Retail

Panera Bread to revamp pay-what-you-like menu

July 15, 2013 at 4:06 PM ET

A customer reviews the sandwich board at the Panera store in Brookline, Mass. in this 2010 photo. Panera has withdrawn a pilot program that allowed cu...
Charles Krupa / AP file
A customer reviews the sandwich board at the Panera store in Brookline, Mass. in this 2010 photo. Panera has put a pay-what-you-wish pilot program on hold.

Who would have thought a free lunch would have been a tricky sell? Upscale sandwich and soup chain Panera Bread last week said it would suspend a much touted project by yanking its pay-what-you-can turkey chili from the menu at its 48 St. Louis locations.

The hearty meal cost $5.89, and customers could pay more or less. It is an ambitious project targeting hunger, but Panera says it needs to determine how to sustain the interest of both diners and donors. As it changes its model, Panera has examples to follow, including its five stand-alone non-profit cafes that are pay-as-you-like all the time.

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Panera may be the biggest restaurant chain to give the pay-what-you-wish concept a try, but it certainly isn't the first.

"It definitely is a process," said Denise Cerreta, who ran a pay-what-you-like community café in Salt Lake City, Utah, from 2003 to 2012. Cerreta now heads the nonprofit One World Everybody Eats, which helps other such centers.

"I totally admire [Panera founder] Ron Shaich and his team for all his effort," Cerreta said. "I think the turkey chili is a pebble in the pond. … There are ripples that are going to come from that."

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Cerreta said that a decade ago, people thought she was crazy for trying to operate a pay-what-you like café, but now more people are familiar and open to the concept.

"I think people realize that they can be micro-philanthropists just by helping their neighbor," Cerreta said.

One World Everybody Eats is working with 36 restaurants that include pay-what-you like items on their menus.

In addition to helping the hungry and educating people about food insecurity, the businesses are also likely to earn the good will of paying customers, said Mary Chapman, the director of product innovation at Technomic, a food research and consultancy firm.

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"There is no doubt that some consumers use that kind of information as a basis to decide what kind of companies get their loyalty," Chapman said.

Like other companies, Panera will continue to make charitable food and cash contributions, but many likely are watching to see if this new approach works.

"There is risk," Chapman said. "You let consumers—they can come in and not pay anything, they can pay twice as much. They have to trust their own customers to do the right thing, and it sounds like in a majority of their customers, enough customers, are doing that."

Panera piloted the project for three months. During that time, it served 15,000 of the high-fiber, high-protein chilis at an average of 75 percent of the full price, Panera’s Antonacci said. It was the third phase of the testing, which the company also tried on a smaller scale in Dallas earlier this year.

One major lesson: Panera served a lot of chili and received a lot of donations during the first few weeks of the program, but after the initial wave of publicity, all the enthusiasm and activity evaporated.

Kate Antonacci, director of societal impact initiatives, said Panera hopes to resume the project. "We're excited about what we learned, and we hope to bring it back in the future," she told CNBC.

"Hopefully we'll bring it back in early 2014—we're not totally sure yet," Antonacci said. The next phase probably will involve four-to-six week campaigns that will encourage both donors and diners to talk about hunger and order the meal.

The turkey chili, served in a bread bowl with an apple on the side, was a new Panera product developed specifically for this program, called the Meal of Shared Responsibility. It was designed to be especially filling for someone eating just one meal a day.

"It's a lot of food, that was the point," Antonacci said.

The Missouri-based chain, which has 1,700 cafés in 44 states, also operates five completely pay-what-you-can Panera Cares nonprofit cafés as a way to feed those in need, as well as to increase community awareness about poverty and hunger. One in six people in the U.S. go hungry regularly, according to Feeding America.

The Panera Cares locations—in Chicago; Boston; Portland, Ore.; Dearborn, Mich.; and Clayton, Mo.—will continue to operate unchanged.

For Panera, Antonacci said, the next challenge will be perfecting a single pay-what-you like item at some of its regular cafés, many of which are located in suburban areas with less poverty, or where people who are hungry might not think to walk into a Panera looking for a bargain.

“We’re trying to provide a unique solution in a dignified way,” she said.

By CNBC's Amy Langfield. Follow her on Twitter @AmyLangfield.

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