business news in context, analysis with attitude

Published on: April 27, 2022

Last Sunday I had the opportunity to visit the Los Angeles version of Smorgasburg, the weekly food festival that brings together an eclectic group of gastronomic enthusiasts - some to sell unique cuisine, and many to buy and eat it.  It all takes place in the Alameda Produce Market downtown, but what's really notable is the youth of the customers - largely, it seemed, between the ages of 21 and 30, and all of them apparently dedicated to the idea of good food ingeniously prepared and inventively presented.  This is an enormous opportunity, I would argue, for retailers willing and able to tap into these enthusiasms.

Bonus video, pictures below….

Here's my report from Brooklyn's original Smorgasburg, posted in September 2016.

Published on: April 27, 2022

Amazon has opened its first suburban Amazon Go store, in Mill Creek, Washington, featuring Just Walk Out checkout-free technology.

It describes the store as offering "an expanded selection of grab-and-go food and beverage items, including a broader range of beer and wine, and everyday essentials. It also features a new Made-to-Order kitchen, which offers nearly 30 freshly prepared breakfast and lunch items for customers to choose from or customize. Additionally, this store offers a selection of new specialty beverages and self-serve Pinkberry Fro-yo with a variety of toppings, which is the first time Pinkberry is available in Washington State."

Amazon opens the new 6,150 square foot store, which has a 3,250 square foot sales floor, at the same time as it also has begun using the checkout-free technology in Whole Foods stores - one in Washington, DC, and one in Sherman Oaks, California.  

GeekWire notes that the company says it "is committed to urban and suburban Go locations going forward. A new Go just opened in New York City last week, and a second suburban location will open in Los Angeles later this year," and describes this opening as "ushering in a new era for the high-tech, physical convenience stores."

Published on: April 27, 2022

Newsday reports that Wegmans is continuing the expansion of its footprint in New York City and its suburbs, entering "into a deal to buy 8.5 acres of land in a shopping center in the village of Lake Grove, where it plans to build a 100,000-square-foot supermarket."

According to the story, Wegmans spokeswoman Laura Camera told Newsday "that the grocer picks new sites based on several factors, including the properties being in densely populated areas and Wegmans wanting regional locations that are easy for customers to find and access."

Wegmans has been operating stores in Brooklyn, New York, as well as in Montvale, New Jersey, and Harrison, New York, and recently announced plans to open one in Norwalk, Connecticut.

Published on: April 27, 2022

Fast Company has a story about how, while three companies - DoorDash, Uber Eats, and Grubhub - dominate on-demand restaurant delivery, there are more than 500 smaller competitors all over the country.  They have names like GrubSouth in Alabama, Meals Now in Arkansas, Phoodiis in Tennessee, and Takeout Central in North Carolina, and what they have in common is the challenge of gaining name recognition and market share in an environment where the big three can suck up all the oxygen.

But now, the story says, "these companies are uniting into a nationwide effort called LocalDelivery, with iPhone and Android apps and a website that provide national coverage, providing an experience more like that of meal delivery’s giants. When users open the app or go to the site, they’ll be paired with the nearest delivery service, or services."

Fast Company notes that the program is being spearheaded by "the Restaurant Marketing and Delivery Association (RMDA), a trade group of about 550 local food delivery companies in the U.S. that was founded in 1990, when hungry people ordered meals via landline phone, not an app. Together, these companies do about $550 million in business annually."

The story notes that "local providers stake the moral high ground in the food delivery wars. In addition to keeping money in the community, they claim to offer better terms for restaurants. Meals Now, for instance, charges restaurants just a 10% fee on the cost of the order. Phoodiis charges 15%.

"If you order from Grubhub’s app or website, the restaurant will pay a marketing fee of about 5 to 15%, plus a delivery fee of 10%, says the company. So, the hit could potentially be higher. DoorDash and Uber each have tiered programs for restaurants that start at 15%."

Published on: April 27, 2022

Axios Capital offers an analysis concluding that e-commerce can be at least partly blamed for current rates of inflation.

Here's the logic:

"We no longer live in a 'Price is Right' world where any given item has a knowable true price that is broadly unchanged from day to day or from store to store. Instead, prices are constantly fluctuating and unpredictable - which makes them much easier to raise.

"Why it matters: Prices, like phone numbers, are things we don't need to remember — we can look them up on the internet if we need to know them. As we pay less attention, however, we become less price-sensitive, giving companies more scope to raise prices."

And here are some examples cited in the story:

"If the restaurant menu is a QR code, on the other hand, raising prices is just a matter of changing numbers on a single web page. That's why e-commerce outlets generally change their prices much more frequently than physical stores do.

"Physical stores are now following suit: E-ink displays at supermarkets can change as frequently as a price on Amazon, while a single item from a single restaurant can have a whole range of different prices depending on where and how it was ordered."

The bottom line, Axios Capital argues:  "Most prices are dynamic these days. Until recently, that worked in consumers' favor, as merchants competed to offer the lowest price. Now, it's working against us, as they attempt to maintain or even increase their margins in the face of higher costs."

Published on: April 27, 2022

Axios has a piece about Chicken N Pickle, a restaurant chain that "combines food and sport, similar to golf concepts … like Topgolf, Puttery and Stroke," but in this case includes on-premises pickleball courts in an indoor-outdoor facility.

"The menu is casual, and, of course, features fried pickles," the story says.  "Each location’s menu looks a little different, but the 'NKC hot chicken sandwich' is a staple with fried chicken, pickles, hot sauce and spicy slaw."

The story notes that "pickleball is the fastest-growing sport in the United States, with 4.8 million people playing nationwide, and as the sport continues to grow, people are going to want more options of how and where to play."

Published on: April 27, 2022

Larry Johnson, the former chairman-CEO of Albertsons, has taken a "major stake" in the Peach Cobbler Factory Franchise Company LLC, which the announcement describes as "one of America's fastest growing dessert franchises."

The press release says that "Johnston will form a partnership with Greg George the Peach Cobbler Factory's CEO to assist in accelerating the company's rapid growth and success forward into the future."

Published on: April 27, 2022

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…

•  The United States now has had a total of 82,789,716 total cases of the Covid-19 coronavirus, resulting in 1,019,008 deaths and 80,547,402 reported recoveries.

Globally, there have been 510,875,118 total cases, with 6,249,072 resultant fatalities and 464,089,256 reported recoveries.   (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 77.5 percent of the total US population has received at least one dose of vaccine … 66.1 percent are fully vaccinated … and 45.7 percent of fully vaccinated people have received a vaccine booster dose.

•  The New York Times reports that "the common perception that nearly everyone in the U.S. seemed to have been infected with the omicron variant in the winter might not have been far from the truth. By February, nearly 60% of the population had been exposed to the coronavirus, almost double the proportion seen in December 2021, according to data released Tuesday by the Centers for Disease Control and Prevention … The new research suggests that three out of four children and adolescents in the United States had been exposed to the coronavirus by February 2022, compared with one-third of older adults.

"While some studies suggest that prior infection offers a weaker shield against the virus than vaccines do, exposure to the virus should provide a reasonable degree of protection against severe illness, at least in the short term."

Published on: April 27, 2022

•  From CNBC, a story about how the US Department of Labor has "ordered Amazon to review how it responds to severe weather events following an investigation into a deadly warehouse collapse in Illinois last year."  The government, however, will not be "levying a citation with fines or other penalties," the story says.

"On Tuesday," CNBC reports, "OSHA investigators said they concluded that Amazon’s severe weather emergency procedures 'met minimal safety guidelines for storm sheltering,' but that a series of safety risks were identified during the probe … In December, an Amazon warehouse in Edwardsville, Illinois, was severely damaged after a tornado ripped through the facility, causing the 1.1 million-square-foot building’s roof to collapse, while 40-foot-tall, 11-inch-thick walls on the sides of the building fell inward. Six workers were killed, most of whom were contracted delivery drivers."

•  The Information reports that Meta Platforms - the company formerly known as Facebook - "may be trying to usher millions into the metaverse, but first it needs to sell more hardware - and so today comes the unveiling of a brick and mortar Meta Store, a place for the company to experiment ahead of a possible wider retail rollout. Opening in Burlingame, California on May 9, the shop nestled in Meta’s Reality Labs campus near the San Francisco International Airport will let visitors try out the Quest 2 headset, Ray-Ban Stories glasses and Portal devices before buying."

Published on: April 27, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Axios reports that "shrinkflation is creeping into grocery stores … Companies are keeping prices the same, but selling you less of whatever is inside — cereal, ice cream or whatever — to compensate."

This is happening, the story says, as consumers turn to frozen and canned product, as well as smaller meat packs and private label items, as a way of compensating for higher prices on their end.

•  Bloomberg reports that Simon Property Group and Brookfield Asset Management, companies that teamed up to buy JC Penney out of bankruptcy, now are "offering to acquire retailer Kohl’s Corp. in a deal that would be worth more than $8.6 billion."

According to the story, "Kohl’s has been under pressure from activist investors including Macellum Capital Management, which is seeking to take control of the company’s board. The Menomonee Falls, Wisconsin-based retailer has engaged Goldman Sachs Group Inc. to field offers, saying that the firm is authorized to coordinate with select bidders … Kohl’s said in March that Goldman had talked with more than 20 potential buyers. The retailer said in February that it had rejected takeover offers it had received as too low."

•  From the Wall Street Journal:

"A New Jersey company is recalling more than 60 tons of ground beef products that may be contaminated with E. coli, according to the Agriculture Department.

"The products distributed by Lakeside Refrigerated Services were shipped nationwide, the USDA’s Food Safety and Inspection Service said Monday. The department’s food safety and inspection service discovered the issue during routine testing of the products, it said.

"It is the third-largest recall of beef products since the start of 2021, according to the USDA. It was also the fifth recall of food products due to possible E. coli contamination over that same time frame, according to the USDA.

The ground beef products were produced from February through the beginning of April, according to the USDA. There have been no confirmed reports of illness or adverse reactions due to consumption of these products, the USDA said … USDA officials said they are concerned that some products may be in consumers’ refrigerators or freezers. Consumers who have purchased the products should throw away the meat or return it where they bought it, the USDA said."

Published on: April 27, 2022

•  Tops Friendly Markets announced that Jeff Cady, the company's director of produce and floral, has been promoted to the role of Vice President of Produce and Floral as part of the Shared Services Center (SSC) that supports both Tops and Price Chopper/Market 32 which merged last year.

Published on: April 27, 2022

Responding to a story we had the other day about various market moves in Texas, one MNB reader wrote:

I spent many years in these Texas markets, competing against HEB,  and with family in San Antonio shopping at HEB.  A couple of quick points on the Dallas moves and Kroger offering delivery in San Antonio.

I don’t think Kroger will hurt smaller players in San Antonio, because there really aren’t any left.  HEB has run them all out of town, except for Walmart, and a couple of token Trader Joes (2), Whole Foods (2), and Sprouts(2).  My mother, who lives in San Antonio, used to love to come visit us in Dallas, and go grocery shopping.  She was always amazed at seeing all the various food products she couldn’t find at HEB in San Antonio.  HEB is a great merchant that pushes their private label very well, but the downside is that you don’t end up with the variety of products that a market with strong multiple competitors provides.  And side note, HEB has somehow kept Aldi out of San Antonio, so Walmart is their only genuine competitor, and yes, grocery pricing is higher in San Antonio as a result.

As to their entry into Dallas, let’s just say… it’s about time.  I remember discussing this as a young Kroger Dallas Co-manager in 1984 (38 years ago).  They (HEB) are a great food merchant and should elevate the competition, which is great for consumers. 

One thing to watch is, will Kroger be able to disrupt HEB home turf in San Antonio enough to slow down HEB moves into Dallas.  I really love what Kroger is doing with these "delivery only” moves into new markets, and think that their ability to profitably change the cost structure of ecommerce is yet to unfold."

And, from another MNB reader:

As a Houston-based commercial real estate developer and a consumer, I think HEB does a better job than Kroger of understanding the Texas customer. Today’s Texas is a mix of cultures including “Texana”, Hispanic, Black, Vietnamese and other SE Asians, Caribbean and Africans. Texas-based (San Antonio) HEB seems to understand that and they market and stock their stores accordingly.  That would be an incredibly difficult task for a behemoth like Kroger - and based on anecdotal observations of parking lot “occupancy”, my sense is that the consumer agrees.  

Got a number of emails about Starbucks' travails.

MNB reader Dean Chilcote wrote:

I worked for Starbucks a number of years ago and left the company about a year after they implemented mobile ordering. Even back then I could see what was coming. The training we received always stressed the importance of the customer experience but as you pointed out, as the mobile orders increased, so did the lines waiting for them which then crowded those who were seated and trying to enjoy their lattes. It’s hard to focus on experience when the mobile and drive-thru orders are backing up.

I suggested that Starbucks should have 2 kinds of stores, one that is drive-thru and mobile orders only and one that is sit-down only. Maybe even change the look of each kind so they are easily distinguishable to customers. Perhaps that is the only way to get the best of both worlds of in-store customers and mobile ones. I guess my suggestion fell on deaf ears.

MNB reader Gary Breissinger had a thought:

I have always thought that it was crucial for brands to be available to their consumers wherever and whenever…and how…they want to buy or consume them.

It could be that Starbucks needs to reposition its offerings in response to changing consumer lifestyles and expectations, e.g., more take out/pick up orders than on premises consumption orders.

If that is the case, then hiring a Chief Technology Officer with fast food experience to help rationalize its mobile/takeout capability is a step in the right direction… and not necessarily an abandonment of its traditional emphasis on creating “a special space” with an unique ambiance.

These things don’t necessarily need to be mutually exclusive.

From another reader:

One of the issues that I always thought would become a problem for Starbucks is the plethora of small format stores. As they expanded drive through and digital ordering, I’ve watched how frustrated both the employees and the customers have become that comes from being too successful and not having the proper size stores and parking lots to handle the work flow and the customer flow. I think this is a serious long-term issue, which will not be easy to overcome, even for Howard.

Michael Sansolo yesterday wrote a column about the unwritten rules that "are frequently called institutional knowledge, the informal system by which insights are passed down inside a company to improve job performance. These bits of lore could be as simple as the right way to make a balky machine work or as complex as understanding why a certain customer must be treated in a specific way to retain their business.

"And quite frankly, the great resignation that is taking place could cause a significant amount of institutional knowledge to disappear thanks to the cascade of boomers opting for retirement."

Michael cited a number of examples, including some from Rochester, in upstate New York, which pleased one MNB reader from the region:

Good stuff. In the ROC we have various debates about the “Garbage Plate” and who makes the best. The original came form Nick Tahou’s, but every Greek family restaurant in town has their own version of it, called something else because Nick’s trademarked the name years ago.

If you go to the BillsMafia Facebook page, you’ll see the occasional question, “Hey, coming to town for my first home game, where should I go for wings?” Hundreds of passionate responses, also extolling the benefits of certain flavors only available at their favorite spot, try the Beef on Weck, and NEVER order wings in Buffalo with Ranch Dressing; Bleu Cheese or nothing. This is what makes our communities unique and great. I love this stuff.

Michael also pointed out that there are unwritten rules in our favorite sport:

 For example in baseball recently there has been a kerfuffle over teams ignoring the unwritten (and incongruous) rule to stop trying too hard once your team has a large and presumably insurmountable lead.

(I actually would suggest that this metaphor has limitations.  In business, unlike in baseball, there is no such thing as an insurmountable lead.  But that's for another day and another column.)

Prompting one MNB reader to write:

As an announcer for the Cubs used to say: “The game is never over until the last man is out.”  Something about there being no clock in baseball, perhaps.

Just one of the things that makes baseball the Best. Sport.  Ever.

One note, if I may:

I made a mistake when proofing Michael's column:  it was my job to add in - for context - the Mets' won-loss record, which I said was 12-5.  In fact, I got it wrong.  By the time I edited the piece on Monday night, the Mets had completed an amazing ninth inning comeback - they were down to their last strike, and went from being down 2-0 to winning the game 5-2 - against the St. Louis Cardinals.  So, in fact, they were 13-5.

Mea culpa, mea culpa, mea maxima culpa.

A perfect example, by the way, of there being no such thing as an insurmountable lead.

And one last note.  The Mets beat the Cardinals again last night, 3-0.  So now they are 14-5.