business news in context, analysis with attitude

Published on: April 18, 2023

Today, I have an extended conversation with Dave Dempsey, CEO of Hyer, in which we discuss the the current labor challenges facing retailers and suppliers, and the ways in which his company has developed a platform that applies gig economy-style solutions to solving pressing and immediate staffing needs.

Two quick notes about this conversation, if I may.

First, this is a follow-up to a chat that I had with Dempsey early in Hyer's rollout.  That initial conversation was in March 2020, just as the states were beginning the pandemic-related shutdowns that would last far longer than any of us would have believed at that time.  We also never would've expected that the nation's labor shortage - two jobs for every one available employee, according to some studies - would continue to create enormous challenges for businesses, and one that Hyer is uniquely positioned to address.

You can access that piece here.

Second, in the interest of full disclosure (and I mention this in the video), I need to acknowledge that Hyer is an MNB charter sponsor.  My plan was to revisit the labor situation with Dempsey, but before I could reach out to ask for a followup conversation, the folks at Hyer contacted me and asked about becoming an MNB sponsor.  I saw no reason we couldn't do both - I love it when people and companies want to sponsor MNB, and I had planned to talk to Dempsey anyway.  (Why penalize Hyer for having such good taste in blogs!)

So, with that caveat, I hope you enjoy my conversation with Dave Dempsey, CEO of Hyer.

If you'd like to listen to this conversation as an audio podcast, click below.

Published on: April 18, 2023

by Kevin Coupe

We've had some conversations here recently about the troubling situations in many cities that are forcing retailers to make necessary decisions.

The latest example:  REI, which sent out the following email to customers of its Portland, Oregon, store:

Dear REI Member,

We are sad to share that our store in Portland’s Pearl District will close early next year.

For nearly 20 years, REI has proudly served our members and the outdoor community from this location. We’ve had a presence in Oregon for over half of our 85-year history, opening our third store nationally at Jantzen Beach in 1976.

The safety of our employees, members and customers is always our number one priority. In recent years, Portland has been dealing with increased crime in our neighborhood and beyond. Last year, REI Portland had its highest number of break-ins and thefts in two decades, despite actions to provide extra security.

In addition, we have outgrown this location and as a result are not able to provide the level of customer and employee experience we strive for at REI. For these reasons, we are no longer confident in our ability to serve you in this location.

We remain dedicated to serving our community in the area and are continuously evaluating opportunities for new locations. While we do not believe a downtown Portland location will be possible in the near term, our stores in Tualatin, Hillsboro and Clackamas remain open and ready to outfit you with the gear and advice you need to enjoy life outside.

The store’s closure will not impact our wide range of day tours and classes available through our Experiences team, nor our commitment to supporting nonprofit partners in the region.

We look forward to continuing to serve you from our Pearl District store through early 2024.

Sincerely,

Your friends at REI

I've shopped at that store.  I know the neighborhood well, from my summer adjunctivities at Portland State University.  It was the area, not too many years ago, to which I hoped to move.  I'd continue doing MNB, do some more teaching at PSU, and enjoy the Pacific Northwest that, in my opinion, is the most beautiful part of the country, with the best food and wine.

Emails like this break my heart.  Emails like this have broken Mrs. Content Guy's spirit - there's no way she's moving there now.  Eye-Opening emails like this one illustrate just how difficult a road some many cities have in front of them.

Portland is said to be one of several cities in the running for a Major League Baseball expansion team.  I must admit to being conflicted about this.  On the one hand, a team would bring much needed investment to the city.  But I also believe that until Portland can figure out ways to deal with the significant issues that face it, making such investments could be problematic.

Published on: April 18, 2023

FMI-The Food Industry Association is urging the Federal Trade Commission (FTC) "to withdraw or significantly narrow the scope of its proposed rule to ban employee non-compete clauses."

FMI Chief Regulatory Officer and General Counsel Stephanie Harris said, “Non-compete clauses are a standard practice in many industries and serve to protect businesses by preventing employees from taking valuable intellectual property, trade secrets, and other sensitive information with them to a competitor … A ban on non-compete clauses would reduce businesses' ability to protect their intellectual property and could lead to reduced innovation, lower quality products and services, and a less conducive environment for recruiting highly skilled workers.”

FMI also said that "if the FTC chooses to issue a regulation prohibiting non-complete clauses, the agency should modify the proposed rule’s definition of 'worker' to exclude executive-level employees and other highly skilled workers given their need to collaborate on sensitive business information to be successful in their job functions."  And, FMI argues that the FTC "lacks the statutory authority to issue such a rulemaking and noted that its members are on the cutting edge of developing technology and business strategies that help sustain an efficient food supply chain in the United States, and non-compete agreements are essential in facilitating that work."

Published on: April 18, 2023

From Axios:

"Americans' go-to international cuisine used to be Italian. But increasingly it's Latin American and Tex-Mex — tacos, quesadillas and birrias — with Asian food next on the horizon.

"Why it matters: Demographic changes — including the dramatic rise in the U.S. Latino population — translate to shifts in childhood favorites and adult preferences.

"Datassential, a restaurant-menu consultancy, analyzed 4,500 new menu items at major restaurant chains last year — and found that Americans are craving cheesy, spicy foods with Latin-inspired ingredients and preparations.

"The 10 fastest-growing items on U.S. menus include birria (a Mexican meat stew), chicken taco salad, and dishes made with Tajín, a seasoning of chili peppers, lime and sea salt."

Published on: April 18, 2023

The Atlantic has a fascinating story about a piece of nutrition research that challenged conventional wisdom to the degree that it has been difficult to get anyone to take it seriously.

An excerpt:

"Back in 2018, a Harvard doctoral student named Andres Ardisson Korat was presenting his research on the relationship between dairy foods and chronic disease to his thesis committee. One of his studies had led him to an unusual conclusion: Among diabetics, eating half a cup of ice cream a day was associated with a lower risk of heart problems. Needless to say, the idea that a dessert loaded with saturated fat and sugar might actually be good for you raised some eyebrows at the nation’s most influential department of nutrition.

"Earlier, the department chair, Frank Hu, had instructed Ardisson Korat to do some further digging: Could his research have been led astray by an artifact of chance, or a hidden source of bias, or a computational error? As Ardisson Korat spelled out on the day of his defense, his debunking efforts had been largely futile. The ice-cream signal was robust."

What makes the story so interesting is that the article's author, when he started doing his own research, found that the ice cream study wasn't the first time these unexpected results came up.  There had been similar studies and results going back decades, but a cultural bias against ice cream prevented researchers from taking it seriously.  The data suggested that in many ways yogurt and ice cream could offer the same sorts of benefits, but traditional thinking prevented researchers from taking the latter possibility seriously.

"The problem with this line of thinking is that once you start contemplating all the ways that cultural biases can seep into the science, it doesn’t stop at dairy-based desserts," The Atlantic writes.  "If the ice-cream effect can be set aside, how should we think about other signals produced by the same research tools?"

The story goes on:

"The ice-cream saga shows how this plays out in practice. Many stories can be told about any given scientific inquiry, and choosing one is a messy, value-laden process. A scientist may worry over how their story fits with common sense, and whether they have sufficient evidence to back it up. They may also worry that it poses a threat to public health, or to their credibility. If there’s a lesson to be drawn from the parable of the diet world’s most inconvenient truth, it’s that scientific knowledge is itself a packaged good. The data, whatever they show, are just ingredients."

You can read the entire story here.

Your Views:

It really is an interesting story, and makes me feel a little bit better about that Graeter's Black Raspberry Chocolate Chip - one of the best ice creams in the world - that I ate last night.

It also teaches an important lesson about epistemic closure - which is another term for being closed-minded.  Just because you think the world is a certain way, or ought to be a certain way, doesn't that it actually is that way.

Published on: April 18, 2023

The New Yorker has an excellent piece in which it describes the product development at Taco Bell, a story that may fill you with envy, impress your intellect, stimulate your taste buds, or drive you to culinary despair.

It is all a matter of taste.

An excerpt:

"Taco Bell’s food-innovation staff, which includes sixty developers, focusses on big questions: How do you make a Cheez-It snack cracker big enough to be a tostada? What are the ideal Cheez-It dimensions to guarantee that the tostada won’t crack inconveniently when bitten into? Or consider the Doritos Locos Taco: What safeguards can be implemented to prevent the orange Doritos dust from staining a consumer’s hands or clothing? Can fourteen Flamin’ Hot Fritos corn chips be added to the middle of a burrito and retain their crunch? Can a taco shell be made out of a waffle, or a folded slab of chicken Milanese? These are all problems of architecture and scalability; fast food is assembly, not cooking."

You can read the story here.

Published on: April 18, 2023

Food & Wine reports that "McDonald's is rolling out what it calls its 'best burgers ever' in select cities. The update will affect a few core McDonald's items, including the Big Mac, McDouble, Cheeseburger, Double Cheeseburger, and Hamburger, essentially its entire classic burger lineup … According to the press release, McDonald's says the upgrades will include:  Softer, pillowy buns that are freshly toasted to a golden brown … Perfectly melted cheese that will make you want to savor every last bit off the wrapper … Juicier, caramelized flavor from adding white onions to the patties while they're still on the grill …Even more of everyone's favorite Big Mac sauce, bringing more tangy sweetness in every Big Mac bite."

The story notes that "if some of those changes sound familiar, they seem to be piecemeal-ing some desirable attributes from beloved regional competitors, including White Castle and In-N-Out, the latter of which has made moves to expand its territory further east."

Published on: April 18, 2023

The US Federal Trade Commission (FTC) said that it "is putting hundreds of advertisers on notice that they should avoid deceiving consumers with advertisements that make product claims that cannot be backed up or substantiated. In notices sent to the companies, the FTC warned that it will not hesitate to use its authority to target violators with large civil penalties."

These penalties could be as high as $50,000 per offense.  More than 670 companies reportedly have been put on notice.

The FTC pointed out that under the law, "companies must back up claims about what their product can do with reliable evidence. If a company makes a claim about the health or safety benefits of a product, that claim must be based on scientific evidence. If a company claims that its product can cure, mitigate, or treat a serious disease such as cancer or heart disease, it must back up that claim through the accepted standards of scientific testing … While the FTC has long history of providing guidance on advertising substantiation, through both litigated cases and policy statements, many sellers continue to make unsubstantiated claims about their products and false claims about the proof they have. Consequently, the FTC is now using its penalty offense authority to remind advertisers of the legal requirement to have a reasonable basis to support objective product claims and to deter them from making deceptive claims in the future.

“The requirement for advertisers to have adequate support for their advertising claims at the time they’re made is a bedrock principle of FTC law,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “The prospect of steep civil penalties will help ensure that advertisers don’t play fast and loose with the truth.”

Published on: April 18, 2023

•  From Bloomberg:

"Amazon continued blocking sellers from offering lower prices on rival sites, despite assuring antitrust enforcers it ended its policy that artificially inflated prices for consumers, according to newly unsealed filings in California’s antitrust lawsuit against the e-commerce giant. 

"The Seattle-based company planned to expand penalties on sellers who presented lower prices outside Amazon, even after it claimed in 2019 that it stopped punishing third-party merchants who posted better deals on Walmart, Target, eBay, and, in some instances, their own websites, according to previously redacted portions of the suit that were made public Friday.

"Amazon knew its sellers lived 'in constant fear' of account suspensions or fast-selling products being taken down, according to an internal company document cited in the complaint.

"California Attorney General Rob Bonta is seeking a court order blocking Amazon from continuing to engage in what he alleged is anticompetitive behavior, as well as compensation for consumers in the most populous U.S. state. A similar suit filed by Washington, D.C., was dismissed in 2021."

•  Bloomberg reports that Amazon's continuing desire "to gain a slice of the global gaming pie, which today is worth in the region of $200 billion each year," continues to by stymied, largely by the company's inability to develop a successful video game.

" It’s very hard to create a successful video game," Bloomberg acknowledges.  "Like the movies, the top-grossing game charts are awash with sequels and tried-and-tested formats. Experimentation is expensive in time, money and risk."  Amazon has spared no expense, spending an estimated $500 million a year on Amazon Game Studios, with "little to show for its efforts."

While CEO Andy Jassy has been publicly supportive, it appears that he's decided to punt:  "As part of companywide layoffs this month in the face of spiraling costs, Amazon let go of around 100 employees from AGS … the feeling among the team was that Amazon seemed to be shifting its emphasis to acquiring more titles developed by third parties. 

"That is undoubtedly the smart move. If Jassy wants a meaningful return on games, the quickest way to do that is to partner with outsiders with a proven ability to make great games."

Published on: April 18, 2023

•  Reuters reports that Loblaw Companies has committed to spend the equivalent of $1.5 billion this year "to expand its business …  in retail, supply chain, technology and construction in Canada."

According to the story, Loblaw "expects to use the investment to grow and improve its stores; it said it will open 38 new or relocated stores and renovate or convert nearly 600 others."

•  Albertsons and Kellogg announced that they "are teaming up to help change customers' recycling habits in honor of Earth Day … The companies have created special signage for in-store recycling bins utilizing iconic Kellogg characters Tony the Tiger and Toucan Sam and will hold a series of in-store events to promote Albertsons Cos.' in-store recycling programs in Albertsons, Vons and Pavilions stores in Southern California and Safeway, ACME, Kings Food Markets and Balducci's Food Lover's Market stores in the Northeast. Packaging that includes the appropriate How2Recycle Store Drop-off label, including some of your favorite Kellogg foods, can be returned to these bins at participating stores."

The companies say that "certain plastic bags, wraps and films cannot be placed in curbside recycling bins at home. By improving customer education on what can be brought back to participating Albertsons Companies stores for recycling, we can give plastic packaging a new life."

Published on: April 18, 2023

Executive Suite is sponsored by Robin Russell Executive Search.

•  SpartanNash announced that it has hired Arpen Shah, most recently the senior director, merchandising enablement at Essendant, to be its new  vice president of merchandising strategy and analytics.

Published on: April 18, 2023

We had a story yesterday about how restaurants are gaining market share back from supermarkets in a post-pandemic environment.  I commented:

During the pandemic, when grocery store sales shot up and restaurant sales cratered, it was an article of faith here that if supermarkets wanted to hold onto those sales, they were going to have to be both aggressive in their efforts and ambitious in their vision.  Restaurants would come back, I argued, and supermarkets could not be complacent about the shift.

These numbers suggest that this is exactly what has happened - that too many retailers enjoyed the fruits of pandemic-prompted shifts without doing the hard and necessary work to keep that business.  Some of it, of course, always was going to return to restaurants;  people were hungering to go out.  But I think that many supermarkets could've done a better job of keeping the customers and dollars that they attracted during the pandemic.

One MNB reader responded:

Just guessing that people missed the frequency of the personal exchange that was difficult during the pandemic. Speaking of value, I bought 4 large USDA choice filet mignon's at my local Costco for $60 and enjoyed a delicious dinner at home with 4 people. The cost for ONE filet mignon dinner at a local popular restaurant, Gulfstream, is $68. All is takes is a little effort to save a lot of money.

And from another reader:

Hey Kevin!  It was inevitable that restaurants would bounce back which is fantastic!  Agree that food retailers are not being aggressive enough to stay competitive, however, I just bought 3 New York Strips, Lobster Claws, Brussel Sprouts, Large Baker Potatoes, Large Tomatoes for a Caprese’ salad and 2 bottles of (cheapish $7.99) wine for less than $70 dollars.  Thinking a meal like that in a restaurant would be $150+! 

On another subject, one MNB reader wrote:

As an R&D exercise, we tested 2d bar codes at retail 20 years ago.  Our intention with this POC was squarely focused on providing more data in the bar code than is currently supported.  Everything was new and “cutting edge”; we were using the first models of 802.11b wireless scanners (by Symbol) and had our shelf tag print house produce a few pages worth of tags.  At the time though, the technology was not as advanced as it needed to be.  The scanner and decoding was too slow.  Also, 2D bar codes on a vinyl shelf tag are not as resilient to imperfections or damage, compared to a UPCA code.  It’s cool to see things finally coming along to support it. 

On the subject of executives needing to spend more time on the front lines, prompted by a piece about Uber's CEO spent time as a driver to get a better sense of working conditions, MNB fave Glen Terbeek wrote:

After working in and observing the food industry for many years, in my opinion the number one key success factor is the amount of time senior management spend in the stores.  After all, that is where the shoppers are as well as the competitors.  The local market!  And where the staff is that deal with the local market daily.  How about "work from Stores” in the future?  With today’s technology, "support people” could have their offices spread throughout the chain, connecting via virtual tools and the occasional meeting.  "Support people" could meet with vendors and others where the action is.  Do we need headquarters any more?  

As Feargal Quinn used to say, “We don’t have a headquarters, we have a support center”.

P.S.   Why doesn’t a 100 store chain operate as say 10 local market defined 10 store units in the future, supported by centralized non local market functions such as buying, logistics, finance, technology, etc? The power of size enabling local market performance. The local units could even have different names!  

Remember, the individual shopper only cares about “their" store in “their" market. 

You're preaching to the choir, Glen.

Regarding the use of robots to help do the cleaning at the United Club in Chicago, MNB reader Rich Heiland wrote:

United must not totally trust the bot. In your concluding frame a real human employee walks behind you carrying a dirty dish. 

I am not opposed to advancing technology, but when I pay $500 a year for an air club membership a part of the experience is being served and maybe it's just my advancing years, but I appreciate the human interactions involved.

I invest money in a club membership so I have a quiet place with reliable plugs and wifi so I can do MNB.  Human interactions are nice, too, but not my priority.

Published on: April 18, 2023

Yesterday, Patriots Day, marked the 127th running of the Boston Marathon, a decade after the deadly bombing that will forever be mentioned in the same breath as the race itself.  That infamous event resulted in the coining of the term, "Boston Strong," an apt turn of phrase to describe the city that our Founding Fathers once described as the "Athens of America."

Kenya’s Evans Chebet won the men's elite race, finishing the 26.2 mile course in  2 hours, 5 minutes and 54 seconds and successfully defending his 2022 crown.

Kenya's Hellen Obiri won the women's elite race, finishing in 2:21:38.

There were more than 30,000 participants in this year's Boston Marathon, for which David Ortiz of the Boston Red Sox served as grand marshal.