Pay-As-You-Wish Restaurants – Case Studies on Marketing Management

7

Pay-As-You-Wish Restaurants*

Free Lunches Finally!

Balconies are great!

Fresh air, open sky, inside-yet-outside cosiness, space to stretch one’s legs or to hop over imaginary pixies, and some silence. They are also so much better than the idiot box that idiots watch. So much more entertaining, more real than all the reality shows put together and full of variety.

You can watch wildlife when a crow from the antennae pole stares menacingly at you. You can enjoy a gourmet show when the saas and the bahu wrestle in the kitchen on the second floor. There’s WWF for free with all the ‘you-banged-my-car-first’ brawls on the street. Not to forget all the spine-chilling action as utensils fly like UFOs in all directions when the wife on the third floor loses her temper!

Free stuff never hurts. Pick what you like and pay what you want.

My balcony clearly preempted the DTH era.

Arjun’s thoughts always made his evening coffee tastier. Like a minstrel happily lost on the harp of fantasy, his mind sang the wildest tunes all the time.

For what may seem to many like schizophrenia, he loved the voices in his mind. They were employed to fill the vacuum he was living in. In addition, they were doing a decent job at that.

There was no other way he could have survived the stress, the monotony and the irrelevance of his profession. His CV read: ‘Arjun carries the responsibility of a big role on his shoulders’. But to him it only meant being another ‘disgruntled corporate coolie’. Like other liveried vassals, he too had a sharp Italian suit for a uniform that helped him to get lost among other sheep everyday at his swanky office. However, it did not help him staying lost after office.

The balcony always ripped off the wool from his eyes.

Truth stared at him on such evenings and nothing helped him get good riddance on such occasions. Not his number-crunching calisthenics, not his negotiation-savvy charm and not even his bribing skills.

The bean counter craved a bean bag instead of the cushioned walnut chair his office flaunted.

However, he knew well for his grown-up tag that some wishes are only horses.

Bean bags, candy islands, ice cream houses, beer fountains, pasta vineyards, skating holidays, all-Sundays weeks, spank-your-boss allowances, blank cheques, school principals on strike, tax-free salaries and calorie-free potatoes! Ah! Wishes and fantasies.

Fantasies had no rationing in one’s mind though, especially inside Arjun’s mind, a five-year-old tenant in a 26-year-old house.

He was making a freshly baked list from this dough today when someone’s voice stirred the silence around his thoughts.

‘I can fulfil one item from your wish list today’.

Arjun turned to the direction of the voice. Sitting on the sloping roof like a bachelor on a recliner sofa was a weirdly dressed but notably handsome young man.

The next minute, catching the quizzical stare that Arjun greeted him with, he jumped to the balcony with the nimble-footed grace of a belly dancer.

‘Hi, sorry for intruding like this. However, I have been watching and hearing you for two evenings. Couldn’t help it today.’ The man offered a handshake.

‘And who are you?’ Arjun glared at him with his hands still in his pockets.

‘Umm. I am…well, doesn’t matter, you see. Call me just a friend.’ The charming, confident dude intriguingly had a weak moment as he replied hesitatingly.

‘Oh yaw? So, what can offer you Mr 1870s Duke from the unknown land? Would you like a drink?’ Arjun slammed back.

‘A what? I am not a D… Oh, wait. Is it because of this attire? You are judging a book by its cover, my friend.’

‘A. I am not your friend. B. Yes, your sartorial predispositions might have led to my error in judgement’. Arjun took umbrage yet again.

‘OK, apologies then. I will introduce myself properly to you. I guess with you I can take a chance. I am…errr…the shoeman.’

Arjun’s befuddled gaze slided down to his shoes. They were not shoes, as he corrected himself the very next instant. It was, at its best, a footwear design from another planet. Strange contraption of leather, plastic and jute all mixed together in patches with cable wires as shoelaces and detachable neon-wheels on all sides.

It drew a giggle from even a stressed-out-and-angry Arjun.

‘So, you are a wannabe Spiderman or Superman but since they have stolen all the capes and masks and other unutterable items of clothing, you consoled yourself with this piece of art?’ Arjun jeered at him.

‘Kind of true,’ said the Shoeman sulking.

The way he sighed and the way his eyes looked when he answered turned Arjun into a curious, friendly child again. A child who didn’t shrug off fairy tales completely, which is why Shoeman had landed on his balcony.

‘I belong to the species of this age’s superheroes. And since all other jobs of status and better perks have been awarded to flying, wall-climbing or night-travelling men, I was relegated to this job profile,’ Shoeman started explaining.

‘I have got these travel-anywhere-you-want shoes. I keep wandering all over the world. Every Friday, when some sane soul gets drunk and blurts out his innermost wishes, I take the task of fulfilling the well-deserved ones. I give them a horse shoe to do the magic. Some use it. Some throw it away. I assumed you are of the former kind.’

Arjun tilted his head smugly, wondering if this was a concoction his mind had whipped up or whether it was indeed an I-took-a-superhero’s-autograph moment? Smiling to himself and in a mood to indulge for this evening, he asked:

‘Do you drink coffee or shoe polish?’

‘Coffee would be great,’ Shoeman nodded in gratitude, probably tired of his super-worldly chores.

The next 20 minutes passed smoothly in what is usually called ‘coffee and good conversation’. They both exchanged random thoughts, some more bits and pieces of each other’s lives and a lot of harmless gossip.

Arjun thought it is a good time to call the bluff off if it was indeed a joke. He decided to poke a needle into the balloon of this strange-but-fun prank.

‘Hey, you said you can fulfil some people’s wishes? Do I count in the good child list then?’

‘Of course, that’s what brought me here. Let me see what wish I can help you with today,’ Shoeman encouraged him.

‘That’s interesting. Let me think—can I have a tree where lollypops blossom? Or a tap that supplies lemonade? Or a pizza that never gets over? Or a farm that grows Belgian dark chocolate cookies? Or a swimming pool of the world’s best beer? Or a restaurant where I can eat all I want and not worry about paying?’

‘Yes, in fact the last one is not a fantasy at all. I thought you had an imaginative mind, Arjun,’ Shoeman replied with a hint of disappointment.

Arjun gave a piercing look, alternating between surprise and irritation.

‘Is that so? So there is already a place where you can go and eat delicacies to glory without burning a hole in your pocket?’

‘Absolutely! What’s novel about that?’

‘Oh, I get it. See buddy, I am not talking about the philanthropic community havens. My mom has been taking me to the Gurudwara Langar Sahib every month. And how I love the food there!’

‘Don’t remind me, man. The very thought of the langar-waali-daal!’ Shoeman joined in.

‘And the lip-smackingly yummy prashaad!’ Arjun chimed in again but caught himself on a wistful ride in time.

‘Don’t get me all distracted, okay. My point is simple. There are such places where religion, philanthropy or community drives such generous setups. That does not qualify as a food joint.’

‘I agree. But I am talking of proper restaurants here. The eat-all-you-want genre.’ Shoeman said in a matter-of-fact nonchalance that really ruffled Arjun’s feathers.

‘OK, I know. There is this fun hawker across the college I used to study in. He sells aloo vadas and stuff. He does not ask his customers to pay at all. People can eat as many pakodas as they come out piping hot and pay as per their wish. No doubt, they throng his little footpath joint. But that does not qualify either,’ Arjun shot another argument.

‘Why not? He is not doing charity. And go ask him some day, chances are he is running a good business operation. It’s not a whimsical venture. It’s a sound business plan. Something that is being experimented now by many other entrepreneurs and restaurateurs across the globe’ Shoeman punched back.

‘Really! Give me two examples. Proper restaurants. No street food spots’ Arjun challenged.

‘Why two? Take more’ Shoeman dug out a sleek tablet from a yellow pocket and threw open the world in a new atlas view for Arjun.

PAY-AS-YOU-LIKE PLACES: A BUCKET LIST WITH A TWIST

Shoeman said, ‘It is simple. Give customers the option of paying what they want for food. And this simple idea is catching huge interest among many social entrepreneurs, especially those who think that they can do well while doing well.

It has not been only about restaurants if we consider names like Radiohead that put its “In Rainbows” album online. The idea was to allow fans to choose its worth and the same concept is gaining ground in the contemporary food landscape, especially with trends such as organic eating and freeganism. The origins are hard to trace but some of the well-known pioneers are Charles Filmore and Myrtle Filmore, founders of the Unity Church. Kansas City’s first vegetarian restaurant was started by them as Unity Inn in 1906. The Inn provided free hot meals in return for free-will offerings.

Today there are so many places that are experimenting and even succeeding with this model. You must have heard of Bon Jovi’s one.1 Are you a rock fan?’

‘No and Yes. What has Bon Jovi got to do with food?’ Arjun asked.

‘Well, Bon Jovi recently opened a ‘pay-what-you-want’ restaurant called Soul Kitchen. The restaurant is meant to serve people in need, who then donate their time in the community in exchange for a nutritious meal for themselves and their families. Seems like the idea was five years in the making with the non-profit organization, JBJ Soul Foundation,’ Shoeman explained.

Arjun got confused. ‘So people don’t pay when they eat? Nothing at all?’

Shoeman injected more details. ‘Well, looks like it is modelled around a pay-it-forward type payment plan. See, if the patron can afford to pay for the meal, they may leave whatever they want; if not, they have to volunteer either at Soul Kitchen washing dishes or working in the kitchen, or volunteer for the Lunch Break organization.’

‘Who else is doing this?’ Arjun prodded.

‘Many of them. Some do it on a trial or limited promotion basis. Like there is Vancouver’s more high-end Rogue Kitchen and Wet Bar that began offering “suggested prices” for its menu of mini-corn dogs, steak and sushi bombs. Or Greek Bailout. Williamsburg’s Santorini Grill started allowing customers to pay what they choose to pay for a month. Some do it on an all-time basis.’ Shoeman cited more examples as he danced his fingers all around the world map.

‘There is one in the suburb of Clayton. It is Panera Bread’s first pay-what-you-want restaurant run by a non-profit foundation.2 While Panera Bread has pledged financial and operational support to these restaurants, it has a lot of sceptics too as they question her motive behind such a venture. Good PR, as some might say.

Then there is the well-known name from Denver—One World Everybody Eats.3

It opened in 2003 and is quite a restaurant. About 50 seats ensconced in an ambience of Buddha statues, where organic dishes are served in a perfect silhouette of an edible herb and flower garden with outdoor seating.

This restaurant again asks its customers to put a fair price on the food they eat, based on their income.

On the other side of the globe is Annalakshmi in Malaysia.

As per its mission statement, it welcomes guests from all walks of life where one pays what their heart feels. This facilitates the generosity of some to do a noble deed of providing for the less fortunate through the services of Annalakshmi.4,5

In this case, the idea came from a Hindu monk Swami Shantanand Saraswathi.’

‘How interesting and apposite! See, Annalakshmi is the Hindu Goddess of Food and Plenty and the adage “athithi devo bhava” meaning “the Guest is God” fits here,’ Arjun offered excitingly.

‘Yes. Some of these places are altruistic and some part-social ventures with a business undertone or vice versa,’ Shoeman continued.

‘The philosophy is the same.6 Be it the One World Café in Salt Lake City and the So-All-May–Eat (SAME) Cafe in Denver. Everyone, regardless of economic status, deserves the chance to eat healthy, organic food while being treated with dignity. It takes care of the service aspect of giving to the community and simultaneously addresses the issue of hunger. It is bonus for people who love to cook.’

Arjun seemed lost in a strong thought for a moment. ‘So who comes here? Experimental lot on the other side of table too?’

Shoeman thought this over. ‘I guess there’s no labelling that. Anyone comes in. Like Attorneys and CEOs, students, seniors and soccer moms, as well as those down on their luck are among the 150–200 customers who dine daily at One World. Anyone can open it too. Like that philosophy student who opened Der Wiener Deewan in Vienna.7

Again a place where cash donations are accepted at the take-out counter for an all-you-can-eat buffet that serves Pakistani curries. One pays whatever one thinks is fair.

Same as the Lentil as Anything chain in Melbourne,8 Australia, that opened its first restaurant in 2000. The customers can drop money into a box by the kitchen after enjoying a cuisine of a mix of Sri Lankan and Tibetan.

It’s all about letting the customers decide their meals. Proprietor-hostess-cook-publicist Paula Douralas took the same leap in a charmingly un-slick Williamsburg spot with Santorini Grill.9

Her initial idea was to run the promotion for a month, but it worked so well and attracted so few freeloaders that she turned it into a permanent spot. But not everyone gets to be in her place or in that of Denise’s (One World Café). Some try it and then have to wrap the idea back in a coffin.’

‘Like?’ Arjun was already wide-eyed.

‘Like Java Street Café in Kettering, Ohio and Tierra Sana in Queens, New York. Even the Unity Inn’s pay-what-you-want idea didn’t gain much attraction after some time and the restaurant eventually gravitated towards set prices,’ Shoeman answered.

Then he followed up with a question.

‘Seems like you are more-than-usually curious about this concept? Are you still thinking from the customer’s side?’

‘What do you mean?’ Arjun said.

‘May be this idea is not all fantasy as you must have figured out by now. I kind of know how happy you are with your current job and everything. Would starting something like this pique your interest? How about having your own restaurant based on this concept?’

Arjun almost laughed. ‘Spine-thrilling thought! But I am not a superhero like you. It sounds great but I am understandably sceptical. Does it work?’

‘Does it work? Three strong words that decide a lot. The answer depends on four words. Mice, Sparrows, Pigeons, Goose! Whatever you get, decides your success or failure.’

Arjun ordered. ‘Elaborate. I am listening.’

THE GOOSE MODEL: WHY PAY-AS-YOU-LIKE (PAYL) WORKS

‘There are many strong ingredients that when present make the PAYL recipe a success. Here’s a quick menu.

  • Having the right neighbourhood.
  • The system eliminates cash handling by employees and actually creates great efficiencies (see Appendix 7.1). You don’t need the cashier; and all the supervision associated with cash is unnecessary. Like at Terra Bite, customers voluntarily drop payments into a slot, which go into a locked safe. So no cashier and no possibility of employee theft.
  • Customers feel like they are getting a whole new set of nutrients here as opposed to processed if it’s a fresh food concept too, like One World Café.
  • It is not always a loss. Sometimes it’s the exact opposite. For instance, patrons have given Denise Cerreta a car, bought new dishes, arranged to professionally clean her carpets, supplied new tiles for the restaurant bathrooms, and donated property for an organic garden and funded a new irrigation system for it.
  • Sense of empowerment drives more customers. Like what Soul Kitchen envisions: Diners have earned a seat at the table for themselves and their families by volunteering hours at the kitchen or other local organizations. They are served nutritious culinary dishes by the staff in a lovely restaurant atmosphere with the dignity of having earned their meal.
  • Patrons who can afford to dine anywhere go back feeling a higher sense of having contributed to their community.
  • It is a charming concept and radical breakthrough in the clutter of restaurant industry where novelty sells like hot cakes.
  • The whole novelty of “Pay as you wish” is just too intriguing to pass up and when coupled with hygienic, healthy, delicious food, works wonders.
  • It is a concept that reaches out to many segments of customers in one shot with a multi-pronged effect. Some customers may not really care about the altruism as much as getting a good meal and paying for it. While there would be others who are so overwhelmed by the concept and touched that they cry right there (see Appendix 7.2). Some are so moved that they go and open one in their community.
  • It is about promoting the very underutilized concept of trust. The concept is a hand up, not a handout where people with no money are encouraged to exchange an hour of service—sweep, wash the dishes and weed the organic garden—for a meal. Likewise, guests who have money are encouraged to leave a little extra to offset the meals of those who have less to give.
  • Customers decide on the sizes of their portions and the fact that most of the food is fresh (as opposed to stocked) means that very little food is wasted. At the end of a typical day at One World, only one garbage can needs to be emptied. As a customer quoted: “I can come in here and eat a ton after a (construction) shift for lunch and pay what I can, and then my mom, who eats a lot less, can just get the amount she wants and pay what she feels is fair.”
  • At other restaurants, pricing itself has a complicated psychological struggle. Customers feel exploited at some places for paying too much for what they think not equivalently worth. Taking one P out of the marketing mix actually adds two stronger Ps: People and Profits. And maybe even a third one—Planets. Usually 60 per cent of patrons pay the suggested amount, with 20 per cent giving more and 20 per cent giving less. Often people vastly overpay in such concepts.

‘Wait a second. People actually pay when there is the option of not paying? Pay-as-you-like is quite an apophasis’ Arjun intersected.

‘One week, a gentleman left a $50 bill next to an empty bowl of soup at So-All-May-Eat. And apparently, since opening, one man has regularly come in and left money on the counter without eating. Such people feel: “I was blessed today so I though I’d pass it on.” In another instance, Santorini Gril has about 95 per cent of customers who have been very fair. So if your restaurant falls in the Golden Goose square, there’s nothing to worry at all,’ Shoeman explained as he grabbed a paper and pencil.

‘Look here’ (Fig. 7.1).

‘If you get to impress and influence a segment of customers who have the wherewithal and propensity to pay fairly, you have to keep your model running by the same standards of service, quality and values. That way you get your golden eggs regularly.’

 

Figure 7.1 Types of Customers in PAYL Restaurants: Sellers Intentions versus Buyers Intentions in PAYL Restaurants (Charity-business Continuum in PAYL Models; Conceived by Case Writer)

‘But not everyone with a fair frame of mind might have the kind of money even though they may feel generous towards the place?’ Arjun proposed a good question.

‘Right. These are “Sparrows” as you can see here in the upper right quadrant. Sparrows are harmless, do-good creatures. But they don’t lay eggs. Still, they can help the system immensely by spreading a positive-word-of-mouth, or by contributing strongly as volunteers or by saving and making up their inclinations to pay whenever their wallets allow them. Or whenever they turn into goose at any stage of their life. So do not ignore such customers,’ Shoeman emphasized.

‘And who sits in the rest of these squares?’ Arjun pointed at the boxes towards the bottom.

‘Well, they are mice and that’s where the concept can falter.’

Arjun ordered again. ‘Explain.’

WHAT MIGHT NOT WORK? TIPS AND WARNINGS

‘Well let’s face it. The society we live in has all kinds of people. There are some who would like to enjoy one innocuous free lunch. But then there are some who would like to exploit the concept. The risks of honour system always stand.10 Like there was this Babu, an Indian restaurant in New York City, where the pay-what-you-feel-is-fair method resulted in too many people getting a free meal. One Friday night, a rowdy group of 10 such free meals took over the restaurant’s large central table and left no money; not even a tip for the wait staff. As a news report stated, Babu started fixing their prices. At times, one has to approach such group of diners who pay nothing over several visits. The not-to-pay mentality has nothing to do with their ability to afford the payment. Such customers are “Mice”.

They love haunting such places for free food.’

‘And they enjoy troubling others. Schadenfreude as Germans would call it,’ Arjun mumbled disapprovingly.

‘But like it or not, such people are part of the parcel. It becomes a sisyphean task then.

There economics can help you survive or it can drain the whole point away. It’s not about giving stuff for free. It’s about the cost mathematics, if you are on a bootstrapping model with no charity foundation behind. Fixed costs or variable costs, you have to figure the model out in a smart way. In some cases, once a certain level is attained, it does not cost to have additional customers. Now check this graph’ (Fig. 7.2).

‘You can have the challenge in the form of “mice” or “pigeons”. Pigeons naturally pigeonhole in your system but they have no money to pay to begin with. In a completely altruistic setup, this segment is your main motive. So nothing can be done here. But if it’s a business operation, then you have to deal with all those people who have passed the curiosity phase and are still not paying.

The trick is to either convert them into some other form of contributions (which works best for Pigeons) or to convince them to support your system through others or later. You cannot afford to let them ruin your system.11 If the above methods do not work, then you have to discourage them from entering or exploiting your system.’

‘That should be easy. “Not Allowed” sign or stares should work,’ Arjun shrugged off.

 

Figure 7.2 Pay-As-You-Wish: Lifecycle (Strategic tweaks for system sustainability in PAYL Models; Conceived by Case Writer)

‘Not that easy. The whole concept is such that your employees or volunteer staff have to be taught not to judge. Usually it is not that tough to eliminate or convert the “mice” types. One feels like you’re being watched. Or that other people are paying. Or that you’re part of a cool experiment. Peer effect works much more strongly than we imagine,’ Shoeman clarified. He continued with other solutions.

‘Denise Cerreta (see Appendix 7.2) has some reasonable ideas. Some people do take advantage of the free meal. Depending on how the café collects the money or if they offer the community dishes, different things happen. If someone comes in, never volunteers and only eats the community dishes daily, they are operating in the structure that one sets up to be sustainable. If someone comes in all the time and takes a lot of food, never volunteers or uses any of the complementary gift food options, someone can talk with them, hear their story and see what is going on. Perhaps they do not know that they can volunteer. Perhaps they are in a really bad jam and we want them to continue to come and eat everyday until things get better. But the issue is addressed and a solution is agreed upon. In a community café, it takes all members of the community to care about it, contribute in some way to make it. People who enter drunk or on some kind of drug are usually given a cup of coffee to go and a small amount of food, but are not allowed to remain in that state.’

‘The system works when at least 70–80 per cent of the customers pay voluntarily, and that the remainder do not somehow antagonize the rest or ruin the environment (see Appendix 7.1). To make it succeed, the area has to be at least average in terms of affluence. One has to eliminate kids (maybe a drive-through?), but one cannot check IDs because that would ruin the experience for everyone. And it’s probably better not to have a sit-in location, because the few homeless people who take advantage of the place will (1) tend to stay a long time and (2) tend to degrade the environment due to their lack of socialization.’

Shoeman got up with his coffee mug as he finished the explanation. ‘Do you want a refill?’

‘No thanks, I think I already had too much today,’ Arjun said. ‘My head feels wobbly. We are discussing mice for God’s sake.’

‘What else can eat away the system? Any termites?’ Arjun was covering all rough edges with all the intensity of a raring-to-go entrepreneur.

‘The challenges faced in a community café are somewhat like other cafés or restaurants: food costs, you need paying customers, good service, good food and regular hours. There are differences too because one has to take and train volunteers and give them food service experience so that they can attain future employment. Sustainability is a key goal of a community café. One has to cover the costs of the needed paid employees, food, rent and utilities and cover the costs of people who volunteer and earn meal vouchers and those who have less money to contribute and still want to eat’ (see Appendix 7.2).

‘So if a person cannot afford a good price for their meal as donation can choose one or two complementary items and a few non-complementary items. That person donates a smaller amount and feels good about that and help the cafe stay sustainable. When the whole system is good, a person donates what they feel is a regular restaurant price for their meal, it automatically builds in a profit margin to cover for others too. One can also start a profit-based delivery service to supplement a PAYL restaurant.’

‘But do even the good customers keep coming regularly? That’s another challenge’ Arjun wondered.

‘Yes, it is. The concept also brings with it the pressure to pay a lot of money. It’s okay to do it once when a customer wishes to prove to himself or show his wife or date that he is a charitable one. But would he come back 10 times? That’s a right question you ask, Arjun. Some may find it quite a baggage when someone’s reputation is on the line. Some would instead prefer to feel liberated from the very complication and just pay a fixed price.’

‘Now I am both eager and jittery. Would something like this work successfully in India if I want to start it?’ Arjun threw the final big question.

‘There are two sides of view on this one. There are some who have witnessed high cynicism and a low level of civic duty in India. As per their reckoning, any act of generosity that could be anonymously abused would be very widely abused. Then there are others who feel that this concept will work anywhere and would work in India, too. It might depend on where it is located. For example, a location that had more tourism. This way it would perhaps offset more people since many would be volunteering and earning meals. If Halchal Café from an NGO Shikshantar can work in Udaipur or a similar café can work in Pondicherry, why not?’

Before Shoeman got any answer or thought on his question, Arjun had drifted off to sleep.

The next morning when Arjun got up all the talk, discussions and names felt like a blur to him. But before everything evaporated, he wanted to draw a rough business plan.

It took him all morning and he could not leave the pencils and spreadsheets even as he arrived to meet some friends at a Saturday get-together they had planned at a movieplex. Waiting for them at the café inside, he kept scribbling into his blueprint ferociously, cutting off all the chaos, coffee chats and weekend hubbub around. Until, a voice interrupted his frenzied doodling.

‘Wow! That looks like a great plan. Do you mind if I have a peek?’

Arjun turned around to see a young man standing at his back, peering over the business plan.

‘I am sorry if I bothered you. Hi! My name is Abhay. I am a restaurateur and own this café. We can work on this together if you think it’s a good idea. Boy, we would make it phenomenal or what!’

Arjun shook his hands with a blank surreal feeling that turned into something else as he caught sight of Abhay’s shoes.

They had neon-light patches. And more!

APPENDIX 7.1: INTERVIEW WITH ERVIN PERETZ, OWNER, TERRA BITE LOUNGE

1. Case Writer: Is the concept strictly an altruistic one or can there be smart marketing leverage to it too?

Ervin: In the right neighbourhood, it can work as a business. The important thing is that at least 70–80 per cent of the customers pay voluntarily, and that the remainder do not somehow antagonize the rest or ruin the environment. One reason why it can work is that eliminating cash handling by employees actually creates great efficiencies: you don’t need the cashier, and all the supervision associated with cash is unnecessary. At Terra Bite, customers would voluntarily drop payments into a slot, which went into a locked safe. So no cashier and no possibility of employee theft.

2. Case Writer: It must be challenging though when it comes to practical issues. How do consumers react? Do some people take advantage of the free lunch? How do you manage all kinds of customer behaviour?

Ervin: One of the major challenges was teenagers. They would arrive in swarms and abuse the system—just for fun. Also, you need to make sure it’s okay with the property owner and surrounding population ahead of time—because just the perception of attracting ‘riff-raff’ will cause angst in the neighbourhood.

3. Case Writer: So what can make it work?

Ervin: To make it succeed, the area has to be at least average in terms of affluence. You have to eliminate kids (maybe a drive-through?). You cannot check IDs because that would ruin the experience for everyone. And it’s probably better not to have a sit-in location, because the few homeless people who take advantage of the place will (1) tend to stay a long time and (2) tend to degrade the environment due to their lack of socialization.

4. Case Writer: Can it work in India as a good and pragmatic concept?

Ervin: I have visited India, and based on my experiences, I would think it would ‘not’ work in India. The reason is that although there are many positive and admirable aspects to the culture, I witnessed high cynicism and a low level of civic duty in India. I think any act of generosity that could be anonymously abused would be very widely abused. I’m just being honest.

APPENDIX 7.2: INTERVIEW WITH DENISE CERRETA, ONE WORLD CAFÉ

1. Case Writer: How did you get the idea or inspiration to start something like this?

Denise: This idea really just came to me, inspired me, and I did not pull myself out of it. The longer story is that months before I closed my acupuncture clinic to pursue something else that would help me grow spiritually, I had a serious leg injury from not listening to a spiritual warning. I prayed to God (or whatever higher being someone believes in) to heal me in 10 days and if that could happen I would ‘listen’ the next time I felt warned like that. I was healed and it was a miracle. I ended up closing my acupuncture clinic and going into the little cafe I had attached to the front of my clinic. A few months into doing this I felt a big energy come on me, like the time before the warning of my injury. Only this time the inspiration or phenomenon told me to ‘go to donation, let people price their own meals’. I kept my word and the next person to walk through the door I told them to ‘price their own food’. The community café was born and through the years has grown into what it is today.

My experience has been positive, and also I have grown as a person with the concept. I would do it all over again. Of course, being the pioneer there are things learned along the way that I share with others so that they do not have to repeat mistakes that I learned from, mostly business/financial ones.

2. Case Writer: It surely must not have been a smooth ride. What challenges or lessons did you pick up as you pursued this radical model?

Denise: The challenges faced in a community café are somewhat like other cafés or restaurants: food costs, you need paying customers, good service, good food and regular hours. There are differences too because we take and train volunteers and give them food service experience so that they can attain future employment. Sustainability is a key goal of a community café. We want to cover the costs of the needed paid employees, food, rent, utilities and cover the costs of people who volunteer and earn meal vouchers and those who have less money to contribute and still want to eat.

3. Case Writer: So how do you strike a balance in such a model?

Denise: Many of the cafés offer one or two ‘community dishes’, which are, made at a very low cost or from food what members of the community have donated to the café from their gardens or pantries. A person who has no time to donate to earn a meal voucher but is on a limited budget and could not afford to donate a sustainable price for their meal could choose one or two complementary items and a few non-complementary items and donate a smaller amount and feel good about that and help the café stay sustainable. Some people donate extra money for their meal to help offset those we pay, but need to pay less. It all seems to work out, but it takes everyone cooperating to make this work. When a person donates what they feel is a regular restaurant price for their meal, a profit margin is built into that and that is used to cover the programme too.

4. Case Writer: What kind of customers do you get? Or do people respect the concept’s ideal foundations? Do you encounter a lot of freeloaders?

Denise: Most people think that this is a good idea and pay a suggested price if there is one. Most people do not really care about the altruism as much as getting a good meal and paying for it. Some people are so overwhelmed by the concept and touched that they cry right there. Some are so moved that they go and open one in their community. There are 18 community cafés now in the United States and there are many more that we are working with that plan to open in the future. Some people do take advantage of the free meal. Depending on how the cafe collects the money or if they offer the community dishes different things happen. If someone comes in, never volunteers and only eats the community dishes daily, they are operating in the structure that we set up to be sustainable. If someone comes in all the time and takes a lot of food, never volunteers or uses any of the complementary gift food options someone will talk with them, hear their story and see what is going on. Perhaps they do not know that they can volunteer. Perhaps they are in a really bad jam and we want them to continue to come and eat every day until things get better. But the issue is addressed and a solution is agreed upon. This is a community café and it takes all members of the community to care about it, contribute in some way to make it work, and we believe that this can be attained if we all work together. People who enter drunk or on some kind of drug are usually given a cup of coffee to go and a small amount of food, but are not allowed to remain in that state.

5. Case Writer: Can something like this work in the Indian context?

Denise: I have always said that this concept will work anywhere and I believe it would work in India too. Each café so far has done things slightly different based on their particular personal beliefs or the uniqueness of their community. So in India it would be the same depending where it was located. I have been to India three times so perhaps picking a location for a first one that had more tourism to offset perhaps more people who would be volunteering and earning meals. Or starting a for-profit delivery lunch service to supplement the café. Or finding US sponsors to offset costs. I have always thought volunteers in India could perhaps sew aprons and the other cafés in the United States could sell them and put that money in India’s kitchen operating account. Many ideas, but you see if we work together now as a community café family we can accomplish so much more!

6. Case Writer: What’s your take on the concept per se after distilling all your experiences, the good and the bad, everything?

Denise: The people and organizations that we have helped since 2006 that have copied our original model, One World Café established in 2003, have all been altruistic. The challenge is to be able to offer extra ways that people can eat who do not have all the money or no money at all to contribute for their meal. With that said, there is a trend in the marketplace in for-profit businesses to reach a percentage of the market that does value altruism and are willing to purchase your brand if you also do things for the community at large.

ENDNOTES
  1. Bon Jovi Opens Pay-What-You-Want Restaurant ‘Soul Kitchen’; By Justin Sarachik; http:www.christianpost.com/news/jon-bon-jovi-opens-pay-what-you-want-restaurant-soul-kitchen-59133/
  2. Panera’s ‘pay-what-you-want’ restaurant; The Week, 11 May 2011; http://theweek.com/article/index/215351/paneras-pay-what-you-want-restaurant
  3. Pay-what-you-like Restaurants, Anna Mantzaris, April 2008 issue; http://www.budgettravel.com/feature/pay-what-you-like-restaurants,1342/
  4. Annalakshmi; http://www.eatingwa.com.au/restaurants/annalakshmion-the-swan/
  5. http://www.annalakshmi.com.au/mission/
  6. Manish Shah, India Tribune; http://www.indiatribune.com/index.php?option=com_content&view=article&id=2648:pay-what-you-want-restaurant-concept&catid=99:column&Itemid=462
  7. Reviews, Trip Advisor; Yes, it works: Pay what you want!; http://www.tripadvisor.com/ShowUser Reviews-g190454-d947308-r89812912-Der_Wiener_Deewan-Vienna.html
  8. http://www.springwise.com/food_beverage/pay_what_you_want_restaurants/
  9. Ben Mathis-Lilley, 11 December 2011; http://nymag.com/news/articles/reasonstoloveny/2011/pay-what-you-want/
  10. Brooklyn Restaurant To Try ‘Pay What You Want’ Model; By Chris Morran on 20 October 2011; http://consumerist.com/2011/10/brooklyn-restaurant-to-try-pay-what-you-want-model.html
  11. The bold ‘pay-what-you-want’ restaurant experiment; Thomas Rogers, 17 June 2010; http://www.salon.com/2010/06/17/pay_what_you_can_restaurants/