At first glance, nothing seems unusual. Inside the Terra Bite Lounge on Kirkland Avenue, people sip coffee, read magazines or newspapers, work on laptops - in short, they're doing the sorts of things people do in espresso cafés.
On closer inspection, though, something highly unusual stands out. While you'll find the menu listing lattes and cappuccinos, you won't find any mention of prices. The Terra Bite, which opened in November, operates under a voluntary payment plan. You read correctly. No prices are listed and no money is requested. Nor is there any particular pressure to pay. A small metal box on the front counter unobtrusively informs customers that they can pay whatever they feel is appropriate.
The Terra Bite is the creation of Ervin Peretz, a programmer for Google, and his girlfriend Susie Allsup. The idea of operating a voluntary payment café came to Peretz while he was on vacation in Vietnam. During a particularly long night in a bar, he was talking with some friends about the level of good in society. Of the opinion that more people were honest than is often commonly assumed, he started to wonder whether a restaurant or café could actually succeed economically without asking for payment.
Back home, Peretz kicked the notion around for a year or so. Initially, the intention was to open a soup and sandwich shop, the idea morphed into creating a espresso café. He then took the plunge and decided to give it a shot. The next challenge was finding the right location.
"We chose Kirkland because it seemed like we'd have the best chance of success," said. "It's a relatively affluent community and a fairly educated one, which seemed like necessary elements. The Terra Bite isn't just an experiment. The business has to be economically viable or we won't be able to stay open."
At first, people reacted to the voluntary payment scheme with curiosity, interest, sometimes even suspicion. Some people didn't get the concept at first, didn't really know how they should behave. Business was slow at first, compounded by last year's windstorm.
But the café soon generated a great deal of media attention as well, including an article in The Seattle Times, a spot on CBS news and a feature on NPR's "All Things Considered." Such attention, Peretz admits, has been helpful to Terra Bite's bottom line. Now that the word has spread business has improved a great deal. He and Allsup have hired several additional employees - besides Peretz and Allsup there are now four - in response to the increase in business.
"The attention has been a little validating. If we had failed early, people would have really been asking 'what was he thinking?'"
As for how well the voluntary payment idea is working, the early returns are promising. The vast majority of people pay, often about what they would pay at a conventional café. Some might pay $20 once a week. Some end up contributing significantly more than they ordinarily would.
"Just about all the adults pay something. Some teenagers take advantage of the system, but in many cases it's just that they don't understand how it works. Once someone explains it to them - customers, not me - they often start putting money in the box," Peretz said. "But we knew going in that not everyone would pay."
Peretz and Allsop are still learning how much nonpayment the business can tolerate. But some, of course, pay nothing. Peretz said that his revenue per customer is below what you'd find at Starbucks or Tullys. But his costs are lower as well. For one thing, since there's no cash register, Terra Bite needs far fewer employees. Efficiency is one element that enables the café to succeed.
Another challenge is how to attract customers in a region where espresso cafés and coffee carts are found at practically every corner. Peretz wants to serve the best coffee, the best food - in short, the best experience, in the hopes of attracting and maintaining customer loyalty.
Peretz has expansion plans and is actively looking for another location, quite possibly in Kirkland. He's close to signing a lease on a space where he would open a juice bar. A Terra Bite soup and sandwich shop could follow if the right location can be found.
At the moment, Peretz said the Terra Bite Lounge is very close to breaking even. As the business becomes more established, he plans on donating a share of the profits to both his employees and several charities.
Peretz shakes off the possibility that he might have to abandon the voluntary payment approach in favor of menu prices and a cash register. At this point, he's firmly committed to this novel path. He is confident he'll prove the naysayers, and the non-payers, wrong.
"I think the public doesn't given itself enough credit for honesty," Peretz said.
Doug Schwartz is the editor of the Kirkand Courier. Reach him at doug@ kirklandcourier.com or 425-822-9166.
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