Kruse Kronicle

A Kirkland cafe with no prices

—

by

mwkruse
in

Seattle Times: A Kirkland cafe with no prices

With its blood-red walls and black leather sofas, Kirkland's Terra Bite Lounge looks like any other coffee shop — until you get to the menu. There are no prices listed. Terra Bite doesn't have them.

You read that right: No prices. Customers pay what and when they like, or not at all — it makes no difference to the cafe employees, who are instructed not to peek when people put money in the metal lock box.

"Does it really matter to any of our patrons … whether they pay a dollar or three dollars or five dollars?" said Terra Bite founder Ervin Peretz, a 37-year-old Google programmer.

He doesn't think so, at least not in the comfortable lakeside enclave that is downtown Kirkland.

Through his "voluntary payment" cafe, Peretz is poised to become the Robin Hood of the Starbucks set. Using an efficient, low-overhead business model and narrow profit margin, he figures he can finesse the largesse of well-off latte lovers to cover the tabs of the less fortunate. …

Comments

6 responses to “A Kirkland cafe with no prices”

  1. Nate Avatar
    Nate

    So do you think this is a fair form of business or a guilt based model?

    Reply
  2. Michael W. Kruse Avatar
    Michael W. Kruse

    I think it is a form of business. People pay for the “experience” of the event as opposed to the tangible goods like the coffee. That could be based on guilt or any number of motivations to “buy.” It just remains to be seen whether the idea is sustainable or over an extended period of time.

    Reply
  3. Peter Kirk Avatar
    Peter Kirk

    Interesting that this is happening in a suburb founded by and named after my great grandfather’s brother.
    But this guy thinks that “people are essentially good, but can be influenced by their environment. If people see good, they’ll be good.” I thought that kind of thinking had disappeared after a century of wars and other evils. I suspect that these people will find out in the long run the truth that the Bible as well as experience teaches us: that people are fundamentally selfish and evil, and only act in an apparently unselfish way when in fact it suits them, if only to build their own self image as good people. Well, when these guys find this out it might be to their financial cost.

    Reply
  4. Michael W. Kruse Avatar
    Michael W. Kruse

    I actually thought of you (because of the name) when reading this story. How amazing that there is actually a connection.
    You picked up on one of the key aspects of the story that I noted. The store owner has a considerably different anthropology than I do.
    People are “buying” the “Robin Hood” feel of the setup. As soon as that novelty wares off I suspect the store will begin to experience some abuse. They will stop offering the least expensive products to cut cost. The Loyal customers base will fade. Less altruistic customers will come more into play and the whole thing will dissolve. The irony is that people making their contributions would have no idea what to contribute based on what they consumed if they did not already have some idea of price ranges from Starbucks and similar stores.
    Nate (above) has commented here several times about “open source” models like those used with Linux code. I think there is a significant distinction here in that software code is not “used up” by more people using it. In fact, more people using it can actually lead to it becoming more useful. Coffee is a consumable. While individual stores may be able to pull this off (for a while) the markets still need price signals related to specific products to indicate to suppliers how much of which kind of product is needed.

    Reply
  5. Nate Avatar
    Nate

    Michael,
    I don’t think this is the first cafe to try this model, I think many have. I am not convinced as of yet that this model is unable to last. I would also agree that this is fundamentally a different model then open source (free software) software.
    I have noticed a simular trend in my church, we offered meals on sunday as a church supper. We began by figuring out what the least we could charge would be and setting a price point that would work. We settled on 2.50 a person. It ended very poorly, for two reasons: 1) the quality of the meal was pretty basic because of the low price point. 2) people asked right away if that meal was worth X amount.
    Instead we have switched to leaving a basket out on the side and asking for contributions. We actually have more funds to spend per person, more people coming, and a more positive reaction to the food (sometimes same meals).
    I suspect our own subconscious expectations play a real role in how we assign value. So I think this model has a chance, especially if it can attract a loyal, regular crowd that like it and want it to survive.

    Reply
  6. Michael W. Kruse Avatar
    Michael W. Kruse

    I think your points are well taken Nate. Different “industries” accommodate different strategies. For instance, I wouldn’t encourage this business model for an auto parts store. 🙂
    As I recall, we have a diner in Kansas City’s eastern burbs that does this “pay what you will approach.” It is in an older town with very strong neighborhood connections and is run by a longtime resident. I suspect the coffee house market can accommodate some businesses like this but I doubt it could ever become and industry standard.

    Reply

Leave a Reply to Peter KirkCancel reply

Discover more from Kruse Kronicle

Subscribe now to keep reading and get access to the full archive.

Continue reading