Two news stories caught my attention last week.
The first was the report that Panera had opened a “Community Cafe” that encourages customers to “take what they need and give all they can.”
The cafe is like any other Panera except there are no prices. Customers pay what they want and what’s raised –minus expenses– goes to charity. Or something like that.
It doesn’t really matter. Three things are clear to me. It’s great marketing. A terrible business idea. And the philanthropic impact will be minimal.
It’s great marketing because as Edward Boches notes, it’s well, everywhere, and the program is a great calling card for Panera when folks ask “what have you done in the community lately?”
It’s a terrible business idea because when the bloom is off the venture the cafe won’t be able to sustain itself from customer donations, much less give back to causes. The cafe may become a venue for community programs, as Panera envisions, but a fully functioning Panera sustained on the goodwill of customer donations, with money left over to give back to causes?
Sorry, Panera. This is one dough that will never rise.
The second story was that Absolut is launching another city-themed vodka –this time Brooklyn– which will join New Orleans, Los Angeles, Vancouver and Boston. And like previous city-themed spirits, Absolut is making a donation to a local charity, $50,000 for affordable housing in Brooklyn.
Absolut wouldn’t be on its fifth city-inspired vodka if they weren’t good for business. But they haven’t been as great for the charities they support since New Orleans causes got a $2 million windfall from Absolut. The next city vodka, L. A., got a fraction of that amount. The Charles River Conservancy in Boston got $50,000. While the marketing for these city-themed vodkas began promisingly, they never evolved beyond a flat donation to a good cause.
What a buzzkill.
The lesson here for cause marketers is that we have to carefully balance philanthropy, marketing and business in the programs we create.
If we overweight philanthropy we may miss the real opportunity corporate partnerships offer. Just think if U2′s Bono had been blinded by philanthropy when he first solicited companies to support Product RED. He would have accepted their checks, which many offered, instead of signing cause marketing pacts, which raised millions more and established RED as leading philanthropic brand.
If we underweight philanthropy, companies run the risk of putting marketing first and reducing philanthropy to “go away” money that gives them a cheap halo that everyone knows the company didn’t earn.
If you underweight the business component you rob the program of its ability to leverage market forces for good. That’s exactly what’s wrong with the Panera venture. Panera can best serve nonprofits by leveraging their company “as is” to support nonprofits. I see Paneras in Greater Boston do this everyday with tremendous results.
The fact that Panera is a for-profit is a good thing for nonprofits. But their “Community Cafe” is too much of a good thing.
But what if you throw off the balance by adding too much business, instead of too little? You blind yourself to the greater good. Even when the philanthropy is in the millions and the marketing even more, and seemingly well intentioned, people see it for what it is: a dumb ploy to sell more buckets of fried chicken that ultimately do more harm than good.
Your image about balance, is apt and well put. In some ways the Panera experiment seems like neither business nor philanthropy. But socially responsible and philanthropic business ideas are new and untested in many ways. Innovation and creativity requires experimentation, risking failure and yes falling over. It is most often that out the failure comes new ideas and better ways of doing things.
Panera is not the only restaurant trying this and other companies like Wolfire Games has a "pay as much as you want" policy that goes towards charity. This may be a a new recipe for a "social benefit business" that needs to be tried out with many more ingredients added to make it work. But I applaud Panera and the others for their experiment.
Thanks for visiting, Lalia. Sounds like you know a lot more about these enterprises than I do so thanks for chiming in. I do agree with you that this may be just one start to a business model that actually may take years to develop. And also like you I applaud Panera's work and admire that they planted a seed!
Agreed and well-put, Joe.
There are several "slippery slopes" of cause marketing and cause branding and they all have everything to do with balance. Put too many marketing dollars toward a cause campaign and it starts to feel inauthentic and people ask why you're spending resources on marketing that could be directed to the cause itself. Do good in a vacuum and no one knows what you're about as a company or how to get on board.
I love the example from Keen from the 2004 tsunami. They had a $1Million advertising budget at that time and they decided to donate it all to tsunami relief efforts instead of their marketing campaign for the year. They ran a small ad that explained why consumers wouldn't be hearing from Keen for the year. It was a risk, but they did the right thing from a place of integrity and it paid off hugely for them in earned media.
Companies and non-profit organizations would be well advised to consider this balancing act very, very carefully before chasing dollars or entering into cause marketing partnerships that may not be the right fit.
Great points, Megan. It's funny though, never heard of Keen. Must have missed their ads.
But it's nice to know not airing them went to a good cause.
You may not remember the name, but you'd know them on sight. biggest little company; Keen's sandals, pulled Angel Martinez (former VP and CMO of Reebok) out of retirement to help start Keen:http://www.keenfootwear.com/wall/shoes/men
As others have said, it is difficult to balance all the elements you discussed, and there are plenty of ill-fated examples of when the campaign has leaned too far in one or the other direction.
Personally, I'd like to see more education and engagement to counterbalance the giving. I'd like to see companies use some of their muscle not just to raise funds, which often come with strings and detractors, but to spend time teaching consumers about the nonprofits they've chosen, how consumers can get involved, and the importance of those nonprofits' missions.
So many campaigns are just that – a quick campaign to raise fast money. A long term committment between the company and the cause would go a long way toward building a healthy relationship for both parties while benefiting the cause and the consumer as well.
Thanks for commenting, Ian. I think you really captured the ideal.
[...] This post was mentioned on Twitter by Olivia Khalili, Joe Waters, changefeed, Ashley Jablow, Mosaico Social and others. Mosaico Social said: RT @TheSocialCMO: Striking the Right Balance of Philanthropy, Marketing & Business ~ The lesson here for cause marketers http://bit.ly/cv6JE5 [...]
Joe,
Thoughtful post as always!
And, a clever turn of the phrase re Panera's dough not rising … but, like Lalia, I think your a bit off base about the Panera business model for this restaurant which is just 10 miles from me.
Seems as though they are experimenting with a form of social entrepreneurship. I read recently about a similar family operated restaurant in Denver called SAME …So All May Eat.http://bit.ly/9qbv0q It is establised under same business model. May want you can afford. The focus — providing healthy meals for homeless — is a bit different but the business model is the same.
I'm all for the experimentation piece, Steve. But Panera isn't just any company. They are putting resources into this and I saw their CEO–or was it their chairman–just resigned his post with the company so he could focus on this venture. That's a big commitment. I sincerely hope it has the return they hope for.
Are you going to get out to the restaurant? I'd love to have you snap a few pics of what it looks like. Is it really like any other Panera? Same kind of food and everything? How about being my roving reporter and asking a few tough questions of the guests there?!
I'll buy lunch for you and a friend in exchange for the scoop!
Well, there's an excuse to go out to eat! (I'll see if I can get there in next couple of weeks!)
Meanwhile, here's a link to an Op-Ed piece in Tuesday's St. Louis Post-Dispatch. This columnist has different take on the new model. http://bit.ly/caKwg4
By the way, the Op-Ed included a photo (that isn't in the on-line version) … from the outside looks like any other Panera (which, by the way, is known as St. Louis Bread Company here).
[...] Waters took a look at the Balance Between Philanthropy, Marketing and Business, using Absolut Vodka and the new Panera Community Cafe as examples. We also got a different [...]
[...] found out about this a few weeks ago from Selfish Giving. He claims that while this may be good marketing for Panera, in the long term it would fail; having [...]
Panera has had success with their non-profit “Pay What You Want” restaurant in a St. Louis suburb, think other companies will follow suit?…
Thanks for asking. I’m standing my original position, which I wrote about in May 2010. “The first was the report that Panera had opened a “Community Cafe” that encourages customers to “take what they need and give all they can.” The cafe is like any …