Photo by Deborah Stone
The brainchild of tech programmer Ervin Peretz, Terra Bite is a voluntary payment café that opened in November 2006

It’s definitely an unsettling feeling to look at a menu and realize it doesn’t have any prices listed. It’s even weirder to learn that it’s up to the customer to pay what and when they like, or not at all. But, that’s how it is at Terra Bite Lounge in downtown Kirkland. The brainchild of tech programmer Ervin Peretz, Terra Bite is a voluntary payment café that opened in November 2006 to much hype. Peretz was initially besieged with interviews from media all over the country who were intrigued with his concept. Almost a year and a half later, I chatted with Peretz to find out how things were going with his novel “on your honor system” operation.

“We’re averaging over 100 people a day,” says Peretz. “And we have a lot of regulars now. We take in less per person than the chains would, but we’re more efficient and streamlined than them because a place like this needs minimal management and supervision to operate. We have just one person working behind the counter, who deals with the food and drinks. And we don’t need a cashier because there’s no cash handling.”

As for making a profit, Peretz adds, “We’re breaking even on the food and drinks, which was our goal, but in order to cover the costs of rent and labor, we would have to probably double the number of customers.”

The majority of the people who come to the café pay something, according to Peretz, with the average transaction at about $3.

In order for this type of model to operate effectively, however, 90 percent of the customers need to be mainstream, self-regulatory and honest. Peretz points out that a place like Terra Bite can only sustain itself in a community with an upscale demographic.

He says, “There’s a level of affluence in this area that promotes civic conscience and feelings of trust. Terra Bite’s model is based on aggregate trust. We can’t predict whether any single customer will do the right thing, but in the aggregate, the behavior is fairly predictable.”

The response to the cafe (the name which is a play on the tech term “terabyte,” a trillion bytes, as well a reference to land and food) has been mostly positive according to Peretz.

Customers enjoy the casual ambiance, the comfy couches and chairs, free wifi and console games, an above average reading selection and, of course, good coffee.

He admits, however, that there are people who are uncomfortable with the voluntary payment concept because it’s so foreign to them and they wrestle with whether or not they paid enough for their transaction. Even though there is an anonymous drop box for the money and no one knows how much you pay or if you even pay at all, some folks still find it difficult to adjust to the system.

“But, I think that the fact that this type of model generates discussion, both positive and negative, is good for society,” comments Peretz. “The dialogue is healthy.”

It’s important to note that Terra Bite is a for-profit business and non-charity. The owner emphasizes that he is not some sort of activist with an axe to grind with mainstream society. Nor is he a saint.

He states that though the model depends on people to pay what they would elsewhere for their beverages and food items, those who are unable to do so will still receive the same cheerful service in a “non-stigmatizing, upscale customer setting, with no political or religious system, and with full-time availability.”

Peretz sees Terra Bite as an experiment and visible demonstration of the level of public honesty.

In his opinion, the café’s existence is proof that a high level of honesty prevaSils in our society.

He says, “The American public doesn’t give itself credit for how honest it is. I believe people feel strongly about the notion of wanting to be good and that this is universal belief.”

Peretz has faced several challenges as a first time retail owner and he admits that he has made numerous mistakes along the way.

He initially perceived that the homeless population might present a problem, but he was wrong. In reality, it was the unsupervised kids and teens that abused the situation and were destructive and distracting to the baristas and other patrons.

“We had to start excluding them, unless they were with an adult,” comments Peretz, “because they would come in groups and then the pack mentality took over.”

Then there has been an image issue that he has had to confront: “We fight the soup kitchen image because some perceive us as a charitable endeavor, but they’re wrong. Our first priority is to maintain an upscale image to keep our mainstream clientele because they are the ones who fund everything. By leveraging the efficiencies in our trust-based process, we can then also benefit those who can’t pay, without asking for charity.”

As for the future of Terra Bite, Peretz says that he will determine his next step in the coming year. For now, he plans a cosmetic remodel of the space, along with an expanded menu of food choices to complement the beverage selection.

“We want to work out all the kinks and then we’ll see where we’ll go from there. I hope we’ll be able to open other locations in the future, as the Terra Bite model is highly repeatable.”