Pay-what-you-want rewards operators

Pay-what-you-want rewards operators

Forced by the economy to re-think their businesses, a growing number of restaurateurs are taking the radical step of ditching their menu prices and allowing customers to pay what they want.

From Potager in Arlington, Texas, and Java Street Café in Kettering, Ohio, to two Blue Sage Cafes [2] in the Portland, Ore., area and points in between, operators across the country are embracing the honor system as a promotion or a business model and saying that no price just might be the right price—even if it makes planning more challenging.

At the Blue Sage Cafes, where a pay-what-you-want promotion began March 12, traffic has grown between 5 percent and 10 percent, said Chris Hein, director of marketing for parent company The Dussin Group [3]. In addition to the two cafes, Portland-based The Dussin Group operates The Old Spaghetti Factory and Fenouil.

“It gives the guests the opportunity to set the price, and hopefully it will bring them back,” Hein said. “It’s better than a two-for-one coupon. If they want to make it a two-for-one deal, they can do that.”

The promotion, which is scheduled to run through April, may be extended if it continues to be successful in driving traffic, Hein said.

“Customers get a bill that covers their beverages, and then they write down what they think the meal is worth and go up front to pay,” Hein said, noting that the per-person check average ordinarily is about $12 at lunch and $15 at dinner.

“Some people add a little extra, and others don’t want to pay much at all,” he said. “If they take any discount at all, it’s usually about 10 percent.”

He noted that if someone has a bad meal experience, the restaurant would probably comp the food anyway.

Each of the Blue Sage restaurants, one in Lake Oswego and the other in West Linn, has about 120 seats.

“Our servers report that they seem to be making more in tips,” Hein said. “Our director of operations said it seems they give our servers a little more and us a little less.”

Chris Dussin, president of The Dussin Group, said: “We understand that these are challenging times for many local families.… We want our guests to help us determine what they perceive the value of our meals to be.”

The pay-what-you-want practice is more familiar abroad, where restaurants as varied as Mireya in Barcelona, Spain, Sobo on Bondi Beach in Sydney, Australia, and The Little Bay restaurant in London have offered honor-system pricing to increase traffic in tight economic times.

Some operators are looking to the practice as a long-term business model that they say reflects their passion for their food.

Customers at 45-seat Potager, which opened in January and translates from the French as “kitchen garden,” pay by sticking cash for what they think the meal was worth in colorful envelopes that owner Cynthia Chippindale has crafted from magazine pages.

“We keep food costs in line by asking people to only take as much as they are going to eat,” said Nick Amoriello, chef at Potager. “You aren’t getting a football-field-sized plate of food.”

Part of the Potager principle is based on the passions of the owner and chef for organic food.

“The idea is to eliminate waste in the food industry,” he said, “and we also want to bring people back in touch with where their food comes from, to slow down and enjoy.”

Amoriello said the startup costs for Potager were reasonable compared to most restaurants.

“None of the tables or chairs match,” he said. “All the plates are from garage sales. That eliminated a lot of the overhead.”

The restaurant also is housed in an old pizza shop that had been closed for two years, yielding lower rents than usual for a restaurant.

“Compared to a normal startup of restaurant, we did it for about 30 percent,” Amoriello said.

Potager currently is open only for lunch. Amoriello said the first month customers left about $12 per person. They left about $7 per person the second month.

“It costs about $8 for a plate of food,” he said, but with generous donations from supporters of the organic-food movement, Potager was able to break even.

Now, as more people learn of the restaurant, “our donations have gone through the roof,” said Amoriello, who was laid off last year after working at high-end restaurants in nearby Dallas “when the economy tanked.”

Chippindale, the owner, grew up in the restaurant business. Her father owned a restaurant in Canada, and she attended Le Cordon Bleu in Ontario. She is an avid supporter of organics.

“If every person tried to make a difference, we could make big changes with small things,” she said.

She says she is not worried about the pay-what-you-want business model.

“If customers stiff me, we close,” she said, “and then they will be back getting their Happy Meal.”

For Amoriello, who graduated from the Culinary Institute of America and has worked at such restaurants as Le Bec-Fin in Philadelphia and Nobu in Dallas, the rewards are rich.

Before, “I looked in the dining room and saw that the clientele really wasn’t there for the food,” he said. “They were there to be seen. The food got lost. Here, it’s really my food, and people are here to appreciate that creativity. This is a return to cooking. It’s a challenge creatively every day, but it really tests the levels of your creativity. It’s taking the frills away. It’s what cooking should be about.”

In Nashville, Tenn., the Loews Vanderbilt Hotel’s Eat restaurant has one dish each Thursday devoted to the pay-what-you-can model. The promotion is being used to introduce the restaurant’s local farm-to-table program.

“Our ‘Fair Price for Local Fare’ promotion will last at least into the fall,” said Johannes Diele, food and beverage director at the hotel.

The promotion has heightened local interest in the hotel’s restaurant, Diele said.

“We have gotten great interest from local customers that inquire about the next upcoming dish as early as Sunday,” Diele said. “We sell about 30 percent of the meals served on Thursdays as the special and our valuable customers set the price between $10 and $20 for the dish.”

A recent dish was a grilled Tennessee pork chop, sweet-potato fries, local baby vegetables and sorghum butter.

Sam Lippert, who bought the Java Street Café in Kettering, Ohio, in April 2008, has a menu with no prices. Lippert said some customers pay more, and some pay less.

“It works out even,” he said.

At Potager, Amoreillo said the lack of pricing allows him and owner Chippindale to pursue their passion.

“We’re not trying to start a revolution here,” he said, “but we hope to get things going.”