The Baffler

The Moral Order of Panera

Surprise! Panera’s pay-it-forward experiment did not solve hunger

The Baffler
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The year is 2010 and Ron Shaich, the executive chairman of Panera Bread, paces around a TEDx stage in St. Louis. Fired up, he tells the audience about his bold new project to end hunger: the idea, called Panera Cares, is a pay-what-you-wish version of Panera, the fast-casual restaurant recently famous for its double bread bowl. His hands pound, scrape, and shake the air, sometimes tumbling over each other, as if fluffing an invisible pillow floating in front of his chest. His button-down shirt balloons out of his jeans.

As Shaich tells it, the idea for Panera Cares came about when he volunteered with his sons for a charitable organization that brought food to “those folks who are shut-in.” They drove to the food bank, which took forty-five minutes, packed two bags of groceries, which took an hour, and then delivered them to these lonely people. He is a businessman, talking to a gathering of people, so it is his duty to rattle off a bunch of numbers: “Three hours, three children, nine hours, two satchels. I figured our hourly rate was about thirty cents an hour, the value of our time.” Crazy math aside, Shaich wonders aloud, “it may make me feel good, but does it add any value?” He concludes that he should have just cut a check and not wasted his time delivering the food.

If Shaich had his way, he would change the whole system. It’s not just the terribly inefficient food-bank delivery service that is up for scorn. “Have you ever been to a food shelter?” he asks.

It’s a horrible experience. You wait, and they finally let you in, and you look around, and I’m in this line myself, and everybody around me is poor, and everybody around me is struggling . . . and you feel so sucked down by it, the energy is so negative. . . . And then you eat the food, and what does the food taste like? It tastes like the stuff we got in second grade!

Later, he says, as he watched TV one night with his wife, he saw a news story about a pay-what-you-wish cafe in Denver. This was his a-ha moment, when, as he puts it, “those entrepreneurial juices in me began to think.” How about a version of Panera that eschewed standard prices and encouraged customers to pay what they could, but looked just like a regular Panera Bread? Shaich says that this would allow Panera to feed those who the USDA “sanitizes” by labelling “food insecure.”

Shaich saw Panera Cares as a soup kitchen for the temporarily embarrassed professional class.

The first Panera Cares restaurant had opened a few months before that TEDx talk, in St. Louis. Shaich explains that it couldn’t be in a poor neighborhood: the business model wouldn’t sustain it. So, it was set up in a mixed income area. He recounts volunteering to work the counter for the first two weeks Panera Cares was open. There were many problems. The employees––many of whom told Shaich that they had experienced food insecurity themselves––worried the store wasn’t viable and that they would eventually lose their jobs. Insouciant teens made big orders of sandwiches, smoothies and cookies, and only paid a few dollars with their dad’s credit card. So, Shaich says, his employees began to cajole customers into paying either the full cost—or more—for their meals.

But there were bright-sides too. As Shaich explains in warm, hushed tones,

One morning, a guy comes in and says, “Listen, I was a tech writer. I lost my job six months ago and my family hasn’t really had a real meal. I don’t know where these kids,” he had three children with him, “I don’t know where these kids are going to eat tonight. We used to love to come to Panera Bread Company. Can we eat here tonight?” We said “That’s why this place is here, come on in.”

In other words, Shaich saw Panera Cares as a soup kitchen for the temporarily embarrassed professional class. In hard times, these down-on-their-luck professionals could show up the morning-of and ask a guy who made over $2 million that year if they could eat dinner at their favorite fast-casual restaurant.

Between 2010 and 2013, four more Panera Cares restaurants blossomed across the country, in similar middle-income neighborhoods of Portland, Detroit, Chicago, and finally, Boston. But by 2016, they had already started to permanently close down. On February 15 of this year, the final location closed in Boston. Panera Bread wrote in an email to Bloomberg that, “Despite our commitment to this mission, it’s become clear that continued operation of the Boston Panera Cares is no longer viable.” Many, if not all, Panera Cares locations operated at a loss.

Three separate times in his 2010 TEDx talk, Shaich claimed that Panera Cares was a “test of humanity.” He wondered if people would come and pay extra for their, say, fresh baked cookies or Asiago Steak Sandwich on Asiago Cheese Demi. Would the food secure customers support Panera’s attempt to give the food insecure a chance at the “dignity” of eating at Panera?

Luckily for Shaich, in 2017 researchers and marketing professors Giana M. Eckhardt and Susan Dobscha studied this very question. What they found was unambiguous: “Consumers in fact experience discomfort when asked to address social issues via how much they choose to pay for their meal.” The researchers refer to the pricing model used by Panera Cares as “consumer responsibilization”: a mishmash of the pay-what-you-wish and the pay-it-forward model (which encourages customers to pay for the next person’s meal). Consumer responsibilization tasks consumers with “solving problems for social issues . . . with the perceived power coming from consumers’ wallets.” Eckhardt and Dobscha note that consumer responsibilization springs from the doctrine of “conscious capitalism,” the business theory put forth by devout libertarian and Whole Foods co-founder and former CEO John Mackey. Conscious capitalism is Mackey’s saucy, improbable mixture of Friedrich Hayek’s market fundamentalism and a superficial understanding of Buddhist mindfulness.

When consumers are responsibilized, every single banal purchase is bloated with a fraught and taxing moral calculus.

Shaich is not only a self-described conscious capitalist, but a board member of Mackey’s Conscious Capitalism, Inc. He and other conscious capitalists operate under the assumption that consumers will prefer their businesses because they are doing good. They assert that by publicly taking on charitable initiatives that benefit people beyond their shareholders, they will lower marketing costs and raise profits—because customers will like them and thus be more loyal. But conscious capitalism is a young, largely untested business theory, and its efficacy claims haven’t been well studied. With Eckhardt and Dobscha’s research, that’s beginning to change. Over the course of a few months in 2017, they cased the Panera Cares in Boston and reviewed every single Yelp review of all five Panera Cares locations. They found that the food secure and insecure both had profound “physical, psychological, and philosophical” problems with the restaurant.

Physically, the food secure were disgusted by the food insecure. As BJK in Chicago wrote on Yelp, “Panera Cares = enjoy the company of smelly, loud, and obnoxious vagrants while you eat. Screw this place I’ll never go to another Panera, ever. Set this crap up in a poor neighborhood.” The food insecure hated it too: they were denied the privacy and anonymity that a food pantry allows. In one review, a woman recounted bringing her low fixed-income mother to the Panera Cares in Portland, to introduce her to the affordable dining options in the area. When her mother paid a reduced priced for her meal, the cashier announced that Panera Cares “can do a discount once, but if you come back this week, you’ll have to pay full price.” She was humiliated for being poor.

Diners noted that this announcement about the “discount” was made only to a select group: the obviously downtrodden. This highlights another problem with Panera Cares: profiling was rampant. There was an inconsistently enforced dress-code for customers. As a manager in Boston explained, “You have to have tennis shoes because it’s a safety issue. You can’t come in in gym pants.” But this was supposed to be the dignified realm of a normal Panera. It’s unclear why customers in leisure wear might pose a safety hazard. And would this mean tech writers can’t go to Panera in track pants and flip-flops?

Customers also reported feeling psychologically exhausted by the task of assessing whether they were in a position to pay the full price or not. Reviews showed that most people monitored what other customers appeared to be contributing. If the person ahead of them got a free meal, they felt angry and stupid for paying full price. When consumers are responsibilized, every single banal purchase is bloated with a fraught and taxing moral calculus.

Where did this idea that customers should be responsible for solving social problems come from? Why did Shaich, or anyone, believe that such an atomized, diverse group could self-organize based on their (supposedly) private decisions at the donation box? As Corey Robin explains in The Nation, this is the fundamental assumption that underlies libertarian thought: the marketplace is the best place to legislate morality. Friedrich Hayek once said that “freedom to order our own conduct in the sphere where material circumstances force a choice upon us is . . . the air in which alone moral sense grows.” He believed that if the government orders our priorities by setting prices or providing services, it cripples our ability to express our own moral priorities. Robin writes that to Hayek, “by imposing this drama of choice, the economy becomes a theater of self-disclosure, the stage upon which we discover and reveal our ultimate ends.”

The wrinkle that entrepreneurs like Shaich hate to admit is that the real engines of change already exist elsewhere.

Panera Cares was a delirious real-world test of Hayek’s libertarian moral-economic theory. Is the market a place where we go to solve major social problems? Or is it a place to go while on break from our seasonal job at Target to spend an hour’s pay on a big, floppy sandwich? The failure of Panera Cares demonstrates, not for the first time, that Hayek’s idea––the one that undergirds our faith that corporations and entrepreneurs will save us––is unworkable and hollow. Eckhardt and Dobscha even find evidence that consumers don’t prefer conscious capitalist businesses, and these companies don’t save on marketing costs.

Panera Cares failed to accomplish anything because the market is too chaotic and atomizing to address immediate, collective problems like hunger. The wrinkle that entrepreneurs like Shaich hate to admit is that the real engines of change already exist elsewhere: in the community and church groups that provide food for those who need it, and in government initiatives like the threadbare Supplemental Nutrition Assistance Program (SNAP). SNAP gives money directly to citizens to buy food for themselves, and studies routinely find that SNAP does exactly what it’s supposed to do: reduce food insecurity. But Bill Clinton’s 1996 welfare reform ensured that an already underfunded and attacked program would impose strict limitations on its recipients.

Unsurprisingly, Shaich never mentions SNAP in his TED talk. If he did, he may have had to admit that Panera Cares was nothing but an elaborate branding exercise, a solution to a problem we already know how to solve. Panera Cares was an experiment that, in the end, was exactly like Shaich: full of empty, unpleasant, and superfluous gestures.

Robin Kaiser-Schatzlein is a Brooklyn-based journalist who writes critically about economic life in America. Follow him on Twitter @robinsreport.

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