operation.

And the chain is now tweaking the meal of shared responsibility to be a seasonal, limited-time offer that would likely span six to eight weeks.

A thrust of the campaign, which likely would be introduced early next year, would be to raise money for Panera’s nonprofit partner, Feeding America.

Shaich said it had not yet been decided whether this would be a St. Louis area or a nationwide initiative.

“We think the meal of shared responsibility as a principle is a powerful one,” he said. “The conclusion is it will have more impact with more fireworks over a shorter period of time.”

In the meantime, those who have been tapping the program will be disappointed by its demise.

Cumberland was silent when he was first told the program would be discontinued.

He figured he would go back to visiting soup kitchens. But they have more limited hours, he said.

He liked coming to Panera because he could come in at any time between odd jobs such as landscaping and painting that he was able to pick up here and there.

And, he added, Panera had a “better atmosphere.”

“I think it’s awesome they even tried this out,” one of his lunch companions said. She said she didn’t want to give her name because she recently escaped a violent relationship.

There is still Panera’s nonprofit cafe in Clayton, she noted.

“But the problem is getting out there,” she said. “A bus pass is like gold.”