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)
and 
. You can also watch it on 
Good distinction, Chuck. You’re right. Radiohead asked consumers to determine the value of their music, truly “Pay-as-you-wish”. The City Cafe Bakery in Dubner’s post uses an honor system.
I agree with A E Pfeiffer’s post, too, that it’s in the customers’ interest to pay–even to be occasionally extra generous–so that the cafe succeeds. I credit the cafe’s appeal to what I’ll call their low PITA (Pain In The A**) Factor. The City Cafe Bakery has eliminated an expected PITA–waiting in line to pay for your lunch. Everyone appreciates fewer PITA’s (or is that P’sITA…?) and City Cafe Bakery is being duly rewarded.
I have the same question as matt. What’s the point of the phone then?
By kicking out people who aren’t paying and they don’t want tips, this seems to be more of a “no one is watching the cash register” business model, rather than a pay as you wish. A pay as you wish would allow a person to pay 1 dollar for a bagel, and another to pay 3 dollars for the bagel.
City Cafe Bakery is quite a strange place. I once tried to purchase a bagel after noon on Saturday. The woman behind the counter laughed told me that I’ve have to come a whole lot earlier that noon. “You wouldn’t believe that number of people who come in asking for bagels”, she added, shaking her head.
It’s not like the oven was even being used at the time for anything else!
I’d like to see how payments would be affected if they put a “dummy” camera in front of the honor box. Would poeople assume someone was watching from a back room?
Better yet, mount an inexpensive close circuit camera and pipe the image to a wall-mounted screen. Anyone in the store could see whether people were paying for their food.
It doesn’t have to record or store any of the video data. Just its presence would probably bump up payments.
The store could put up a weekly poster stating the amount the customers are shorting the store in aggregate.
-$142
“Last week, 96 bagels and 72 doughnuts were not paid for, totalling $142 in food that was taken and not paid for. If this continues, we would go out of business in a few months. You can make a difference. Pay for your food. If the number does not drop to under $25 per week for each of the next 3 weeks, we will be forced to abandon the honor system and use a cash register for every order.”
If the payments are over the retail price of the items (extra, unexpected profit):
“Thank you for paying for your food last week. To show our appreciation, if you purchase two items, you may take a third with our compliments this week. Your honesty is always appreciated.”
You don’t have to do this every time, but often enough to generate goodwill with the regular customers. Maybe even have a “Free Doughnut Day” for the first 100 customers one morning as a thank you.
There is a pay-as-you-wish restaurant in Salt Lake City. They have a suggested amount. I have eaten there a couple of times when I have been in SLC. You can also pay for your meal by working at the restaurant. Here’s the website: http://www.oneworldeverybodyeats.com/
Poster 14, that would be a terrible idea from the social psychology point of view. You would essentially be advertising that it is quite normative NOT to pay, thus ironically making people feel far less guilty about not doing it themselves. Part of the reason these things work at all is because paying is just so normative that we all feel on some deep level that you HAVE to, and everyone would think you were terrible for not doing it.