Does it Pay to be Honest?

OK L.A.B. Rats,

Its is that time of the month where I get to unleash my newest piece that I wrote for Food Service News.

If you are new to this reality show...F.S.N. is the Hospitality newspaper that goes out to all the Food Industry pro's in the state of Minnesota.

If you ever get a chance....check them out online and read some of the stuff that their diverse writing staff toses out each month.

Better yet....compare my posts here to what shows up on their official website.

My editor is Mike Mitchelson, and he is such a pro.

90% of the time, the guy cleans up my thoughts and actually makes me look 10 times brighter than I really am.

I am lucky to be plugged into him.

I'll shut up now and 4-3-2-1..........

Does It Pay To Be Honest?

Submitted by Klecko

DATELINE – Snap Fitness / December 2011 –

I think it was a week before Christmas when the boys and I held another one of our informal “Feats of Strength” contests. There were four of us rotating around the leg press machine, each one of us doing our best to lift weights that would impress legendary louts like Paul Bunyan.

Then just as the grunting and testosterone were about to hit levels high enough that they’d irritate the other 50 people who weren’t engaged in our competition, the front door came crashing open.
A huge box did its best to squeeze through the front door, but this cardboard cube was even bigger than one of those Amana refrigerator boxes that you’d use for a fort when you were a kid.

So as you can imagine, our contest stopped and most of us in the gym waited in anticipation to see, not only what was in the box, but who was on the other side, pushing it.
As expected, the guy hauling this load was none other than Josh Malaske.

In addition to being the General Manager of our club, he also runs 4 other Snap Fitness Centers across the Twin Cities and surrounding metro.

Within minutes Josh began unpeeling layers of packaging, and to everybody’s relief, we saw that our gym had just adopted its first commercial cooler.

Then just minutes after plugging it in, Josh darted back to the parking lot and used a two wheeler to bring in a small tower of boxes.

There were crates of bottled water, an entire rainbow of Gatorade flavors, protein bars, muscle milk, 5-Hour Energy shots and a dozen other pre and post work out options.

As Josh began to load the cooler with these items, the rest of us felt like the show was over and went back to work.
Twenty minutes later, my buddy Ian taps me on the shoulder and pointed in the direction of what was now a fully stocked cooler.

There stood Josh holding a black metal box, but he looked befuddled.

“Now what are you doing?” somebody asked from the treadmills.
Josh explained that he needed to try to figure how he was going to attach this cash box to the cooler.

“Why would you need to do that? Won’t we just give our money to the on duty attendant?”
That’s when Mr. Malaske reminded us that we had the privilege of working out in a 24 hour facility, and during some of those hours there wouldn’t be a gym representative on hand.
I was confused so I chimed in…

“So why do you need to attach a cash box? Won’t your counter staff just lock the cooler when they go home?”
Josh smiled and then explained…

“No, it’s not going to work that way. The cooler will remain open at all times. I’m not going to start locking stuff up around here. I trust you guys. I’m just going to attach this box to the cooler and then I’ll put a sheet with the prices on the front of the door. Club members can just toss the cash in there and take what they need.”
Me and my muscle-bound buddies started to chuckle. Surely he had to be joking, there had to be a thousand dollars worth of inventory in the cooler. Did Josh really believe that our membership wouldn’t abuse this system?
Half a year has passed since then, and recently I caught up with Josh and asked him how this experiment was working out.

“Yes, the experiment is working well, and we plan to continue to offer the honor system to our members. Of course we do have some knuckleheads that think they don’t have to pay for the items they take, but overall members are very honest and things are working in our favor. We have also installed the same Honor System Café at our Cottage Grove location and things are going well. It would be great to have them at all of my locations, but trying to find extra space for coolers is challenging.”

Next I asked if it was just the company’s goal to break even, but Joshed really seemed to believe that you can make a profit in a business arena that is founded on trust.

“We are estimating additional revenue between $5000 to $7000 annually, but another interesting point is that since this program was put into place, we have had a 25% increase from our 2011 membership sales. Actually we started our year off at a 40% increase, but our momentum slowed down a bit when warm weather came earlier than expected."

As you can imagine, this marketing strategy made for interesting conversation at the gym. Even if Josh was just breaking even, this was still a win-win because whether the people in his gym realized this or not, they no longer were viewing themselves as clients, but more like family.

After experiencing this curious trust, I did a Google search to see if any other companies were employing similar campaigns. One interesting piece I ran across was written by Paul Ballew for a publication called Shopper Culture. He wrote a story called Panera Bread Honor System Paying Off.

The article talks about how the Panera Cares non-profit feeds close to 4000 people every day. The bakery suggests a set price for each item, but customers pay whatever they think is fair, or in some cases…whatever they can.
Statistics provided indicate that 65% of the customers pay the recommended price, while the balance pays more, or less.

To date, the restaurant has almost broken even.
According to the New York Daily News, “Panera hopes to open a similar location in every community where it operates.”
A few days after reading this, I stumbled across another internet article that claimed businesses didn’t need to worry about customers ripping them off, because their employees would steal $8’s for every buck a shopper would steal.

So according to bakers math, out of the estimated 36 billion dollars that are swiped from American retail businesses each year, only 4.5 will be taken by customers while 31.5 billion will be pocketed by the people who are working for these concepts.

In closing, I asked Josh if his client base had thanked him for extending his trust.
His response “We have many comments from members from both locations about the Honor System Café. Members really appreciate the convenience of the cooler and the different options available.”
With that said, I stand corrected, but who would have thought…the majority of people are actually decent.
With that said, don’t get any funny ideas, when Klecko drops off your bread order tomorrow morning, he’s going to want to see cash on the barrel head.

Talk to you next month.