Panera Bread recently opened a new location in Boston. One of the most striking things about this bakery-cafe is that, unlike its predecessors, there are no cash registers and no prices. Rather, the cafe provides suggested donation amounts and donation bins to collect contributions. This new model is the most recent installation of the Panera Bread Foundation’s non-profit concept: Panera Cares community cafe. Under this innovative model, customers are asked to embrace the notion of shared responsibility and pay what they can. Those who can afford it may donate the suggested amount or more, but those who cannot may donate what they’re able or volunteer their time in exchange for a meal voucher. Either way, the goal is for each person who enters Panera Cares to eat with dignity.
The Panera Cares model stems from a longstanding history of conscious capitalism at Panera, according to Kate Antonacci, Panera Bread’s Director of Societal Impact Initiatives. This notion of a conscious approach to value creation is built on the fundamental premise that every business performs better when it has a deeper purpose than short-term profit maximization and recognizes its responsibility to all of its stakeholders, not just its shareholders.
“A higher purpose generates engagement by all constituencies,” Antonacci said. “We recognize that delivering value to our shareholders is a by-product of the quality of relationships with customers, communities, team members and suppliers. Delivering profit is a by-product of meeting the needs of our stakeholders.”
The importance of serving society is evident in the activities of the company’s nonprofit arm. For many years, the Foundation has facilitated both cash and in-kind contributions – amounting to upward of $100 million each year – to select nonprofit partners serving local community needs. However, Panera often felt disconnected from the beneficiaries of its goodwill and wanted to develop a platform that would allow the company to leverage its core competencies to make a much more direct impact on society.
“What does the world need that Panera is uniquely positioned to provide?” That was the question that prompted Panera’s exploration into the issue of food insecurity, which is defined as limited or uncertain access to adequate food. “Panera and its franchisees open a new cafe every 72 hours and employ nearly 80,000 people. If there’s anything we know how to do it is open a restaurant. We knew that our nation-spanning scale provided us with a real opportunity to turn our core competencies against a societal ill – and, in this case, we were laser-focused on food insecurity,” said Antonacci.
According to the United States Department of Agriculture, one in six Americans live in a “food insecure” household. Fifty million people are missing a week’s worth of meals per month which amounts to 8.2 billion meals that are missing from families’ tables annually, Antonacci said. Since launching the community cafe concept in 2010, the Foundation estimates that it has fed hundreds of thousands of people in need through its now five sites across the country (St. Louis, Detroit, Portland, Ore., Chicago, and Boston).
So why does it work? Antonacci said she believes the community cafes are successful because “people are fundamentally good and do the right thing. At its core, this concept is an experiment in human nature.”
Antonacci also indicated that the cafes have been successful because the Foundation continues to innovate around Panera Cares to discover new ways to make a difference in its communities. “Over the past few years, we have continued to look within at what other core competencies we can bring to bear. That led us to decide to use our expertise in job training to create an internship program for at-risk youth,” Antonacci said. “We have taken in kids who’d been on the streets and in foster homes and trained them to work a cash register, prepare food, and serve our guests. With these skills, the kids have a better shot at making a living and joining society’s mainstream. And because we wanted to set them up for long-term success in the world, we partnered with places like Covenant House in St. Louis to help them develop life skills. We graduated our first class of interns in May 2011 and have since graduated dozens more in similar programs across the country.”
Panera bet on people doing the right thing and, ultimately, they have. But it’s not just by chance. The Foundation has been strategic in its approach to selecting locations for Cares cafes, finding sites in economically diverse neighborhoods that have both the need and the support. It finds sites in neighborhoods with a deep sense of community and civic responsibility. This enables community members to become vested in the model. Such an approach is quite different from checkbook philanthropy. There is a real investment on the part of Panera in terms of its time, scale, people and facilities, further demonstrating Panera’s commitment to the cause.
The concept has not been implemented without challenges. When the first location opened, despite many signs and handouts explaining the mission, customers were confused. In response, Panera designated an associate to greet incoming customers and explain how the new concept worked. Team members also had to overcome their own biases and fears that the “pay what you can” model would fail, while also learning more about the issue of food insecurity. Externally, Panera’s team had to move consumers away from the notion that this was a “free cafe.” Each cafe struggled with underlying communication and perception issues. Addressing these areas helped Panera to better communicate the value of the Cares cafes and gain support from a wider audience.
But that wasn’t always the case.
“When we first embarked on this journey, there were many who told us that as a publicly traded company, it didn’t make ‘business sense’ for Panera to devote time and resources to building a non-profit enterprise,” Antonacci said. “On that score, they were wrong. Panera Cares is about a conscious approach to business in which making a difference in our communities makes a difference for our business. Panera Cares is a powerful differentiator that helps build trust with our customers, pride with our associates, and ultimately enhances our competitive advantage.”
Panera Cares has raised awareness about the Panera brand and has highlighted the company’s core values while also shining a spotlight on the issue of food insecurity in the United States.
Ultimately, the Panera Cares model has proven to be right for the business and all of its stakeholders. It has created an outlet for Panera to address an issue and rally other consumers around its efforts. Antonacci hopes that a similar shift in corporate citizenship will spread to other companies. Rather than simply writing a check, she said, “companies should look at the skills they possess in order to directly impact a social issue.” By giving their time and expertise, companies can contribute in a way that is unique and authentic to them.
Any endemic societal issue cannot be solved overnight and requires long-term commitment, Antonacci said. Panera Bread is poised to fight food insecurity now and in the future, one meal at a time.