It appears humanity continues to need examples of why certain cherished economic theories simply don’t work:
A Panera Bread Co. restaurant in the St. Louis area where patrons have paid as much or little as they want for a meal for almost eight years is closing its doors.
Panera founder and executive chairman Ron Shaich told the St. Louis Post-Dispatch that the St. Louis Bread Co. Cares Community Cafe in Clayton, Missouri, is closing Tuesday because it was on a month-to-month lease and the store would have required a big investment. St. Louis Bread Co. is part of St. Louis-based Panera, which operates more than 2,000 bakery-cafes.
“The nature of the economics did not make sense,” Shaich said.
The cafe opened in 2010 in an existing Panera-run restaurant blocks from the St. Louis County government buildings. The idea for the Clayton cafe was that people who could afford to pay the suggested price or more would do so, subsidizing those who could pay just a portion of the price or none at all. ((i.e. “from each according to his ability, to each according to his need…” — Jemison))
In the seven years since, “we served probably a half-million meals through this cafe, all at no set prices, as a gift to the community,” Shaich said in a phone interview with the Post-Dispatch. He said customers paid, on average, about 85 percent of the suggested price, proving, he said, “that people are fundamentally good.”
“We loved it, it worked well, it proved that the idea would work,” Shaich said.
No, it proved that the operation could continue only until it required an infusion of new capital, and those who could provide it decided not to throw good money after bad. If they only averaged 85% of the suggested price, it was probably bleeding cash the entire eight-year run. Heck, even the Soviet Union managed to stumble along painfully for 70 years until the contradictions of its economics caught up with it. That doesn’t mean they were on to something.