From the March 5, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Panera Bread and the Profitability of Ethics

As we head into March and National Ethics Awareness Month for insurance, I’ve been thinking a lot about acting with integrity.

I’m a firm believer that most of us are trying our best to do right by our fellow human beings. But in tough times, it’s easy to slip into a survivalist mentality where we will do anything to hang on, hoping that when (and if) good times return, we can go back to the luxury of “doing the right thing.”

Except that doing the right thing should never be a luxury. And a quiet trend that started in Dearborn, Mich. actually suggests that nice guys do finish first.

About a year ago, Panera Bread launched an experiment in Dearborn by setting up a store where customers “paid what they could” for menu items. The experiment worked: The company estimates that about 20 percent of patrons gave more than the suggested donation; about 20 percent gave less or nothing; and about 60 percent left the suggested amount.

A year later, the cafe is breaking even, taking in about 80 percent of the retail value of the food—enough to pay expenses.

Of course, insurance isn’t bread. And actuarially speaking, there is no way insurance could replicate the Panera formula. But by thinking altruistically, Panera is taking the long-term view of corporate success and building a devoted return-customer base—and insurance is all about repeat customers.

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