I just signed up for their rewards program, and I noticed a promotion where if you give up a reward (Usually a free pastry or drink) they will donate 10 meals**** to hungry children. It is a very nice gesture, but the numbers don’t add up to me. I tell them I don’t want a free $1.50 coffee, and they somehow use the money they save to buy 10 meals?
They sell you the food for more than ten times what it costs them. That $1.50 coffee might cost them five cents, and most of that is for the cup.
Two questions:
1)Is it 10 Panera meals or 10 of those “$3 dollars will feed a family of 6 for a month” meals that Sally Struthers used to pimp. Because there’s a big difference between a nice take out meal and something that costs 45¢ and is basically a Centrum and some peanut butter.
2)Is it just a limited time offer? If they’re just doing for a week or so during Thanksgiving or the Holiday Season it means they want to do some charity work (or they need to make a donation) and this makes it really public, it makes you feel like you’re doing part of it and they get the entire write off.
Panera probably has a certain amount of charitable giving as a % of revenue or net income that they shoot for each year as a company. They’ve likely forecast the amount they’d be contributing as a result of this program and determined it’s within those goals. If it ended up being way more than they expected they’d simply curtail the program at some point.
Remember too, there are some tax benefits on their end for the charitable donation, and it’s tax deductible for them since it’s not tax deductible for you. For how much would probably depend on how they account the value of the reward versus the value of the ten meals to hungry children.
Then too of course the questions already brought up, what exactly do they mean by ten meals. I doubt the program assumes the value of these rewards is equal to the value of the charitable contribution, especially if (as you present it), it appears to be a variable rewards system and not some sort of points loyalty system.
I once asked this about the hunger site, and early click for charity website. They claimed they were feeding people for something like 1.5 cents per cup of food. It worked on something like very simple staple foods that could be prepared from bulk grains, like rice, wheat, barley, etc. The 1.5 cents would purchase 2 tablespoons of raw rice, which when cooked would be 1 cup of cooked rice. And even then they were talking about the price of rice in a granary, not delivered to the actual hungry people. The cost of packaging and distribution was many times more than the wholesale cost of the wheat or rice, but they assumed that someone else was funding all that jazz. Their contribution to the WFP was assumed to be used to buy bulk food.
I found the whole thing rather distasteful and deceptive. I wonder if Panera is doing something in the same vein. But regardless, I have been “sharing” my offers, because it’s so easy and costs me so little.
That makes the numbers worse, not better. You give up $1.50 worth of coffee, but it puts only a nickel in Panera’s pocket. How do they feed 10 hungry children with that?
The answer is, they don’t. Panera’s donation to hungry children has very little in common with the donated reward item except that it gives the patron a chance to feel altruistic without it costing them any real currency. It’s like the programs the airlines have to donate frequent flyer miles to various charities. The customers feel good, the airlines give away some seats that were going to be empty anyway, and the customer’s brand loyalty, which is the point of those rewards programs, is enhanced.
Like **Martin Hyde **said, Panera is going to donate those meals regardless, but by doing it this way they can increase the benefit to them.
The website for Feeding America values donations at ten cents per meal. (It says that a $25 contribution pays for 250 meals, a $150 contribution pays for 1500 meals, etc.) So they may be contributing a dollar instead of your “reward.”
BTW, the Feeding America website says, “The Panera Bread Foundation will be donating 50 percent of the funds donated by Panera Bread customers in Panera Cares Community Breadboxes at more than 900 company and franchise-owned Panera Bread® bakery-cafes to support local Feeding America® food banks. The remaining 50 percent of funds will be used to procure Panera product which will be donated to support participating food banks.” I’m not sure I like that; it sounds like half the money that people leave in those charity boxes in the restaurants is going to be used to buy product that will then be donated.
Notice that they never say they WON’T donate the food if you DON’T do your part.
I basically think these programs don’t really alter whatever a corporation had planned to donate that year (because they are probably decently good at forecasting.) What it does though, is make that charity more visibly. Panera sells (in my opinion) overpriced stuff that is trying to appeal to middle and upper middle income people.
A lot of what they sell is junk food, pastries and et cetera, sometimes wrapped in up in wholesome marketing. I think they recognize the suburban soccer Mom demographic that they are really big on really like feeling good about themselves. These aren’t McDonald’s customers, and they need to be marketed to differently. Panera’s customers feel better about eating at Panera because of visible charity activity, and when Panera gives them a way to make buying Panera stuff make them feel directly involved in charity it’s associating their feeling good with something that they believe is objectively good (charity!)
It’s really just marketing. Not saying that Panera is an immoral company, I think they do legitimately donate a healthy amount of corporate revenue to charity, but programs like this are just a way to use that to increase their sales, build their brand, and strengthen their customer base.
The cost of shipping a single serving of rice, or 10,000 servings of rice is the same, because these are shipped overseas in cargo containers and trucked to remote villages. If the shipping is paid for, the marginal cost of adding an additional serving is vanishingly low. The containers may stay at a charity’s warehouse for quite sometime if they are only partially filled, so advertizing the that a few dollars could pay for several days worth of food is not deceptive, because it is “piggy-backing” in a container that might otherwise ship partially empty.
All food is bought somewhere. Obtaining “Panera” products from their wholesalers is no different than buying food elsewhere for donation. The company does not, however, get the mark up from reselling the products bought with the donated money under its name.
I know that the Panera near me donates the bulk of left over product (day old bread, cookies, which are completely fine). The cynic in me wonders if food that would be donated anyway would be paid for with that money.
That’s exactly what I was going to say. Last year’s Panera commercials on TV were touting how they cook everything fresh and donate anything unsold to charity.
So it’s not exactly dishonest - they are donating what they say they’re donating - but they’d probably make the same donation regardless of what customers buy.
To a large extent, this is true of most commercial fund-raisers of this sort. My advice to anyone: If you really want to give to a cause, go give directly. Don’t buy something for yourself and pretend like you’re still an angel.
Airlines have to take the air miles they give away as a liability on their balance sheet, the same is probably true of freebie stuff panera give away. Now the liability is not the full face value of the freebie, but it is still there. Airlines and companies don’t like these laibilities to build up overtime, so they find ways to have people use up those miles/ freebies and so they can wind the balance sheet liabilities down and get some good press. Airmiles are a problems because they build up in unusable increments, and people often dont have the opportunity to use them up. I would have thought the reclaim rate on somewhere like panera would be pretty high, but then it is the year end so they may be encouraging people to use them up before end of year.
IANAA (I am not an accountant), but I don’t think it’s correct that the foodstuffs that Panera gives away are treated as a liability as are the frequent flyer miles issued by airlines. If Panera doesn’t sell, throw out or give away bread, soup or whatever, the food spoils. So I think any leftover food would be treated as an expense and not a liability.
To get that free $1.50 coffee, you likely spent $15 on 50¢ worth of coffee. That leaves a healthy cushion for some feel-good charity.
The reward is the liability not the actual food . Panera is trying to get people to burn up the rewards
useful link here on how loyalty points have to be accounted for
http://www.metzner-schneider.com/wn_accountloyalty.htm
So the money for paying for the 10 meals is coming from the saving from not actually giving you the free coffee or what ever, the release of the liability on the balance sheet and potentially some tax savings as the company is making a charitable donation. Plus they get to look like nice people.