business news in context, analysis with attitude

Published on: December 9, 2013

by Kevin Coupe

Interesting approach by the AMC Entertainment theatre chain, which is in the process of an initial public offering (IPO) from which it hopes to be able to use profits to improve its moviegoing experience (plusher seats, better food and beverages). Instead of just going the traditional route, AMC also is going to its most loyal customers - the 2.5 million members of its Stubs affinity program, who pay $12 a year for the privilege, getting a $10 credit for every $100 spent - and offering them the opportunity to buy shares without broker fees.

In an email to Stubs members, AMC CEO Gerry Lopez wrote that the company is "reserving a number of shares in our initial public stock offering (IPO) for you, our most loyal customers, to reserve on a first-come, first-serve basis. The price per share will be determined by negotiations between us and the underwriters of the IPO, but it will be the same price per share as offered to Wall Street investors.

"We will also give you the same 24-hour head start our employees will receive, in order to ensure you have the earliest opportunity to reserve shares at the offering price. While many companies depend on their customers' support every day, those customers don't always get the chance to own a piece of the action at the same price as Wall Street investors. We're offering this exclusive employee benefit to our AMC Stubs members to express our sincere gratitude for your loyalty."

Lopez goes on to write that "AMC has always been at the forefront of innovation in our industry. We pioneered many important movie-going experiences, like the multiplex theatre format and stadium seating. More recently, we have introduced Dine-In Theatres, recliner renovations, The Marketplace concession stands and MacGuffins bars, not to mention IMAX®, ETX and 3D-capable digital projection. We will continue to innovate in the future, and offering our IPO in this manner, through this platform, is but one of the many ways we nurture that innovative spirit."

AMC was acquired last year for $2.6 billion by China-based theatre operator Dalian Wanda Group.

I think this is a pretty interesting approach; I'm a Stubs member, and it certainly caught my eye when I got the email.

I'm not sure I'll actually invest, but if I were to do so, it would give me a greater investment in the chain and make it even more likely that I would seek out its theaters rather than another chain's. It is all about connections … and an understand that AMC clearly has that businesses have to find ways to forge and solidify those connections whenever and wherever possible.

AMC's approach is an Eye-Opener.

Published on: December 9, 2013

Bryan Silbermann, CEO of the Produce Marketing Association (PMA), had an usually personal take on last week's passing of Nelson Mandela, and his comments - in the form of a memo to all PMA members - seemed well worth sharing here:

"As a native-born son of South Africa, I wept last night as I watched images and heard recollections of Nelson Mandela from the world’s leaders. This giant of a man united a divided country, inspired the world, and offered every one of us so many lessons in leadership and humanity.

"To PMA’s thriving community of members in South Africa, we send our condolences and prayers. During your days of mourning, we will be with you, reflecting on what his life should mean to us all. I know members on every continent share in your loss – we all benefited greatly from the example he set, an example that spanned races, generations, and nations as his influence spread around the globe. Those examples apply directly to our PMA community and this association. Nelson Mandela taught us how essential it is to be inclusive, sharing, courageous, and forgiving.

"Mandela also offers us lessons in association leadership. Consider these three quotes which speak to the culture and focus of this association and the way we try, in our own small way, to educate, collaborate and inspire the growth of our industry:

• 'Education is the most powerful weapon which you can use to change the world.'
• 'Lead from the back — and let others believe they are in front.'
• 'I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.'

"No matter which country issues your passport, every PMA member can learn the timeless and universal lessons from Nelson Mandela. Lessons in leadership know no borders, just as best practices and a shared passion for growing our industry are integral to the purpose of PMA’s global community."

Published on: December 9, 2013

There was an excellent piece in the Washington Post over the weekend that addressed Walmart's urban strategy, focusing on the lessons it has learned in Chicago that influences it strategy in the District of Columbia.

Several things seem clear from the story. One, that Walmart's entry into urban neighborhoods continues to be controversial, with arguments being made from both sides of the issue being made about whether the retailer is good or bad for local business and communities. Two, that it may not matter how much controversy there is, because Walmart is intent on bringing stores to areas where it has not been represented, if only because it has to find growth opportunities where they are available.

You can read the entire piece here.

Published on: December 9, 2013

The Associated Press has a story about Hampton Creek Foods, a San Francisco startup that "seeks to disrupt a global egg industry that backers say wastes energy, pollutes the environment, causes disease outbreaks and confines chickens to tiny spaces … In its food lab, biochemists grind up beans and peer through microscopes to study their molecular structure, looking for plants that can fulfill the culinary functions of eggs. So far, the company has analyzed some 1,500 types of plants from more than 60 countries."

The company's funding comes from "prominent Silicon Valley investors" and luminaries such as Bill Gates, and is a part of a broader push by venture capital firms, "which invest heavily in early-stage technology companies," that "poured nearly $350 million into food-related startups last year, compared with less than $50 million in 2008 … Plant-based alternatives to eggs, poultry and other meat could be good for the environment because it could reduce consumption of meat, which requires large amounts of land, water and crops to produce, backers say … It could also benefit people's health, especially in heavy meat-eating countries like the U.S., and reduce outbreaks of diseases such as avian flu, they say.

Hampton Creek Foods has already released its first product - mayonnaise - and says it "soon hopes to start selling cookie dough and a batter that scrambles like eggs when fried in a pan."The story says that The American Egg Board, says that "eggs can't be replaced," and that the industry "has reduced its water use and greenhouse gas emissions, and hens are living longer due to better health and nutrition."

Published on: December 9, 2013

The Wall Street Journal has a story about how diet sodas are losing some of their luster among consumers. Here's how the Journal frames the story:

"Coca-Cola Co. and rivals hoped zero-calorie recipes would lift the $75 billion U.S. soda industry after Americans began scaling back on full-calorie carbonated soft drinks in the late 1990s amid obesity concerns. For a while they helped: Diet soda's share of consumption rose from 26% to 31% between 1990 and 2010, according to Beverage Marketing Corp., even as many consumers complained about the taste.

"Now diet soda is the industry's weightiest problem. Store sales of zero- and low-calorie soda plunged 6.8% in dollar terms in the 52 weeks through Nov. 23, while sales of regular sodas dropped 2.2%, according to Wells Fargo, citing Nielsen scanner data. As a category, diet soda has contracted more than regular soda for three straight years."

The reason? Well, the story says that "the biggest drag is health fears about artificial sweeteners found in diet soda—mainly aspartame, but also sucralose and acesulfame potassium." While the soda industry and federal regulators say they are all safe, there is an argument "that frequent consumption of such sweeteners might trigger 'metabolic derangements' by tripping up body mechanisms that regulate caloric intake. Such concerns follow some studies showing a correlation between diet soda and obesity, diabetes and heart disease."

Published on: December 9, 2013

In the UK, the Telegraph has an interview with Tim Mason, the former CEO of Tesco's Fresh & Easy Neighborhood Markets, who says that the western US chain could have been successful and that he would have liked to have had more time to make it so.

According to the story, Mason says he "understood the reasons why Tesco decided to pull out a year ago, a decision which lead to him leaving the business after 30 years.
But he hit back at criticism of the Fresh & Easy chain he began setting up in 2006, which eventually cost Tesco £1.5 billion and is now being run by billionaire investor Ron Burkle."

Mason says, " "Fresh & Easy was a great idea, and people who worked there, and the customers who went there, loved it. In different economic circumstances I'm very sure it could have been a success. Yes, I would have liked more time...but I couldn't have expected longer given the global circumstances that Tesco found itself in."

Indeed, Mason argues that the problem was circumstances rather than implementation, noting that he had a strong record before moving to the US to launch Fresh & Easy: ""The guy that did Clubcard, that did Tesco Express, Tesco.com, Tesco Personal Finance, he was the same one who did Fresh & Easy … Either I was very lucky for 20 years and got found out or something else happened."

Published on: December 9, 2013

McDonald's has yet again committed an employee relations gaffe, posting financial advice on its internal information website that advises employees how much they should tip nannies, personal trainers, pool cleaners, massage therapists and dog walkers for the holidays - at the same time as workers in 100 cities around the country were protesting what they say are less than subsistence wages.

The tips would add up to hundreds of dollars, NBC News reports, though the site also advises that people should live within their budgets.

McDonald's first reaction to questions about the site was to say that it is all third party content provided Emily Post. It's second reaction was to take down the posting.

Published on: December 9, 2013

McDonald's has yet again committed an employee relations gaffe, posting financial advice on its internal information website that advises employees how much they should tip nannies, personal trainers, pool cleaners, massage therapists and dog walkers for the holidays - at the same time as workers in 100 cities around the country were protesting what they say are less than subsistence wages.

The tips would add up to hundreds of dollars, NBC News reports, though the site also advises that people should live within their budgets.

McDonald's first reaction to questions about the site was to say that it is all third party content provided Emily Post. It's second reaction was to take down the posting.

Published on: December 9, 2013

United Press International reports that a new Harris Poll says that this Christmas, more people are likely to buy presents in a storer than do so online than even did so last year, but that before doing so, almost seven out of 10 will engage in "webrooming," or checking out the product online before going to the store.

This is a shift from the practice of "showrooming," when people check their mobile phones while in the store and then order the products they see online.

The reason? Experts say that bricks-and-mortar stores have learned to play the e-commerce game, and have become a greater and more dependable resource for shoppers.

Published on: December 9, 2013

The Associated Press reports that a Colorado administrative law judge has ordered a Denver-area baker to make a wedding cake for a gay couple's wedding, despite the fact that the baker said that making such a cake would force him to go against his Christian faith.

According to the story, "The American Civil Liberties Union filed a complaint against shop owner Jack Phillips with the Colorado Civil Rights Commission last year on behalf of Charlie Craig, 33, and David Mullins, 29. The couple was married in Massachusetts and wanted a wedding cake to celebrate in Colorado.

"Mullins and Craig wanted to buy a cake in July 2012, but when Phillips found out the cake was to celebrate a gay wedding, he turned the couple away, according to the complaint."

Attorney Nicolle Martin, who represented Phillips, said, "He can’t violate his conscience in order to collect a paycheck. If Jack can’t make wedding cakes, he can’t continue to support his family. And in order to make wedding cakes, Jack must violate his belief system. That is a reprehensible choice. It is antithetical to everything America stands for."

“At first blush, it may seem reasonable that a private business should be able to refuse service to anyone it chooses,” Judge Robert N. Spencer wrote in his opinion. “This view, however, fails to take into account the cost to society and the hurt caused to persons who are denied service simply because of who they are.”

Published on: December 9, 2013

...with brief, occasional, italicized and sometimes gratuitous commentary…

• Sears Holdings Co. confirmed on Friday that it will spin off its Lands' End business as a separate company. The goal of the move, according to reports, is to assuage discontented investors; the Lands' End company stock will be distributed to existing Sears shareholders.

The Associated Press story notes that the holding company's Sears and Kmart chains have both struggled to find any sort of competitive advantage, though a cost-cutting process, the liquidation of inventory and the sale of assets has reduced debt and generated cash.

The problem is that fewer and fewer people can find any sort of reason to actually go into a Sears or a Kmart store. I wandered through a Sears recently, and thought for a few moments that I'd somehow ventured into a time warp and been transported back to the 1950s. Not a great way to come to market, methinks.


• The Chicago Tribune reports that Starbucks and Gilt are bringing back the metal, laser-etched $450 Starbucks card that comes complete with "$400 in credit, enough for about 160 regular coffees or 90 fancy ones. It also comes with automatic enrollment in My Starbucks Rewards Gold-level status, which includes a free birthday treat and 15 percent-off coupon at StarbucksStore.com, free refills on iced or brewed coffee and tea, special offers and coupons, and a free drink or food item with every 12 stars."

It is the second time that the two companies have partnered on the premium card.


• The Los Angeles Times reports on a new study from the British Medical Journal saying that it actually does cost more to eat healthy - "around $550 a year more, or $1.48 more per day," when examined on a global basis.

According to the story, "Meats and proteins showed the biggest difference in price with healthier options costing $0.29 more than less healthy options. For grains, the difference was $0.03, for dairy $0.004, for snacks and sweets $0.12, fats and oils $0.02, and for soda or juice, $0.11 … The review incorporated findings from 27 studies in 10 countries during an 11 year period."


• The Chicago Tribune reports that Chicago Mayor Rahm Emanuel’s office "has formed a task force to find buyers for any Dominick’s stores left vacant after the owner Safeway pulls out of Chicago market.

"Dominick’s plans to close all its stores that haven’t sold on Dec. 28. So far, 15 stores out of 72 Chicago locations have been purchased by other grocers. Jewel’s parent has agreed to buy four and Roundy’s, the owner of Mariano’s, has inked a deal for 11.

"The task force will be chaired by Deputy Mayor Steve Koch. Beyond marketing the stores that don’t sell, the Mayor’s office said in a statement it will also work to 'ensure smooth transitions of those stores that have been purchased'."

Published on: December 9, 2013

An email from MNB reader Brian Blank:

Musing on the latest round of fast-food worker strikes, living wages, Walmart pay, and the like it occurred to me that a big part of the problem is that the wrong people are in these jobs. (No, no…hear me out!)  Yes, anyone who has ever been fast fed, shopped at WMT, etc. can point to at least one employee they’ve dealt with who barely deserves the wage they get—if that much—based on the attitude, competence and/or work ethic displayed.  But that’s not really what I mean by the “wrong people”.  These lower paying jobs (especially in fast food) aren’t really meant to be the sole source of income for a family; in large part they are meant to be filled by teens and college students, and by others who are there part time for extra income.  Unfortunately, this is no longer the reality much of the time.  The causes are many, from the factory that closed and sent the good paying jobs to China and Bangladesh, to teen parents who don’t finish school, to who knows what.  I have no solution, but I don’t think an extra few bucks an hour are going to make things better, and it certainly won’t help the underlying issues that have led up this.

You won't get any argument from me that this is a big, systemic problem and that it requires a more sophisticated and focused approach than just increasing the minimum wage. I grow more certain every day that if wage disparity is not addressed, the have vs. have not situation in this country is going to grow more severe, and hostilities will grow sharper. It won't be pretty.

MNB reader Mark Raddant wrote:

In most things, I consider myself to be a liberal.  But if 25% of fast food workers are women with children (and no second parent mentioned), then perhaps a bit of a generational “tough love” is in order.  Maybe it should be hard enough to survive without having first developed skills and earned an education and have children without first thinking of being able to support them in the best possible way for the kids to develop.  Apparently we have missed convincing these folks that the way to the middle class is much easier if you 1) stay out of jail; 2) finish high school; 3) be in a permanent committed, mutually sacrificing relationship before having kid—in your mid-twenties.

On the other hand, I am pretty convinced we have a generation of wealthy folks whose incomes are WAY more than they contribute, so why not at both ends of the spectrum?

I see your point, but on the other hand, I'm not sure that many of the adults working for fast food companies and some big box stores - working hard and long and with great dedication - aren't people without an arrest record, with a high school diploma, and in loving/committed relationships.

I think to assume otherwise may be a mistake.

Published on: December 9, 2013

In Week Fourteen of the National Football League…

Buffalo 6
Tampa Bay 27

Minnesota 26
Baltimore 29

Cleveland 26
New England 27

Indianapolis 28
Cincinnati 42

Detroit 20
Philadelphia 34

Atlanta 21
Green Bay 22

Kansas City 45
Washington 10

Miami 34
Pittsburgh 28

Oakland 27
NY Jets 37

Tennessee 28
Denver 51

NY Giants 14
San Diego 37

Seattle 17
San Francisco 19

St. Louis 10
Arizona 30

Carolina 13
New Orleans 31