We’ve written before about pay-as-you-wish commerce, most significantly the case of a bagel man in the Washington, D.C., area, but also a coffee shop in Seattle and three instances of pay-as-you-wish download-able music: Radiohead, Jane Siberry, and SongSlide.
Now here’s another baked-goods pay-as-you-wish scheme that’s worth looking at, concerning a bakery in Kitchener, Ontario, called City Cafe Bakery. Below is a good description from an article by Karen Hall in Bakers Journal (the “Voice of the Canadian Baking Industry”).
There are a few things worth thinking about when you read any given pay-as-you-wish story.
On the plus side, there’s the opportunity cost of not having to hire someone to work the cash register.
On the minus side, there’s the issue of “survivorship bias” — i.e., if you’re reading an article about a pay-as-you-wish business, it is inevitably a business that has managed to survive and perhaps even prosper; but don’t forget all the articles you’re not reading about such schemes that failed miserably. The particular incentives in any particular pay-as-you-wish scheme are what determine success or failure.
Finally, as interesting as the pay-as-you-wish element of this bakery is, I was most interested in the line at the end about the don’t-answer-the-telephone rule. That’s something I’ve tried to adhere to for years, and which e-mail has only made easier.
“Everything is rounded off to the nearest quarter with taxes included where applicable,” he says. “So every dessert is $1.50 (tarts, brownies, and date squares), every pizza lunch is $5, every beverage is $1.25, every loaf of bread is $2.75 (Italian sourdough, multi-grain, and raisin bread on weekends), croissants are $1 each, and bagels are three for $2 (plain, sesame, and multi-grain).”
The bakery conducts audits every six months and [John] Bergen says only once did things come up short.
“Our theory is that two percent of our sales are being ripped off. ‘Ripped off’ in the sense that there are people who forget to pay or they make a mistake in paying, and then there are people who deliberately don’t pay. And every so often we have to kick somebody out that we know hasn’t been paying,” he says. “But at the same time we figure we’re being overpaid by three percent. Some people come in and want a $2.75 loaf of bread, but they see we’re busy so they throw $3 in and walk out. Or, although we discourage tips, some people still give them to us. But because the staff is paid well (the average wage is $15.50 an hour), the tips go into the general pot.”
The staff will make change if a customer needs it, but Bergen says they will ask the customer how much they want back because they don’t want to have to do the math.
Nor does staff answer the phone. There is a cell phone that suppliers can call, but the main phone does not get answered.
“When somebody phones, the (voice mail) message says the mailbox is full,” Bergen says. “We don’t answer it because the staff is here to produce and it disrupts us.”
(Hat tip: Brian Doelle, via BoingBoing)
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there is a pay-what-you-wish deli in downtown denver as well. At least there was when I lived there a year ago.
Here’s an idea for a study – look at the cases of obesity relative to the proximity of pay-as-you-wish food service.
Also – “but Bergen says they will ask the customer how much they want back because they don’t want to have to do the math.”
CAN they do the math? The other day two teenagers working in a pet store near me couldn’t figure out change for $17.70 from $20.00 WITH A FREAKING CALCULATOR.
Why have the expense of the phone, then? Is it just for emergencies–for calling out? If that’s the case, then wouldn’t the store’s cell phone work just as well? (And, honestly, isn’t it likely that 99% of the employees and customers have cell phones, too, if they needed to make an emergency call?)
Last weekend, I saw a very small scale but ingenious pay-what-you-want “store” in operation. I was playing golf at a course that was surrounded by homes. Nearby one green, in someone’s backyard, was a large bucket of used golf balls. Next to the bucket was a smaller, covered bucket with a slot in the top, with a sign that said “$3 / 3 Balls” on top.
I wonder whether part of the secret to a successful “pay-you-want” venture is that the consumers have a vested interest in the producer staying in business. That might explain why they’re willing to sacrifice the short-term gain of getting something for nothing for the longer-term benefit of being able to get their bread, coffee, music etc. from there again at a reasonable price tomorrow.
It might be interesting to find out whether these consumers see themselves as shareholders rather than customers – maybe they’re “investing” in a business model they find interesting and worthwhile.
the movie clerks has a pay-as-u-wish convenience store- the theory there was that people assume someone must be monitoring, so they pay- the irony is what they’re really saying is that people assume noone would be stupid enough to have a pay-as-u-wish convenience store!
It seems there’s a distinction to be made between a true pay-as-you-wish business that asks you to assign a value to the product (like the Radiohead model) and one like this, where there are in fact set prices–”bagels are three for $2″–but only an appeal to conscience is used to enforce the price.
A big part of their incentive system is the presence of staff and other customers. It is easy to notice if someone did not pay. When people are all around, you don’t want to walk out without putting something in the fare box. At an empty fruit stand or an empty office kitchen, nobody sees what you did not do.
It would be easy for an owner to underreport income and sale tax because there is no cash register printouts…