business news in context, analysis with attitude

Published on: August 25, 2021

Content Guy's Note:  Longtime MNB readers will know that while I'm not a fast food junkie, I've always found the siren call of In-N-Out to be virtually irresistible.  First of all, there are few things in life that compare to a Double-Double, animal style.  But also, if I am going to be honest about it, there's the fact that because I live on the east coast, In-N-Out is not available to me unless I am visiting one of the seven states in which the more than 300 company-owned units are located.  Absence can, in fact, make the stomach grow fonder.

The thing is, In-N-Out is one of a number of California-born food businesses that have always held a certain fascination to me and a lot of other people.  From Du-Par's to Tommy's to El Cholo, they've represented a particular take on the notion of California cuisine.

George Geary, a well-known cooking teacher, TV personality and culinary travel guide, is out with a new book:  "Made in California - The California-born burger joints, diners, fast food and restaurants that changed America."  And, I would add, how Americans eat.

I had the opportunity to chat with George the other day, in a conversation that touched on cuisine, unique business models, and what has made some successful and others not-so-much.  The fact is that many food trends have been started not far from where I am sitting at the moment, and I thought that was worth paying attention to.  I hope you enjoy our conversation.

If you want to listen to it as an audio podcast, you can download this file:

Published on: August 25, 2021

Salad chain Sweetgreen said yesterday that it is acquiring Spyce, which the Boston Globe describes as a local eatery " that uses automated kitchens to serve robot-prepared meals."

"Spyce, opened in 2018 by a group of Massachusetts Institute of Technology alumni, prepares its meals in a mostly automated kitchen," the Globe writes.  "At its two locations, in Downtown Crossing and Harvard Square, customers can order at a kiosk and watch their meals come together.

"Behind the counter, workers load ingredients into refrigerated containers in Spyce’s 'Infinite Kitchen,' which balances timing, technique, and measurement to try to ensure each bowl turns out exactly as planned. Its double-sided plancha - divided into multiple temperature-controlled lanes, each for a different ingredient - sears the foods before depositing them into a bowl that travels through the kitchen on a conveyor belt."

“We built sweetgreen to connect more people to real food and create healthy fast food at scale for the next generation, and Spyce has built state-of-the-art technology that perfectly aligns with that vision,” says Sweetgreen cofounder Jonathan Neman, adding that the acquisition will allow the company "to elevate our team member experience, provide a more consistent customer experience and bring real food to more communities."

Published on: August 25, 2021

The New York Times reports that e-commerce platform Shopify its working with video app TikTok "to add the ability for consumers to shop directly in the TikTok app."

Here's how the Times frames the story:

"TikTok has largely been known as a video app that provides entertainment and memes. Users have not been able to buy products directly in the app, even though TikTok features many influencers who often talk up clothing, makeup and household products. Instead, users have been able to buy goods on TikTok only through ads on the app.

"But under the new partnership, Shopify merchants that participate in a pilot program will be able to add a shopping tab to their profiles and link to products within TikTok posts. Shopify said it expected to expand the feature to all of its merchants this fall.

TikTok joins Instagram and Facebook in offering in-app shopping, part of a larger shift toward what is known as social commerce - buying products directly within a social media platform - as creators seek out new ways to make money from their audience."

Shopify brings considerable marketing muscle to the partnership:  "Shopify said sales on its social commerce channels - including TikTok, Facebook, Instagram, Snapchat and Pinterest - grew 76 percent from February 2020 to February 2021. In total, Shopify works with 1.7 million merchants."

Published on: August 25, 2021

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the United States, there now have been 38,968,925 total Covid-19 coronavirus, resulting in 648,161 deaths and 30,618,644 reported recoveries.

Globally, there have been 214,176,634 cases, with 4,469,017 resultant fatalities and 191,666,897 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 71.2 percent of the US population age 12 and older has received at least one dose of vaccine, with 60.4 percent being fully vaccinated.

•  From Axios:

"More than 77% of America's ICU beds are being used right now as hospitals grapple with a crush of severely ill COVID patients, almost all of them unvaccinated … Arkansas and Alabama officials said this week their states were completely out of ICU beds."

The story says that officials emphasize that the problem is one of demand, not supply, and that some North Texas hospitals "may begin to prioritize vaccinated patients over the unvaccinated."

•  CNN reports that "Krispy Kreme is doubling down on its popular free doughnut promotion for customers vaccinated against Covid-19 …  the chain is giving anyone with vaccination proof two free doughnuts every day until September 5. The promotion comes following the US Food and Drug Administration's full approval of the Pfizer/BioNTech Covid-19 vaccine on Monday."

The story notes that "in March, the chain began its promotion to encourage people to get vaccinated with a free doughnut a day for the rest of the year. So far, Krispy Kreme says it has given away more than 2.5 million doughnuts through the deal."

•  Axios reports that "employees at nearly 50 Tyson chicken plants can win $10,000, once a week for the next five weeks, if they've received at least one dose of COVID vaccine … Only employees at the company's chicken plants are eligible for the $10,000 giveaway. Tyson's prepared foods, beef and pork plants are offering other monetary incentives, the company told Axios.

"Tyson is requiring all U.S. employees to be vaccinated by Nov. 1."

The story notes that Tyson "employs 139,000 people, most of them in the U.S., with about 24,000 in Arkansas."

Published on: August 25, 2021

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Block Club Chicago reports that the city of Chicago will see more than 100 Amazon Locker installations placed in public parks around the city, a move that is creating controversy among those who feel that a) it is an inappropriate use of public property, and b) the city isn't getting paid nearly enough.

According to the story, "The contract shows Amazon pays the Park District $50 a month for each of the smallest of the steel lockers, which are 6 feet wide. The contract calls for $125-a-month payments for the largest lockers, which are 15 feet wide.

"A total of 49 lockers have been installed in city parks. The majority of those lockers are the 6- or 9-foot versions, according to figures provided by the Park District.

"Another 53 lockers are scheduled to be installed in parks around the city this year. If all of those lockers are 6 feet wide, the Park District would make $69,900 for a full 12 months of rent. It would also get a one-time $20,000 payment for allowing at least 100 lockers.

"That means the park district could get as little as $89,900 in the first full year.

If each of the next 53 lockers installed are the largest possible — 15 feet — that would net the Park District $117,600 in the first year, plus the $20,000 bonus.

"That means the most the Park District could get in the first full year of rent on all 102 lockers is $137,600.

"For comparison, the Park District’s budget this year is $481.8 million."

Juanita Irizarry, executive director of Friends of the Parks, is one of the critics, saying that "regardless of how much it is, the Chicago Park District needs to stay on mission and not pursue income streams that disrupt the purpose of public parks."

I'm with the critics on this one.  The commercialization of public parks in this fashion strikes me as entirely inappropriate, especially because park officials sold the rights for so little money.  But even if the dollars were far higher, I'd hold this position - there have to be some lines that we don't allow businesses to cross, and this is one of them.

There's also a legitimate argument being made by local business people that if indeed such commercialization was going to be allowed, priority should've been given to local businesses, not Amazon.

•  The Verge reports that "Amazon has developed electronic tracking technology for the trucks used by its partners to monitor their movement and hopefully improve driver safety … Electronic logging devices (ELDs) are federally required to prevent fatigue-related accidents on trucks, but now it seems Amazon will offer its partners a custom ELD offering, possibly giving Amazon direct access to a lot more data from a tool it maintains itself.

"Amazon’s Relay ELD — named after the company’s Relay platform for booking delivery jobs — works by plugging hardware into the diagnostics port of trucks to directly digest information from the engine … It then communicates that data over Bluetooth to be logged in an accompanying app. ELDs typically track location, movement, and when a truck turns on or off, to monitor drivers' hours."

Published on: August 25, 2021

•  Alimentation Couche-Tard this morning announced that it is acquiring "convenience and fuel retail sites from ARS Fresno LLC and certain affiliated companies. The transaction includes 35 high quality locations currently operated under the Porter's brand and located predominately in Oregon and Western Washington.  Closing of the transaction is expected to be completed in the second half of September 2021."

Terms of the deal were not disclosed.

Published on: August 25, 2021

•  Charlie Watts, who for more than 50 years provided the drumbeat that provided the musical backbone for the Rolling Stones, has passed away.  He was 80.

Variety writes, "Universally recognized as one of the greatest rock drummers of all time, Watts and guitarist Keith Richards have been the core of the Rolling Stones’ instrumental sound: Richards spends upwards of half the group’s concerts turned around, facing Watts, bobbing his head to the drummer’s rhythm."

And Rolling Stone writes, "As much as Jagger’s lyrics or Richards’ riffs, Watts’ timekeeping on key Stones songs made them key Stones songs. The loose, almost jazzy feel on '19th Nervous Breakdown,' his groove lock with Richards on 'Beast of Burden,' his extraordinary control with a very odd rhythm on 'Get Off of My Cloud,' the bounce of 'Jumpin’ Jack Flash,' his ice-cold snare on 'Gimme Shelter' — all of these are masterclasses in serving the song and shaping it at the same time."

Published on: August 25, 2021

Got the following email from an MNB reader about my Amazon Fresh coverage:

I visited the first store in Woodland Hills 3 weeks after it opened, three other stores and the Woodland Hills store three more times, and the last time was last week.  My observations:

Woodland Hills store first visit - a repeat of what you saw and I would give them a F.

Woodland Hills and the other stores I would give a C or a C+.

General observations:

At no time was any of the stores busy.

However, for every live customer I saw three employees doing online fulfillment.  I asked a couple of those fulfillment folks if it was for pick up or delivery-they said 80% for pickup.

I also loved the technology of the shopping with the smart shop basket.  However, they don't allow that shopping basket to leave the store so the customer will have to transfer the bags to another shopping basket to take it out to their car.

All of the locations would be considered B's.

Produce pricing was like conventional supermarkets.

Produce quality - B.

Produce selection - C-.

Produce presentation - C-.

Produce personal knowledge - C-.

Produce pace of stocking - C.

I timed one of the Amazon fulfillment shoppers and it took her 14 minutes to fill the order, which was four bags but not full bags.  This 14 minutes doesn't include the checking of the order or when it leaves her hands.  At the minimum wage of $15.00 per hour and a 20% fringe, that selection would cost $4.25 and it hasn't gone to the customer yet.  At the average LA conventional supermarket rate and 45% fringe, it would have cost over $7.00.

All of the perishable department were C's due to presentation and variety.

Grocery dominated with PL and too many OOS even on last week's visit. 

With the B locations and size of the store their volume, hurtle rate for a ROI may be as low as $250,000 per week, and that would include the online.

They must love the financial results as they are rolling them out nationwide.  They don't have to cluster to make supply chain sense, because they are being supplied by Whole Foods.

Wow.  That's what I call an in-depth analysis.

I suggested yesterday that what the Amazon Fresh store I saw may really be suffering from is nobody-gives-a-damn syndrome, with more focus on being a dark store that just happens to allow customers to enter.

One MNB reader replied:

Thank you for addressing this topic head on in your FaceTime!

Your comments mirror exactly what I’ve heard about Amazon Fresh (being a dark store that just happens to be open to the public), and the conclusion that immediately came to mind about Amazon might be thinking about their purported “Department” stores. 

As always, your perspective and commentary is refreshing and informative!  Keep up the great work!

From another reader:

How disappointing KC, I can't imagine a store of associates with no sense of urgency, no pride in what they do, how the store looks to customers? They should be embarrassed!

Sounds like they could use a Jim Donald maybe? Also I'd be curious as to how that store looks today, or the day after your visit.

On another subject, from an MNB reader:

Kevin, I wanted to give you some clarity into the adversarial relationships between retailers, distributors and manufacturers.  The first example speaks to " just charge the vendor philosophy".  The second is flat out thievery.

While I was reading your site today, I received a message from a customer that stated due to our order not being here prior to the beginning of the promotion we are charging you lost sales. Which BTW, may or may not occur.  So we eat it.  Now this was caused solely by the transportation company and not us. In this case the retailer is not the only one losing sales. We both are. Could we charge the trucker for lost sales?? Not really.

The second was a charge for a show that we never attended nor did we give authorization to attend.  That was a big FU from a distributor.  So then what is our recourse?  Pull promo spend?  We lose. Shut them off?  We lose.  Attempt to negotiate a lesser bill?  Why, they stole the money.

These are just 2 examples of many that all add into the cost of goods, the cost of transportation and ultimately the increased prices for the consumer.

It is very frustrating to see the integrity of some (a lot) of retailer/distributors degenerate to such levels.  My question, especially in this time of crisis and yes it is crisis, why can't we all work together.  It will ultimately benefit all of us.  All for one

and one for all.  Not all for me and none for you.  Then no one benefits.  Especially the consumer.

Regarding our coronavirus coverage, an MNB reader wrote:

The Pfizer approval is a good one.  This hopefully will change some of the “it’s not approved” nah sayers to go get the vaccine.  However I don’t think even with increased advertising, it will create long lines at vaccine locations.  If people that don’t want the vaccine have not gotten the message yet, then they never will….until they get sick.

Responding to the open letter written by a Boston Globe reporter to Russo's, the iconic Boston-area produce market closing next month, one MNB reader wrote:

Sounds to me Mr. Russo sells his wares based on what he would expect, if he was the shopper.

Radical concept, huh?

The other day we took note of a Los Angeles Times report that "the Academy of Country Music Awards is making the switch to streaming, moving from a TV network to Amazon Prime Video and marking the first time the streaming service will exclusively air an awards show …  the ACMs announced the move from CBS, which previously said it would air the Country Music Television awards show next year."

ACM painted it as a decision driven by its desire to be innovative, but one MNB reader wrote:

Interesting spin on the part of the Academy of Country Music, but the fact of the matter is that viewership of the ACM awards ceremony has been in steep decline and advertising revenue has fallen well short of the license fee the ACM received for airing the awards for some time now. It will be interesting to see – if such information ever becomes publicly available – whether Amazon ponied up the $22 million the ACM unsuccessfully sought from CBS or if Amazon turns a profit on the streaming-only venture. Incidentally, CBS is still on the hook for airing the Tonys (another loss leader, albeit one with considerable prestige) through 2026.

Yesterday, MNB took note of a Wall Street Journal story about how "drought is blistering key U.S. cash crops, further elevating prices for staples including corn and wheat … Farm incomes have been hit hard over the past two years, first when Covid-19 shutdowns hammered prices and afterward when hot, dry weather reduced output, limiting farmers’ capacity to cash in on rising demand and higher prices … Extreme heat is baking most of the U.S. North Dakota, South Dakota, Minnesota, Iowa and Nebraska all contain areas of extreme drought, according to data from the U.S. Drought Monitor. North Dakota and Minnesota, in particular, are experiencing near-record lows in soil moisture, according to data from the National Oceanic and Atmospheric Administration.

"As a result, many crops planted this spring are wilting. Some 63% of the U.S. spring wheat crop is in poor or very poor condition, versus 6% at this time last year, according to Agriculture Department data."

I commented:

While lousy weather and drought are part of a natural cycle, the concern that scientists seem to have is that the extended problems being suffered in agricultural regions around the world may have a permanent impact on the cost and availability of basic foods on which we rely and even have taken for granted.

Which, clearly, will have an impact on the retailers who sell these products and the consumers they serve.

Prompting one MNB reader to write:

I spent hours driving from Wisconsin through Illinois Indiana and Ohio over the past 2 weeks, corn and bean crops looked wonderful every where I looked, no issues with those crops.

I don't doubt that, but your observations also don't make me doubt the Journal story or the conclusions being reached by the Department of Agriculture and the National Oceanic and Atmospheric Administration.