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    Published on: January 10, 2020

    by Kevin Coupe

    Yesterday we took note of a New York Times story about high-profile chefs who currently are running some of the nation's most prestigious and gastronomically adventurous restaurants, but who got much of their training and early experience working at the likes of Applebee's, IHOP, and Wendy's.

    The Times noted that while "chain restaurants are often accused of a sterile uniformity and a lack of attention to quality ingredients, nutrition and the environment," for people wanting to get into the restaurant business, they offer "formalized training, efficient operations, predictable schedules and corporate policies that claim to discourage the kind of abuses that have come to light in the #MeToo era," not to mention often better pay and benefits.

    I loved this notion, and wondered how supermarkets - many of which have those same attractions but might be able to use some innovation assistance on the culinary side - might be able to get in on the action.

    But apparently it isn't just Applebee's, IHOP, and Wendy's that are teaching people what they need to know to succeed in business.

    Think Waffle House.

    That's right. Waffle House. There are close to 2,000 of them, with 40,000 employees, and the company is estimated to have roughly $1 billion in annual sales.

    A friend of mine yesterday sent me a story from a November Wall Street Journal - that I somehow missed when it came out - arguing that Waffle Houses are a great source of management talent.

    Managers there need to be able to achieve speed and have endurance. "If the restaurant is busy or short-staffed, managers are expected to dive in," the Journal wrote. "The company’s training program teaches them how to analyze P&L statements, but it also prepares them to cook, clean and wait tables." Managers know that success depends on keeping regulars, and so they get good at customers service.

    They make good money, and since Waffle House only promotes from within, it is a job that allows them to build some measure of wealth.

    Waffle House "says the share price of its employee-owned stock, which is based on its audited book value, has increased every year for the last 57. The company says it typically opens about 50 new restaurants a year." And so managers don't leave.

    That's not to say Waffle House is a perfect place to learn management skills. It isn't. They have lots of problems … but it may well be that "a successful Waffle House manager could succeed in almost any retail job in America."

    In other words, an Eye-Opener.
    KC's View:

    Published on: January 10, 2020

    The Dallas Morning News has a story about how just a few years ago, "Walmart thought its low prices and big supercenters were 'great' and everything else - including strawberries that had to be eaten that day, employees with little training and the process for in-store pick up of online orders - was 'good enough'."

    That's according to JP Suarez, Walmart International Chief Administration Officer, who said that the company realized that it wasn't good enough when it became how long people had to wait to pickup orders that they'd placed online. Fifteen percent of the time, they'd walk out without picking up the order.

    Greg Foran, then the CEO of Walmart US, "was the first one to tell me that the stores weren’t good enough and they had to get better,” said Suarez, who, the story points out, has over the past five years overseen "the building of 1,100 new stores and the addition of curbside grocery pickup to 3,200 Walmart stores.
    “We were a $400 billion company, but he pushed us to be great,” Suarez says. “Good retailers were going away fast, and great ones would stay around."

    The wait time now, Suarez says, is 11 seconds.
    KC's View:
    It ought to be emblazoned on every wall of every retailer … Good enough isn't ever good enough. The minute you think you are good enough, you almost certainly aren't.

    Published on: January 10, 2020

    The Wall Street Journal reports that GrubHub, the food delivery service, "is considering strategic options including a possible sale amid increased competition and a recent decline in its shares." The story notes that the company is worth about $5 billion, down from $13 billion about a year ago.

    One company said to be interested: Walmart, identified by Seeking Alpha as being the subject of enough trade chatter to make it worth noting.

    The New York Post advances the story this way - reporting that in addition to Walmart, "Kroger, Albertsons and Ahold-Delhaize … have been reviewing how buying the Chicago company could help them with food delivery and groceries."

    But it also notes that GrubHub is denying that it is for sale.

    The Journal writes that "competition in the nascent food-delivery industry, which ferries takeout orders from restaurants to homes and businesses, has intensified as newcomers try to lure customers and grab market share with discounts and promotions. At the same time, restaurants are pushing back against the fees delivery companies charge, squeezing Grubhub and its competitors. Investors and analysts have said the industry needs consolidation, with many seeing room for little more than two major players."

    Among the other players in the space - DoorDash (which has the largest market share, at about 37 percent), Postmates and Uber Eats.
    KC's View:
    Whether or not GrubHub is formally for sale, the notion of a food delivery service being bought by a major retailer is an intriguing one, since it would allow that retailer to own its delivery functionality to a greater extent than it does now.

    I would applaud that, because it would move that retailer away from the Instacart model, in which all this stuff is just outsourced.

    Published on: January 10, 2020

    The Los Altos Town Crier has a story about the remodeling of four Safeway Community Market locations - two in Berkeley, one in San Anselmo and one in Los Altos - that used to be called Andronico's as recently as 2016, when the company was bought by Safeway.

    And now, they're being rebranded. As Andronico's.

    “Over the past few years, we’ve listened to and learned what is most important to our customers and employees to retain the unique character and charm of Andronico’s and set it apart from traditional Safeway stores,” Safeway spokeswoman Wendy Gutshall tells the Crier.. “We’re excited for the opportunity to make some changes and enhance the customer experience, while creating an eclectic, upbeat neighborhood hub for feeding a healthy lifestyle."

    The process of resetting the store will result in specialty foods that used to be typical of Andronico's to be brought back, with private label Safeway items and bargain items being sold off to make room for them.
    KC's View:
    It will be interesting to see how these new Andronico's stores reflect the banner's storied history while still being price sensitive enough not to completely disenfranchise the shoppers who have been patronizing them as Safeway stores.

    I hope that the company is smart enough not to dilute the Andronico's brand equity, which still has some value after all these years. Just using the name doesn't make these stores Andronico's … there has to be a commitment to food culture that will serve as a differential strategic advantage.

    If it works .. it could be a powerful new format for Albertsons/Safeway.

    Published on: January 10, 2020

    Taco Bell announced a 2020 commitment to, according to Fast Company, "convert all consumer-facing packaging - that’s anything the customer comes into contact with when they order food, like the wraps around tacos or the physical box that holds the $5 Cravings Box items - to be either reusable, recyclable, or compostable at all locations across the globe within the next five years."

    The story says that "the company will install recycling and composting bins in restaurants where local infrastructure permits (not every municipality supports those waste streams), and the new packaging materials will also be free of PFAS, phthalates, and BPA - chemicals abundant in food packaging that have been associated with negative health effects like cancer, thyroid disease, and low birth weight."

    The company doesn't have it all figured out - yet.

    "Missy Schaaphok, Taco Bell’s global nutrition and sustainability manager, says the brand is still figuring out exactly what that new packaging will be. 'We want to ensure that convenience and functionality are very top of mind when it comes to our packaging,' she says. 'Sure, the look and feel might change - especially if we move away from black plastic, for example, with our power bowls, to something else that might be fiber based. That will be a dramatic change, but we want to ensure that the . . . customers have the same experience, but with the sustainability aspects in mind'."
    KC's View:
    For me, the problem always has been that Taco Bell food tastes like cardboard packaging, albeit packaging that is slathered with cheese and sauce.

    Published on: January 10, 2020

    DC Velocity reports that Amazon has signed a contract with Rivian, which makes electric vehicles and in which Amazon is an investor, to have it manufacture 100,000 delivery vans over the next decade - each of which will b e outfitted with the Alexa-powered technology.

    The Alexa technology will allow delivery drivers "to use the artificial intelligence (AI) device without having to resort to their apps or smartphones … Rivian will allow drivers to verbally control vehicle features such as heating, ventilation and air conditioning (HVAC), windows, and opening or closing the front-mounted cargo trunk, known as a 'frunk.' Rivian's connected car system will also allow owners to access their vehicle's onboard cameras remotely, using screen-based devices like Echo Show and Fire TV.

    "In addition, users will also be able to use standard Alexa features such as playing music, getting directions, placing calls, controlling smart home devices, and thousands of the other Alexa applications known as 'skills'."


    Benzinga reports that Chinese e-commerce giant Alibaba "is offering lucrative deals to local sellers in Europe," hoping that it can generate enough traction to pass Amazon as the dominant e-commerce platform there.

    In addition to lowering monthly seller rates, Alibaba also is reducing the commissions it charges on sales to below those charged by Amazon.

    The story says that Alibaba "is particularly interested in Spain and Italy sellers to sign up on its online retail platform AliExpress … The two countries make a prominent market for Amazon in the continent, alongside the U.K., France, and Germany."
    KC's View:

    Published on: January 10, 2020

    CNBC reports that there are real differences between how consumers and corporate executives see the economy, that while consumers tend to be optimistic about the country's economic future, executives are "sure that tougher times are coming … The gap between sentiment is broad and growing," the story says.

    Here's how the story describes the different perspectives:

    "Chief executive officers and chief financial officers see an economy that is heading into a slowdown if not an outright recession. Recent surveys show that CEOs believe recession is the biggest risk in 2020, while almost all CFOs surveyed by Deloitte think the economy is likely to at least slow.

    "They view the U.S.-China trade war, a slowing global picture and increasing headline political risks as threats to the decade-long expansion that is the longest in American history.

    "But consumers are in the opposite camp. While sentiment has leveled off from record highs, they still view conditions as generally positive. Spending remains strong even amid a growing savings rate, as consumers remain the beneficiary of a 50-year low in the unemployment rate and historic highs for the stock market."


    • Ahold Delhaize-owned Giant Food Stores said yesterday that it has allocated $114 million to its capital expenditures budget for Pennsylvania, which will be devoted over the next 18 months to "to create an innovative Giant Direct ecommerce fulfillment center, open two new stores, and remodel 35 existing stores in 2020 and 2021.  With this investment, Giant will grow its commitment to the city of Philadelphia, its home market in Central Pennsylvania, and Monroe County."

    "We’re doubling down on growth and innovation for our customers," said Nicholas Bertram, president of Giant Food Stores, in a prepared statement. “The accelerated growth of Giant Direct has set the stage for additional investment opportunities that extend our ecommerce geographic reach. At the same time, our Giant Heirloom Market format has enabled us to reach an entirely new demographic in Philadelphia.”
    KC's View:

    Published on: January 10, 2020

    • Albertsons announced that Mike Withers has been named president of Jewel-Osco. Again.

    Withers served in the job from 2014-17, at which he moved on to be Executive Vice President, Retail Operations for Albertsons’ East region. He was succeeded by Doug Cygan, who passed away in 2018 and was replaced by Paul Gossett, who left the company last fall.
    KC's View:

    Published on: January 10, 2020

    For the record, this New York Times piece has nothing specifically to do with business … except that, it seems to me, the scenario paints a picture that, it it gets worse, cannot help but have an impact on retail businesses.

    Here's how the piece, by Nicholas Kristof and Sheryl WuDunn, begins:

    "YAMHILL, Ore. — Chaos reigned daily on the No. 6 school bus, with working-class boys and girls flirting and gossiping and dreaming, brimming with mischief, bravado and optimism. Nick rode it every day in the 1970s with neighbors here in rural Oregon, neighbors like Farlan, Zealan, Rogena, Nathan and Keylan Knapp.

    "They were bright, rambunctious, upwardly mobile youngsters whose father had a good job installing pipes. The Knapps were thrilled to have just bought their own home, and everyone oohed and aahed when Farlan received a Ford Mustang for his 16th birthday.

    "Yet today about one-quarter of the children on that No. 6 bus are dead, mostly from drugs, suicide, alcohol or reckless accidents. Of the five Knapp kids who had once been so cheery, Farlan died of liver failure from drink and drugs, Zealan burned to death in a house fire while passed out drunk, Rogena died from hepatitis linked to drug use and Nathan blew himself up cooking meth. Keylan survived partly because he spent 13 years in a state penitentiary.

    "Among other kids on the bus, Mike died from suicide, Steve from the aftermath of a motorcycle accident, Cindy from depression and a heart attack, Jeff from a daredevil car crash, Billy from diabetes in prison, Kevin from obesity-related ailments, Tim from a construction accident, Sue from undetermined causes. And then there’s Chris, who is presumed dead after years of alcoholism and homelessness. At least one more is in prison, and another is homeless."

    The piece argues that "there is a cancer gnawing at the nation" that predates the political warfare that dominates the airwaves, headlines and online news services. "Suicides are at their highest rate since World War II; one child in seven is living with a parent suffering from substance abuse; a baby is born every 15 minutes after prenatal exposure to opioids; America is slipping as a great power.

    "We have deep structural problems that have been a half century in the making, under both political parties, and that are often transmitted from generation to generation. Only in America has life expectancy now fallen three years in a row, for the first time in a century, because of 'deaths of despair'."

    You can read the entire, sobering story here.
    KC's View:
    Every once in a while I read something that, regardless of whether it directly concerns the main business of MNB, I think is worth reading. This Timespiece, in essence, seems to be making the point that as much debate and arguing as taking place in the country, we may be talking about all the wrong stuff, and that we're ignoring the fact that the fabric of our society may be unraveling. Provocative stuff, designed to make you think.

    Published on: January 10, 2020

    Got the following email from MNB reader Rich Heiland about the new rankings of the best supermarkets in the US:

    Like you I kind of take these things with a grain of salt. But, as you know I am an HEB fan. And in a way, it has nothing to do with groceries, which after all are a commodity.

    Every store in our area has them. What HEB consistently has is nice people who seem to enjoy their work and know their store and products; fun commercials that are localized by region using sports stars and others from those regions (i.e., San Antonio gets Spurs players, not Rockets); generally among the first to step up in any community crisis or emergency; participates locally in terms of staff, donations; isn’t afraid to innovate; quick to admit mistakes; laughs at itself; actually listens to customers. I could go on. But bottom line HEB takes care of business by taking care of the business outside the business. By doing so it creates an experience, which in today’s retail environment is the ultimate loyalty builder. Oh, and yes, it also sells food and other stuff.


    One of the other chains on the list was Market Basket, which prompted this email from MNB reader Joe Axford:

    Market Basket? Give me a break, they have three stores in Salem NH, three in Haverhill MA for example, with no other supermarket competition. I have to take these surveys with a grain of salt.

    Or a whole shaker of salt. Salt. Salt. Salt.



    We talked here about the importance of food stores being more adventurous when it comes to culinary, which prompted one MNB reader to write:

    Some retailers are doing culinary training already. Since 2014 H-E-B has operated a culinary school in San Antonio.

    H-E-B again. Not a coincidence.

    MNB reader Craig Espelien chimed in:

    I read the piece today on where some chefs received their training - iHop, Applebees, Wendy’s, etc. and was intrigued by your comment on how grocery retailers (or retailers in general) nudge their way into this pathway.

    This got me thinking about definitions - and the fact the food service (sort of regardless of the outlet) is defined as being part of the “Hospitality” business where grocery retailing in specific is not. Perhaps if all retailers thought of themselves as being more in the hospitality business, more would achieve the levels of preference achieved by HEB (also referenced in the blog today).

    Perhaps the very mind set the industry has or does not have is a way to “nudge” into the pathway - approach customer experience from a hospitality perspective rather than from a “cart full of groceries” perspective.




    Responding to yesterday's FaceTime piece about StitchFix, one MNB reader wrote:

    Huge huge huge fan!  My stylist bats about .800 and keeps me in good style.  I have slowly dialed back frequency as I have built up my wardrobe.  I was skeptical, however I am a huge fan.  It feels incredibly personalized and the more I interact with them the better the clothes get for me. Also, I love the Mavi jeans.

    I raved about the Mavi jeans yesterday, which prompted MNB reader Tom Gillpatrick to note:

    Mavi is Turkish brand … Mavi is Turkish word for blue.

    Something I didn't know. Thanks.

    From another reader:

    You have frequently commented on Stitch Fix model but I don’t believe I have seen you take a look at the Stylist role and how it contributes to the company’s success.

    As a former part time Stylist, I can tell you that it wasn’t as simple as the use of an “algorithm” to create a Fix. Stylists must complete a required number of Fixes per hour, create the customer note of a specific length, and maintain a “keep rate” based on what their clients decide to keep. These and other statistics are monitored weekly and if a Stylist falls below their stats, they are coached by a Stylist Lead until their stats improve.

    As a young company, they have experienced some growing pains with inventory levels, making it challenging for stylists to find items that meet their customer’s needs. Keep rates fall and customers have left angry and inappropriate feedback comments for the Stylist. Part time Stylists are required to work a minimum number of hours per week even when inventory is low.

    I chose to leave Stitch Fix after a about a year. As a “boomer” I didn’t really fit the demographic of what Stitch Fix looks for in a Stylist role. I found the minimum hour requirement and metrics standards a little more than what I was looking for in a part time job.

    A lot goes on behind the scenes at Stitch Fix. I’m sure there are similarities with Trunk Club and other similar services.


    Thanks for the perspective.
    KC's View:

    Published on: January 10, 2020

    Little Women, in cinemas now (which is not something that one can say about a lot of worthwhile entertainments these days), is something unusual. Or so I gather. I've never read the book by Louisa May Alcott, nor have I ever seen any of the previous six film versions (the first was a silent film back in 1917, which has been lost to history), nor any of the various television adaptations. I say this not as a point of pride, but just a statement of fact. I came to Little Women with as open a mind as one could come to a story that first saw the light of day during the Andrew Johnson administration.

    I've been interested to read some of the various articles and reviews about the 2019 version, written and directed by Greta Gerwig (Lady Bird), because the point that many of them have made that while this is a respectful adaptation of the original novel, it is not religious in its adherence to the text. The point seems to be that when Gerwig felt the need - either for narrative reasons or because a 21st century prism requires rethinking parts of the story - she veered from the original without violating the spirit of the piece.

    To which I say, Bravo! Too many movies, for my taste, are so wedded to the original text and ideas as to be unsurprising, which in itself is a business lesson. Take, for example, Ron Howard's The DaVinci Code and Angels & Demons, based on the Dan Brown best-sellers. Both films are so rigidly adapted from the books that star Tom Hanks almost has to step around the commas; after both films, I found myself wishing that they had changed the identity if the bad guy, or added some narrative wrinkle, just to keep things interesting. But, no. Like a retailer who does things a certain way because that;'s how they've always been done, the films remain earthbound.

    Watching Little Women, I couldn't see the seams, or where new inventions has been sewn into the fabric of the original. That's a good thing. The movie is a lovely piece of filmmaking, about four teenaged girls growing up in Massachusetts during the Civil War, and about the choices they make as they move into adulthood. For most of them , like the vast majority of women for a long, long time, marriage was not just the most prudent and expected choice, but the only choice. The heroine of Little Women, though, is Jo March, the second of the foursome, who yearns to be a writer and has no intention of marrying or settling down or settling for anything … and that, essentially is the plot, or at least as much as I am going to give away here, just on the off-chance that you haven't read the book or see any of the earlier versions either.

    It seems to me, though, that Little Women is replete with lessons. For one thing, Jo is portrayed as a published writer, but one who is underperforming, largely because she is writing what she thinks audiences want. She's making a living, but there's a vacancy in her creative soul. It is only when she decides to write of what she knows - her sisters, her upbringing and all their messiness and complications, that her writing spirit catches fire. That's a good lesson for anyone. You can't always do work or hold a job that you love, but you can know that you're going to be better at it, more committed if you're passionately connected to it.

    Little Women as a great cast - Saoirse Ronan as Jo, Emma Watson, Florence Pugh and Eliza Scanlen as her sisters, the incomparable Laura Dern as their mom, and Meryl Streep, Chris Cooper, and Timothee Chalamet in various supporting roles. (You can see that Gerwig is a filmmaker people want to work with. That's a great place to be.)

    Oh, and there's Tracy Letts as Jo's publisher, who almost lets (no pun intended) her best work get past him because he doesn't connect; it only is when family members read a manuscript and fall in love with it that he realizes that he may have a golden opportunity. He was practicing epistemic closure - he saw the world one way, and didn't understand that there are a myriad of attitudes and perspectives that make the world more interesting and profitable, not less so. He seems focused, because he only has round holes, to shave off Jo's edges to fit his preconceptions. Again, a big mistake, because such moves almost never take advantage of what someone actually is good at.

    Terrific film, Little Women/i>. Go see it.



    I must confess to being somewhat conflicted by The Two Popes. Not because I have mixed feelings about the quality of the filmmaking, which I don't. The Two Popes is about an imaginary series of meetings between Pope Benedict XVI (Anthony Hopkins) and Buenos Aires Cardinal Jorge Mario Bergoglio (Jonathan Pryce), who will succeed him as Pope Francis when in an almost unprecedented move, Benedict decides to retire.

    The meetings may be invented, but the attitudes are not - much of the dialog is taken from writing and speeches by both men. Benedict is the conservative, dogmatic, intractable protector of doctrine and tradition, in love with both power and the trappings of power, while the future Pope Francis is far more humble and connected to people, believing that the Catholic Church needs to listen more and preach less than it has.

    The script, by Anthony McCarten, is an excellent piece of work - it manages to express its various opinions without seeming itself like a lecture. The direction, by Fernando Meirelles (City of God, The Constant Gardner
    ) is masterful - you'll think they shot the whole thing at the Vatican and Papal summer residence. And both Pryce and Hopkins are excellent, making these two well-known public figures inescapably human. (This is a bigger lift for Hopkins, who is playing someone a lot less likable.)

    Kudos, by the way, to Netflix … for making a movie that might not have been made by more traditional movie companies.

    My problem with The Two Popes, you'll forgive me, is more political in nature. Benedict is portrayed as unable to escape various controversies and scandals that are plaguing the Catholic Church - perhaps because of disposition, perhaps because of inclination, and perhaps because the problem is so deeply ingrained in the Church that one person can't address it effectively, much less solve it.

    Or maybe all of the above. Francis's papacy, the movie suggests, will be a better one because of his innate goodness and compassion. But for my money, the Church has not done anything close to what it needs to do in order to weed out the evil that has infected it; I know enough about people who have been victimized by men of the cloth to feel, in my heart, that the world would be better off if many of these schools and churches were simply closed down, and these cretins were carted off to prison.

    Francis, The Two Popes argues, has a greater claim to moral authority than his predecessors. In my heart, I think he's better (especially on issues of climate change and economic inequality) but not nearly enough, and the Church in which I was raised has given up virtually all claim to any moral authority. I may be conflicted about the movie, but I'm not conflicted about that.



    We had a story earlier this week about how expected tariffs on wines (and other stuff) imported into the US are likely to raise prices … and so I decided get some while the getting is good.

    And so I tried the 2015 Hecht and Bannier Languedoc Blanc from France, a blend of Piquepoul Blanc and Roussanne that is delightful with seafood … and the 2015 Vernaccia di San Gimignano from Italy, which has a really nice intensity that went great with these terrific scallop and shrimp cakes that I served over sautéed spinach. Both are delicious, and cost about twenty bucks a bottle - well worth it, I think.



    That's it for this week … have a great weekend, and I'll see you Monday.

    Slàinte!
    KC's View: