Welcome to the No Cost Cafe


Imagine walking into a cafe, ordering a coffee and a biscuit, grabbing a seat and plugging away on your laptop. Then at the end of the week you drop a $20 into the anonymous drop box. Notice the missing step? The coins and bills to pay for your order when you receive it? Welcome to the Terra Bite cafe. It’s all about pure karma.

Terra Bite plays on the term “terabyte”, and references earth and food. It’s a dream turned into reality by Google programmer Ervin Peretz. Ervin came up with the idea of the pay-what-you-can cafe located in downtown Kirkland Washington, while arguing in a bar with a friend. Peretz put his money on the fact that people are for the most part good, but can be influenced by their environment. If people see good, they’ll do good as well.

Peretz ponied up $4000k/month for a lease on some space to set up the cafe. The break-even point for the Terra Bite cafe is about 100 customers, with $3 per transaction. So far they are sitting at 80 per day. It seems like most people are overpaying for their coffee and treats as well. The idea is built on wanting to contribute something, because of the open, honest environment. Ervin has plans to open up other locations if the idea pans out. If it turns out that 20% of customers are dishonest, then he might also think about installing cash registers.

What do you think about this social experiment? Could it become the ultimate web working location? Or will the pressures of overpaying be too much to handle?



This is a great idea. It wouldn’t work in my town though, which is a shame, as the ethos is wonderful.


They should put a screen on the wall with the ‘break-even’ gap. This way the users of the service would be able to put some reality into the equation.

Regardless it’s so great to see that the majority of comments on this appear to be supportive of the karma concept.

“Be the change you want to see in the world” Mahatma Ghandi

Neal Watzman

In the US, where so many stores view the customer as a thief, it is refreshing to see a business that is relying on the honesty of its customers. I hope they suceed.

You know, in many cases, people do rise to the expectations set for them.


I used to go the hare Krishna “temple” just for the food and they had an honor system I would regularly throw $5 to $10 in the jar for the “free” meal they would provide every day .


It seems to me that the theme “covering costs is ok, but profits are not” recurs. A bit odd amongst self-employed and web-working people, dont you think?

I go to our neighbourhood cafe (Starbucks only because it does not smell of food and takes ‘plastic’ – yes it is in the UK so we are different that way) to work on my thesis. One coffee (£1.69 short, £1.89 small – look Mama, no use lingo!) and I sit for 6 hours or so. They sell one coffee, do not bother me and do not rely on my “honesty” to leave that £10 note in the drop-box.

In any case I do not carry cash, prefer to pay for the privilege and do not like the warm-n-fuzzy afterglow when my business brain is asking – why have this in a ‘rich’ neighbourhood with more laptops per home than people? why not offer this to homeless people when they want a shelter from icy rain on some days and let the rich neighbours pay into the drop-box to sustain it? I see a disconnect..


There have been many variations on this idea. I remember reading a long discussion about a business that was entirely on this model – he delivered boxes of donuts to offices and had a small box for people to pay for the donuts (all on an honor system). Each day he would return, pick up the uneaten donuts and the money.

I think it was something Malcolm Gladwell wrote. About how this which started as business was also a bit of a measure of honesty – and that apparently it was cultural – some businesses were very honest – others extremely not. (there was much more, I’ll see if I can find the link – or perhaps someone with more time can search it).

I think it is also very well worth noting that there is NOTHING inherent in this model that requires it be in an “affluent” environment. (for one in a less affluent environment the starting costs – such as the space lease – might be lower). Rather what it requires are:

– trust in your clients (which has historically be much higher than it is mostly today – recall the idea of “tab” which you could run up at most neighborhood stores?)

– communicating with those clients as to what you as a business need

– providing great service that inspires people to pay for it

What this type of business does assume – which I do think is a good starting point – is that people will keep coming back to their cafe on a regular basis – and that those same people will want to support that cafe and pay for the services they get there (think of it like a modern form of a private club – but one open to anyone who walks in the door)

I actually think this model might work BETTER in “less affluent” environments. There the impact of assuming trust will be very high – not to mention the value of the space on a community (I spend a lot of time in cafes all over the city – currently San Francisco but also in any city I visit – it is very very clear that locally owned cafes play a role in revitalizing neighborhoods.

On bit of advice – he shouldn’t be afraid of giving customers lots of opportunities to pay for the services – i.e. not just a space/box which assumes people pay on a weekly basic but also a space right at the counter. I’d also suggest that there be TWO boxes. One “for the cafe” and one a “tips for the employees”. This would allow for a direct signal of the value of those employees, something potentially missing if people aren’t easily dropping their change in a tip jar etc.

He will also have to figure out a reasonable and valid approach to the local sales tax (not sure about Seattle but many cities have sales taxes on coffee & pastries). Likely this is somewhat new ground for the sales tax authorities – I’d suggest that he figure out something and err on the side of paying too much (and the karma is not negligible to keep in mind here – sales taxes support very directly all the services of cities and states which in turn allow – hopefully at least – for the success of businesses and communities)



The more opportunities we have where we’re expected to be honest, the more honest we’ll be. The more opportunities there are where we’re treated like criminals, the more criminal we’ll be.

I agree that in the current day, this concept would have a hard time working in an urban, low-income area-yet might succeed in an affluent area. However, I also remember a time when a man had dignity and integrity even if he worked at a gas station or other non-sexy job, he did his job with enthusiasm and hard work. I believe that that time may be gone, but we can slow the process of our degradation by revamping small ideals of honesty and contributing to the greater good whenever or wherever we can.


Coffee 2.0!

This is awesome concept and just plain good for the soul.


the daniel

@Ben Langhinrichs:

The trains/subways are the same way in Los Angeles. $1.25 for a ticket, but no turnstiles or security, just an occasional ticket check (I spent a good year riding the train and had my ticket checked not more than twice). $250 fine if you don’t buy that $1.25 ticket though!

I like the idea of this cafe – here’s an expansion on the concept:

People who get to donate whatever they want have to be on the list – geeks off the street can buy at the register, or sign up to be on the list. Donations are made through paypal, or a machine, or something – displayed on the wall is an anonymized summary of donations – Patron 1 donated 20 dollars last week, Patron 2 donated 35.. the regulars could define the value of a week as a group that way while avoiding embarrassment about personal contributions.

I can pervert any simple, beautiful idea by adding a complex system to it – maybe I should look into becoming a programmer ;)

Dave Good

In a week where we have been assailed by the purient and lest common denominators of humanity, by which I mean the sad, sorry collapse of Captain Nowak, the tragic death of Ms. Smith, and the appalling media circus that has erupted around them, I am actually happy that someone is willing to see if the “better angels of our nature” are still there. Can it be that someone still has faith in us, that mankind isn’t swirling around the “bowl”, like some great, brown, proverbial turd, and headed for the drain?

It’s kind of funny, I am gladened by the mere offer of an opportunity to prove my honesty. How have we come to such a state, where a man will lay out coffee, a pastry, and some WiFi, asking only that you contribute for the common good is such an unusual occurance that we consider it noteworthy. Wether his motives are altruistic or not, I believe that this was the world of our grandparents, where a man stood for something, and paid his fair share. That there was trust between neighbors, and even if people didn’t have the coin, you paid what you could, when you could.

I’m not saying that everything was perfect in the past, and thet we are living in the end times, but I think that little efforts like this might just stem the tide of ever-increasing incivility that has become so prevelant in our nation today.


Dave, are you honestly criticizing someone for trying to make the world a better, friendlier place because you don’t think it’s meaningful enough? Every little bit helps, and besides that, this guy doesn’t owe ‘less affluent” people anything. Just because he’s not helping the lowest common denominator doesn’t mean his efforts are wasted or meaningless. I wish the world had more people like him and less like you…

As Theodore Roosevelt said, ““It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. “


It also works in an environment where unemployment is low and disposable incomes are up. We’ll see how well it works if the market crashes again.


seems to work in affluent suburbia, so let’s see him pull this off in a less affluent community…truly like a little hobby for rich tech people, out of touch with reality…if he wants to just throw moola out the window on social experiments, why not consider effective positive change and giving the money to a school or meaningful social program instead of cheap lattes for his neighbors?

Ben Langhinrichs

In case this seems hopelessly idealistic, it is worth remembering that in Germany, the subways have no turnstiles. You are still supposed to buy tickets, but nobody collects them, and while large fines are levied if you are found without a ticket, the primary motivator seems to be that honesty is expected.


I think for once we should belive in human kindness. This is what we do everytime you check wikipedia. You believe in the kindness of the person who wrote that article, you belive that she really reserched it and wrote it as close as possible to the truth. Maybe it should start leaving the web.

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