Lattes on the honor system

by Dollars & Sense

In yesterday's Seattle Times, Amy Roe reports on the Terra Bite Lounge in Kirkland, WA, where patrons pay for their lattes and sandwiches on the honor system:

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.

Through his "voluntary payment" cafe, [founder Ervin 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.

Thanks to Dollars & Sense subscriber (and occasional tech volunteer) Paulie Peña for the link.

Labels: economic alternatives, Terra Bite Lounge

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2/07/2007 02:57:00 PM

Comments:

I'm curious to see how long this "social experiment" is able to fuel itself. The problem with running such tight margins in a for-profit business is that the income is not likely to increase much above the average but recurring costs are likely to rise. Fair-trade coffee costs more, dairy prices are dependant on the costs of fuel, rent can skyrocket at the whim of the landlord.... The economic viability of Terra Bite is tied to the amount of foot traffic it gets. Should the novelty wear off there is no cash reserve and no advertising budget.

I wish the place luck, but I wouldn't be surprised if cash registers appear soon.

# posted by

Anonymous : Friday, February 09, 2007 11:27:00 AM