Facade of the Post Modern Times cafe in Minneapolis
Almost half of customers pay nothing. The rest pay what they want. The cafe is making more money: by running on donations, the cafe doesn’t have to pay sales tax.
In a cafe in Minneapolis, USA, almost half of the customers have not paid anything for food and drinks since the owner decided to stop charging fixed prices — and started ordering, instead, voluntary donations.
But, since adopting this unusual model, , which has accumulated losses for years, started to make a profit.
In one shared in January on the cafe’s Instagram account, the owner, Dylan Alversonexplained that he had decided to move to a donation-only model in response to a “government occupation” in Minneapolis.
The restaurant is just four blocks from the place where, in January of this year, by agents from ICE, the US immigration agency, and six blocks from the place where, in 2020.
“Starting tomorrow, we stopped generating money for the fascists that occupy our city”, he stated. “We refuse to generate taxes in the form of a profit-making capitalist business aligned with the Government’s strategy”.
What happened in the following weeks and months was “astonishing,” wrote . The café “prospered”, even with a percentage of customers who don’t pay for food around 40% to 50%.
When operating with donations, coffee does not have to pay sales taxand the employees work as volunteersreceiving a portion of the community’s tips and donations.
Last year, Alverson’s coffee earned 1.3 million dollars (around 1.12 million euros), but ended the year with a loss of 18,500 dollars, around 15,900 euros, “despite cost containment measures”, such as the fact that the owner himself receive only 23,000 dollars per year (around 19,800 euros), accumulating the roles of “manager, cook and handyman”.
After “struggle for 15 years to make a profit”, Alverson concluded that “This wasn’t possible without exploiting people.”. But, since changing the business model, he says he has achieved “more success than I ever had when running a conventional company with 22 workers”.
According to the National Restaurant Association, 42% of restaurant owners said their your business was not profitable last year.
Therefore, “what started as a way to avoid paying sales tax” could end up “pointing out a solution to a business model in crisis throughout the sector”.
The model “pay what you want”, or “PWYW”is a “well-known, although not exactly common” pricing strategy, in which it is the buyer who decides how much to pay for a given product, explains .
While paying zero is “always a popular option,” the underlying idea is to build trust between a seller interested in offering value or gain market share and a buyer “with a sense of justice”.
Apparently it works well.
