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    Published on: March 20, 2008

    Now available on iTunes

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, available on iTunes and brought to you by Webstop, your first stop for retail website design services.

    It always is sort of sad when a store goes out of business, and a lot worse than that for the people who actually own those stores.

    I’ve gone through two going-out-of-business sales in my life, and they were among the more wrenching experiences that I’ve ever had. They were clothing stores where I worked my way through high school and college, and even after college when I was an eight thousand dollars-a-year newspaper reporter and needed to keep a second job.

    In both cases, the owners brought in these companies to run the sales, and they brought in all this crappy clothing to sell at huge markdowns, and it seemed as if it wasn't just that the doors were closing, but that the souls of these places were being ripped out. I remember it being horrible, just horrible…and I wasn't an owner, just an employee…albeit an employee who felt pride of ownership because my bosses made me feel that way.

    I mention this because of two stories I saw this week about independent supermarkets. One story was in the Republican-Herald in Pennsylvania, where a supermarket called Hanrahan’s in Mahanoy City has closed.

    According to the story, the store has been there for six decades, “filling and sometimes delivering grocery orders to older residents, butchering meat at the deli and selling a few handfuls of penny candy to youngsters.”

    When economic tightness and tougher competition combined to make things difficult for the Hanrahan family, they say they tried everything from changing suppliers to reducing their advertising expenses. Then, they decided to try to sell the store…and when the word spread, customers assumed they were closing for good, and business got worse. And now, they’re closed.

    And then, about the same time I read that story, I got a note from the folks who own the Blue Moon Grocery in Easthampton, Massachusetts, which has been put up for sale by the owners, Deborah Robinson and Lisa Mascaro, who apparently have decided to move onto other things. They say that they’ve established a market for specialty and natural foods that now can be exploited by a new owner … and I hope they are able to sell the store and that the new owner finds success. On the other hand, it probably is a tough time for any store that is labeled as “upscale,” what with the economic hard times that seem to be sweeping through the country. And I hope that they don't suffer the same fate as Hanrahan’s – that by putting the store up for sale they create the impression that the place is closing, and that the shoppers simply go elsewhere.

    I haven't been to either of these stores, so I cannot judge how good or bad they may be, or how well they served their neighborhoods, or whether they really have been competitive. But I feel bad for the owners, regardless…because when you have your own business you invest your heart and soul in it – not to mention your money – and when the end comes, it is dark and never pleasant.

    And I wonder how many stories like these we’re going to read in the next few months and years. Too many, I fear.

    I do know one thing, though. I would urge anyone concerned about their ability to compete to factor into their thinking the fact that conventional wisdom is exactly that – conventional. That’s a good time to break the mold, change the model, and find new ways to connect to shoppers.

    Because I suspect that in coming days, the same old, same old isn’t going to cut it.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: March 20, 2008

    At its annual meeting yesterday, Starbucks CEO Howard Schultz rolled out a series of initiatives that he said are designed to improve the company’s fortunes, generating new sales and boosting the share price.

    Among the moves:

    • A new automated espresso machine called the Mastrena, made in Switzerland, that “grinds coffee for each drink and has a lower height that will allow customers to see baristas making their beverage,” according to the New York Times. Starbucks expects the machines to be in all of its stores by 2010.

    • The Times also reports that Starbucks will acquire “the Coffee Equipment Company, the four-year-old Seattle-based maker of the Clover coffee machine, which brews a more expensive, higher-quality coffee one cup at a time. The price was not disclosed. Starbucks will roll out Clover systems in select markets.”

    • Starbucks also introduced a new coffee blend, called Pike Place Roast, that Schultz described as “a coffee so fresh that those people who drink it with milk and sugar will want to drink it black because of the sweetness.”

    • The Times reports that Starbucks baristas “will be directed to brew smaller batches of coffee and refresh the coffee in urns every 30 minutes. Today, coffee can sit in Starbucks’ urns for as long as two hours.”

    • Schultz also said that customers using the Starbucks card now will be able to customize their espresso drinks with soy milk or flavoring at no extra cost.

    USA Today also reports that “Starbucks has strengthened and lengthened its relationship with Conservation International, a non-profit concerned with responsible land use. The companies declined to state the financial commitment.”

    • The company also plans to “introduce health- and wellness-related food and drinks and energy beverages later in the year,” according to the Times.

    • And, Schultz introduced a new social networking site,, which will serve as both a corporate blog for Starbucks executives and a place where customers can make suggestions, observations, even criticisms.

    USA Today reports this morning that “consumers will be encouraged to submit ideas, to comment and vote on ideas from others, and even to follow along as ideas evolve into real products. Some 48 Starbucks employees will respond to comments on the site, and Schultz will have a blog. Alas, consumers will not be compensated for ideas that Starbucks adopts.”

    The Wall Street Journal reports that “the company has stopped testing $1 drip coffee because ‘at the end of the day, we were not selling many,’ said Michelle Gass, senior vice president, global strategy.”

    “This is the first time the U.S. business is under pressure; it’s a character test,” Schultz told the meeting. “But it’s not about the economy. We don’t want to use that as an excuse. And it’s not about the competition. Don’t believe the media hype. There’s no coffee war going on. This is about us. We somehow evolved from a culture of entrepreneurship, creativity and innovation to a culture of, in a way, mediocrity and bureaucracy.”

    KC's View:
    Two notes about this.

    First, I hope that both Starbucks management and the investor class realize that this is a long-term play. Overnight results, especially during what at best is an economic malaise, probably aren’t going to happen.

    Second, Starbucks still has to deal with the size issue. Schultz refers to his desire to re-establish “a culture of entrepreneurship, creativity and innovation,” but those things are terribly difficult to achieve when you have as many stores in as many places as Starbucks does. If the retailer went off the rails, it happened because of an over-arching desire to dominate, which would drive both sales and the share price.

    At this moment in time, it seems to me that management has to pretty much ignore the immediate share price and aim toward long-term consumer value…and trust that the stock market price will take care of itself.

    Finally, I have to say that I am disappointed that Starbucks did not announce any sort of loyalty program for people who use its cards. It seems to me that this was low-hanging fruit, and they don’t seem to have reached for it.

    Published on: March 20, 2008

    After much speculation, Costco Wholesale has confirmed that will open stores in Australia, with Sydney and Melbourne planned entry points – though no sites have been finalized yet. The company hopes to open its first Australian unit in 2009.

    "There's a lack of competition in the (Australian) market," Costco's Australia country manager Patrick Noone told Reuters this week. "We have a well-run operation and there are efficiencies of scale selling merchandise in bulk.”

    KC's View:

    Published on: March 20, 2008

    • Published reports say that Wal-Mart plans to open its biggest US store on the outskirts of Albany. The store will be “a 260,000-square-foot, two-story supercenter selling department store merchandise as well as groceries, liquor and automotive and other services,” according to a report by the Associated Press. The grand opening is scheduled for May.

    • The Wall Street Journal reports that the US Supreme Court decided this week not to hear the case of Deborah Shank, a former Wal-Mart employee who was permanently brain damaged in a car accident eight years ago. Her medical expenses were covered by Wal-Mart, but when she sued the person who caused the accident and won, Wal-Mart sued to get back more than $400,000 in medical expenses – something it was allowed to do under the terms of the company health plan.

    According to the Journal, “More companies see such recoveries as a way to make a dent in soaring health care costs. Daphne Moore, a Wal-Mart spokeswoman, said, ‘It’s a very sad case, and we understand that people have a very emotional and sympathetic reaction.’ But the plan, she said, is obligated to act in the interest of the health benefits of its employees as a whole. The benefits are designed so that when an employee does have an accident, ‘the plan steps in and covers those medical expenses so our associates don’t have to worry about them being covered,’ and then later to reimburse the plan if and when they receive funds for the accident from a third party, she said.”

    The case has been a public relations problem for Wal-Mart, which has ended up looking heartless because Shank does not have many financial resources, and is likely to be going on public assistance at some point.

    KC's View:

    Published on: March 20, 2008

    Several stories about the security breach at Hannaford Supermarkets that became public this week have referred to the company first having become aware of the problem on December 7. However, subsequent stories that we read yesterday noted that while the breach apparently first took place on December 7, Hannaford only became aware of the problem in late February – several weeks ago.
    KC's View:

    Published on: March 20, 2008

    • The management consultancy Hay Group in the UK has released a new survey saying that Tesco is the most admired British company. Sainsbury came in second.

    The Hay Group said that “the 2008 Most Admired rankings are testament to the extraordinary and continued success of the UK retail industry. It is one UK industry which is truly world class … renowned for its innovation, customer service focus and swift response to changing consumer tastes. One reason for its consistent success is the performance-driven culture which permeates many UK retailers.”

    KC's View:

    Published on: March 20, 2008

    • General Mills reports that its third quarter net profit rose 61 percent, to $430.1 million, compared with $267.5 million in the period a year earlier. Net sales rose 11.5 percent, to $3.4 billion.
    KC's View:

    Published on: March 20, 2008

    Paul Scofield, one of the greatest British actors to grace the stage and the cinema, died yesterday at age 86. He had been suffering from leukemia.

    In various obituaries, it was noted that Scofield was a rarity – a star without ego, a man who lived almost his entire life in the same part of Southern England where he was born, and who was married to the same woman since 1943.

    Perhaps his greatest role was as Sir Thomas More in Robert Bolt’s “A Man For All Seasons,” which he played on the London stage, on Broadway, and in the movie version, for which he won the Oscar. One speech from that play has been quoted many times here on MNB, but in view of the peccadilloes of public men that have been in the headlines recently, it is worth repeating.

    At this moment in the play, More is explaining why he won’t make the politically expedient decision of approving of King Henry VIII’s divorce…a decision that eventually will lead to his beheading. And he says:

    “If we lived in a State where virtue was profitable, common sense would make us good, and greed would make us saintly. And we'd live like animals or angels in the happy land that needs no heroes. But since in fact we see that avarice, anger, envy, pride, sloth, lust and stupidity commonly profit far beyond humility, chastity, fortitude, justice and thought, and have to choose, to be human at all, why then perhaps we must stand fast a little, even at the risk of being heroes.”

    KC's View:

    Published on: March 20, 2008

    Tomorrow marks the observance of Good Friday, and MNB will be taking the day off. We’ll be back Monday … and look forward to seeing you then with fresh news in context & analysis with attitude.
    KC's View:

    Published on: March 20, 2008

    MNB took note the other day of a Boston Globe piece that suggested there could be confluences for the seeming polar opposites of organic farming and genetic engineering. One excerpt:

    “This idea is anathema to many people, especially the advocates who have helped build organic farming into a major industry in richer countries. As reflected by statements on their websites, it is clear that most organic farming trade organizations are deeply, viscerally opposed to genetically engineered crops and seeds. Virtually all endorse the National Organic Standards Board's recommendation that genetic engineering be prohibited in organic production. But ultimately, this resistance hurts farmers, consumers, and the planet. Without the use of genetically engineered seed, the beneficial effects of organic farming - a thoughtful, ecologically minded approach to growing food - will likely remain small.”

    My comment:

    I have to be honest here – this stuff is way beyond my pay grade. I don't know nearly enough about either farming or genetic engineering to be able to make a judgment about this column. Though I suspect that there will be a lot of argument from the pro-organic community that introducing genetic engineering techniques into their world will subvert and dilute their ultimate goals.

    I have to say, however, that I am intrigued by the notion that people at opposite ends of the scale could come together to create a new approach to agriculture that would, in the final analysis, end up with more people being fed. Which I think is supposed to be the point.

    Is it too much to hope that as a people we should be able to keep open minds and look for complex solutions to complicated problems? As opposed to being narrow minded and open only to knee-jerk solutions to problems defined as simplistically as possible?

    I was right about the objections. One MNB user wrote:

    I'd like to know who at the Boston Globe owns stock in Monsanto? Intensive mono-crop agriculture, dead soil and unhealthy plants are the direct link toward uncontrollable pest invasions. Companies genetically modify seeds so that they work along the expensive pesticides they produce. This is how it is marketed to farmers. You
    don't buy one without the other. This is how organic GMOs would work in the perfect world envisioned by the writer. The system creates expensive dependencies off the farm.

    "Organic" is not a type of milk (borrowing from a quote). It is not a knee-jerk solution. It's a method of agriculture that works to create balance and health in soils. Healthy soils lead to healthy plants, which are naturally more resistant to disease and infestations. It's a more labor intensive way to farm which adds to farm costs. Organic
    farmers are not eligible to partake in the farm subsidy program, so they sell their product at a more true market cost. The consumer pays for this at the grocery store. The cost of most conventionally grown products in the marketplace does not take into consideration farm subsidies, petroleum-based pesticides, herbicides, fungicides (most made from foreign oil), the cost to the environment as a result of intensive chemical farming, etc. These costs are not built into the price people pay at the grocery store. Naturally, those products come across as being less expensive, though the consumer ends up paying in other hidden ways.

    The solution to feeding the world is to get more people back to the land and farming, not to dumb-down organic standards by gunning for GMOs. Most of the world's "growing population" has either left their farmland or been forced off for various reasons political and economic. These farmers are now crowded into urban centers with no job skills in order to adapt. There are less people farming and certainly less people farming in their traditional methods which, by the way, includes saving their seeds at the end of the season to plant the next year (that means, basically, free seeds every year). You can't do that with genetically modified seeds. (If you're curious about how this works, read about the plight of cotton farmers in India.)

    I, personally, am not comfortable with the fact that only one or two companies control 95 percent of the world's seed banks and that 80-90 percent of US farmland is planted in GM crops. The cost to develop GM seeds is huge, and only a few companies with those kinds of financial resources can do this. It is projected that organic will account for 10 percent of the food market before 2020. I imagine those who control 95 percent of the world's seed will have something to say about that.

    I am not an organic farmer, though I work alongside them on a daily basis. Let the organic farmer work out creative solutions toward creating healthy soils and plants. Let them remain independent of those one or two companies for their seed. Let them reap the financial benefits. Organic farming methods are proven and are sound without the use of GMOs. Organic and other forms of sustainable agriculture can feed the world. I think consumers have declared loud and clear that they are opposed to GMOs. Certainly that's the case for most European countries.

    No one knows the long-term effects of consuming genetically modified organisms. The wizard behind the curtain is more interested in control of market share, not feeding the world.

    MNB user Sabrina Wootton wrote:

    This is a very complex issue. Your op-ed indicates that you may not understand the scope. The organic farmers are NOT narrow minded... that isn't the case. Just because GMO crops have moved forward at an accelerated pace, doesn't mean this is good for agriculture, world hunger or the planet OR your health for that matter. The giants like Monsanto and Novartis would like the fairy tale to be believed that GMOs are solving all those issue, but the reality is that playing God with genetics for crops doesn't make any more sense than doing the same with livestock or humans. The unknown ramifications are so huge, only the passing of time and the ensuing affects will tell the real story over several generations. Had these experiments been conducted in well constructed, protected "bubble environments" instead of ramrodded forward all around the US farmlands and other parts of the world, I think we'd all be much better off in the short and long term. It isn't that farmers cannot produce enough food to feed the population, but the encroachment of housing, industry, shopping malls, and other building into farmable land and the lack of viabilty for small farmers to successfully make a living are the major problems in the US. Farmers are such a minority, and agri-business is so powerful...

    From the very first line of my commentary, I conceded my ignorance about agricultural issues.

    MNB user Rosemary Fifield wrote:

    My first thought on reading this is, why can't the two concepts be merged without calling it organic? Why can't we simply do what's best for all and use organic farming methods and genetically modified seeds to provide what's needed? Just don't label it organic.

    This sounds sensible to me.

    MNB user Jessica Duffy wrote:

    If you are not using herbicides in your organic fields, then you do not need herbicide-resistant crops, yes? It is thought that if Bt toxin is approved for organic farming, then there should not be so much resistance to corn engineered to produce Bt. However, the grower is then required to buy new seed every year from the manufacturer that has breeding strategies to prevent the grower from being able to grow future seed from the engineered plant. Also, there may be unforeseen consequences to our ecology if the engineered plant cross-breeds with wild plants. The results could be far-reaching and uncontrollable, such as impacts on non-target insects and animals that far-surpass the damage that aerial spraying of a toxic pesticide could produce. Plants and weeds that are already damaging pests by themselves could become more resistant to their natural insect and animal feeders, requiring further use of toxic herbicides to control. The unique ability of plants to hybridize makes genetic engineering dangerous to our environment.

    MNB user Liz McMann wrote:

    Sure - combining GE and organic methods would feed more people. It would also line the already deep pockets of Monsanto, who controls nearly all the GE seeds out there. It would feed more people until the terminator gene kicks in and farmers realize they can’t save their own seeds and are essentially enslaved to a corporation that now OWNS the reproductive properties of plants.

    And sure, GE pollen drift doesn’t pose a threat. Especially when Monsanto can sue every small farmer whose crops accidentally cross-pollinate with GE varieties. GE genes are turning up in organic products already, despite measures taken to prevent cross contamination.

    While the example in the article points out one case where pesticide usage was reduced after switching to GE crops, I suspect this is not the norm. When crops are genetically engineered to be resistant to an herbicide like Round Up, I’m pretty darn sure they’ll be spraying that stuff on thick. The pounds per acre usage of glyphosate (Roundup) on soybeans in the US increased 200% from 1994 to 2006, despite the use of GE soybeans for 80 % of soy grown in the US (NASS).

    It would be nice if technology and organics could work together. We could start with increasing funding for organic research in the Farm Bill. I guarantee that if we sunk the same amount of money that goes into GE research into organics research- we’d be feeding the world without GE crops in no time.

    Of course, making our planet and environment healthier in a holistic way is not nearly as profitable as slinging seeds and pesticides, so I won’t hold my breath waiting for organics to beat out GE crops overnight.

    Another MNB user wrote:

    Peaceful co-existence didn't work before and it wouldn't work here.

    "Diet for a New America" by John Robbins outlines several strong points on how to maximize food supply. We don't need to mess around with DNA in our vegetables fruits and grains, and the potential risks that come with doing that.

    But MNB user Joe Colyn chimed in:

    As "far apart" as both "sides" seem to be, there is in fact a lot of common ground. GE is a toolbox that allows for the production of healthier plants - resistant to the competing pressure of pests, be they weeds, insects, or viruses and result in reduced pesticide use and allow for better care of the soil/water/environment (fewer toxic residues, less tillage, less fuel used). Organic practices strive for the balance of plant/soil health that can yield food, yet continues to have challenges with pest and practices (tilling for weed control, for example). The convergence of the GE technology and the organic practices could realize some very good solutions for feeding the world.

    Onto another subject….

    MNB had a piece about nutritional labeling the other day, which prompted MNB user Neil Golub to write:

    Glad you can now see the potential impact of the Overall Nutritional Quality Index (ONQI). Price Chopper and HyVee will be among the first.

    There is very little comparison between ONQI and Guiding Stars. Stars is very limited. On the grocery shelves, 72+% of the items offered for sale have no rating so one really has to hunt around. I give Hannaford credit for doing a good job on what little they have to offer. However, it pales in comparison to the offer made by ONQI.


    • 2½ years in development. 11 nationally recognized nutritionists. A real all-star team led by Dr. David Katz.
    • ONQI goes way farther than Stars.
    • We can achieve 100% of the food items with ONQI vs. 28% with Stars.
    • The complexity of nutritional information is weighing or balancing all the good nutrients from the bad. ONQI measures some 30 nutrients and then weighs them against the bad ingredients in a product such as sugar, salt, saturated oil, trans fat, etc. It considers good calories vs. bad calories.
    • All of this information is processed through an algorithm that weighs and balances the good and the bad and gives us a score of 0-100. (0 stinks and 100 is wonderful).

    Soon, a customer can stand in front of the snack section and pick a snack, chip or crackers with the highest ONQI rating, i.e.:

    • Pepperidge Farms Goldfish has a rating of 2 while Nabisco Triscuits is 27.
    • Most produce items are 70-100 – great numbers.
    • Fresh meats range from 40-70.
    • Packaged goods scores are all over the lot. Cereals that sound healthy from the packaged ingredients may, in fact, earn a low ONQI score because of salt and sugar content.

    ONQI sees through all the ingredients and gives a customer simple to understand information … “even for a caveman”.

    What is really important is that all items will be rated so one can compare cereal to cereal, cupcake to pound cake, peaches to strawberries, pudding to watermelon, or grapes to cookies.

    Now the customer can be very intelligent if they can read a number. The higher the number, the better the nutrition.

    ONQI is very thorough and we view it as a winner and Price Chopper intends to do a great job introducing it to our customers.

    It should be noted, just for context, that Neil Golub is CEO of Price Chopper Supermarkets in upstate New York.

    KC's View:

    Published on: March 20, 2008

    So here we are in the middle of one of the most interesting election cycles in years, and what is everybody talking about?


    Everybody is talking about former NY Gov. Eliot Spitzer and the fact that he had to resign because he was spending thousands of dollars on hookers. And then his replacement, Gov. David Paterson, ends up admitting that he and his wife went through a rough patch during which they had affairs with other people. (When I have a fight with my wife, I go to a movie. Go figure.)

    And then, because the world apparently is spinning out of control, the tabloids in New York suddenly start reporting on allegations that the former governor of New Jersey, Jim McGreevey – who resigned because he was having a homosexual love affair even while being married, and then put his paramour on the state payroll – was actually engaging in threesomes with his wife and another employee. (The only person not confirming this is the wife, who is suing for divorce and claiming that she knew nothing of his extracurricular habits.)

    I’m beginning to feel cheated. After all, I live in a state – Connecticut – where when Gov. John Rowland resigned, it was because of simple fraud charges, with no allegations made about his sexual exploits. At this point in tri-state electoral politics, that’s what passes for ethical behavior.


    And this during a period of time during which public officials lose their jobs for having inappropriate relationships with Congressional pages, and another gets arrested for having a “wide stance” in a public men’s room.

    I got home from a business trip the other day, and my 13-year-old daughter announced that she’d learned two new words. One of them was “prostitute.”

    Once again, our tax dollars at work.

    Agence France-Presse reports on a Japanese study saying that people who sleep less that five hours a night are more likely to be obese and struggle with diabetes.

    To which I have the same reaction that I have to so many of the studies that get reported here and elsewhere.


    By the way, how strange is it that the woman who accepted money for sex from then Gov. Spitzer – which I think is called prostitution and is illegal in the places where it happened – is now getting big offers from companies who want to use her notoriety to sell product?

    It is as if the word “shame” does not appear in any of their personal dictionaries.

    Great piece on this week by Mike Steinberger about the weird and complicated patchwork of state laws and regulations that control how wine is shipped in the United States. My favorite paragraph:

    “The way we transport and deliver booze in this country is as Byzantine as the process by which we choose presidents. Earlier this month, the battle over wine and the battle for the White House even intersected, briefly. At the same time that Hillary Clinton spokesman Howard Wolfson was comparing Barack Obama to Ken Starr, the Specialty Wine Retailers Association was circulating a fundraising letter lauding Starr's leadership in the fight to liberalize interstate shipping laws (you read right: Ken Starr is trying to make it easier for you to buy wine, not harder). Personally, I think the current primary system is no way to choose a president, and the three-tier distribution system is definitely no way to get a man his grog.”


    Is there anyone on the planet who doesn’t feel that Paul McCartney got a raw deal in his divorce from Heather Mills, who, it appears, can most charitably be described as a gold-digger?

    Good for the Boston Red Sox. In case you didn’t see the story, the players threatened to boycott their final preseason game as well as a planned trip to Japan if Major League Baseball and Red Sox management didn’t pay the coaches and trainers a promised stipend to compensate them for the Japan trip.

    In a lot of ways, we’re talking about big numbers here that are hard to relate to. (I’d like to get paid a $40,000 bonus to go to Japan for a few days.) But in an age when most players seem far more concerned about themselves than other people, it was nice to see a little solidarity.

    Just as it was nice to see the New York Yankees travel to Virginia Tech this week to play that institution’s baseball team. Coming about a year after the tragedy at Virginia Tech, the exhibition game was a way to help the college community find some respite from the grief it still feels.

    Got a good movie for you to rent: “Zodiac,” the David Fincher movie that came out last year and that looked at the decades-long search for the Zodiac serial killer who terrorized Northern California during the sixties and seventies. Split between the efforts of police and journalists to track the killer, the film sports wonderful performances by Jake Gyllenhal, Robert Downey Jr., and Mark Ruffalo. And while the film is so cool as to be chilling, it also is a fascinating look at how finding the killer destroys the lives of the men obsessed with the search.

    That’s it for this week. Have a great weekend, and I’ll see you Monday.


    KC's View: