Informational Interview

I interviewed my father, Louis Brienza. He owns a Dunkin Donuts in Bethpage, NY. My father manages the day-to-day operations and deals with the financial end of the business. He makes all business decisions for the company ie: loans, real estate, expansion, and banking. He looks for employees that are outgoing, reliable, confident, and who can communicate well with customers. The entry level jobs in his business include crew-members that handle customers, bakers who handle the manufacturing of the products, and store managers. I also learned that in recent years there has been a decrease in sales due to the recession our economy has been facing. The customers are cutting back on there discretionary income. Some businesses will see an increase in the next five years because the financially strong companies will stay in business and build while the weaker companies end up closing. This will create less competition, therefore, increasing the sales of the bigger companies.

Informational Interview

I interviewed Edward Din, owner and manager of Wong's Chinese Restaurant in Norfolk, Virginia.  From this interview, I was able to gain an insight into a family-run business and how it is affected by seasonal changes.  Mr. Din and I spent the majority of the interview discussing how his restaurant's business is affected by its location as it sits on the beach.  In the summer, Mr. Din employees many employees because the restaurant sees a lot of customers in the warm weather.  Once the season's start to change and the temperature cools, the restaurant loses many of its customers and they are forced to let non-family employees go until business once again regains momentum.   I had never thought before how the economics of a business could be affected by its location and and the regional weather.  It makes me wonder how many other restaurants see a change in profits and have to let their employees go at certain times of the year and how important it is to those restaurants when they open.  I thought the interview was definitely beneficial because I learned about a different aspect of the restaurant industry.

Informational Interview

I interviewed Steve Efstathiou, owner of three diners in New York and Virginia. The interview was very helpful in understanding the competition in the restaurant industry. Mr. Efstathiou informed me that the industry is very competitive. The increase in national chains, for instance, Chinese and Italian chains, has made it hard for diners to gain support, especially with the economy how it is now. He said the restaurant industry was hit hard five years ago and he has seen a turnaround this year that he expects to last into the future. To gain consumers, restaurants must differentiate themselves from others. The main way restaurants differentiate themselves is by pricing. Offering 2 for the price of 1 meals, and discounts draw consumers in. I mentioned the high demand of diners in the area, especially around the college where students see many diners in their hometowns, and he said that he would love to open one around the school but property prices are way too high. This is very important to consider when opening a business since you need to be able to cover your costs.

Informational Interview

My informational interview was with Mr. Brett Kelly, the co-owner and co-manager of a small business restaurant named "La Terrazza". It is located in New City, New York. Mr. Kelly and his friend began the Italian restaurant 16 years back. As of now, he has 40 employees. As the manager, he is in charge of scheduling staff, purchasing items, booking affairs, printing/updating menus, having owner/manager responsibilities, and assisting for the hosts if needed. During the interview, he spent time explaining the different types of entry-level jobs. He focused on the "front of house" staff, which include waitresses, head waiter, booking manager, and assistant managers. However, his main focus however was on chefs. His small business has 6 different chefs, including preparation/salad chef, broiler chef and executive chef.
A really interesting part of the interview was when he explained the recent increase/decline in certain jobs over the past few years. He has noticed that weekly dinners (from Monday-Thursday) have declined over the past few years. Mr. Kelly states this is a direct effect from the recession - many people do not have the time or money to go to restaurants on weeknights. He also stated his restaurant is becoming increasingly popular for events - such as weddings, birthday parties, retirement parties, etc. The part of his business that was most striking to me was his staff is mostly made up of full time workers. These full time workers include teachers and nurses - workers who are looking for more ways to "make ends meet." I did not realize that some restaurants may participate like this. Speaking with him showed me how difficult it is to run a small business, especially during a recession. However, it also showed me how rewarding it can be.

Informational Interview

My informational interview was with Valarie Zuffanti, the Senior Sales Manager at the Ritz Carlton Corporations in Boston, Massachusetts. Her hectic day starts at 8:30 am, which is when the staff meets to discuss their goals for the day, any important guests that are arriving (since the hotel is a high-end one), etc. This meeting will last approximately 30 minutes, until nine am, when the group breaks off, and starts accomplishing their goals. Currently Valarie is figuring out the price of beds in the hotel- meaning at The Ritz Carlton- for the next year, 2011. During the day, Valarie will also talk with clients in the companies target audience, such as workers at Goldman Sacks, to make sure they are aware of the great deals at The Ritz Carlton. Prior to the stock market crash, the primary consumer of The Ritz Carlton's services were Wall Street workers, but since the crash in 2008, there has been a complete shift. This shift has come from financial workers no longer bringing in income for The Ritz Carlton employees, since they cannot shell out the expensive room rates. Hence one reason the hospitality industry has been declining, even for the upperclass workers, who have not been as taken aback by the financial crisis of 2008. Despite the 80 percent of Ritz Carlton clients that were in administration, and the financial sector; the hotel industry is beginning to buzz again. Although, this is not in full swing, there is an increase in the number of jobs, due to a somewhat stable footing in the stock market, and more jobs- such as security, bell hops, and front desk receptionists; have been desired from this increase.

No toy without certain fat restrictions

Recently a bill was passed by the San Francisco Board of Supervisors that states that restaurants cannot give away toys in their meals unless they meet certain health requirements regarding fat, calories and sodium.  The bill, which blatantly takes on the Happy Meal, was headed by Supervisor Eric Mar after he became horrified by his daughter's growing collection of free toys.  He believes this new rule is a way to counter the fatty, salty fast food.  Mr. Mar has said that he hopes this will act as an incentive for fast food companies to "provide better choices".

A spokeswoman for the company has said that she does not believe that this is what customers want "nor is it anything they asked for".  The mayor, Gavin Newsom, was also not pleased with this new ban and had hopes to veto it because he does not think this will fight child obesity.  The boards counter fact was that roughly 30% of the city's fifth graders are overweight, which is an extremely scary statistic considering the Happy Meal is aimed towards their age group. "Under the bill, any meals will have to have fewer than 600 calories, fewer than 640 milligrams of sodium and less than 35 percent of calories from fat (with an exception for some healthy items, like nuts)." If restaurants fail to adhere to these policies, then no toy for their customers.

I believe that this is a smart move for the city as child obesity is one of the biggest growing problems in the country. I think that this will be an incentive for children to choose healthier options as the toy is the rewarding piece of the meal. Hopefully this new standard will convince fast-food restaurants to serve healthier meals as they will begin to see what their customers are drawn too.

Minimum-Wage Debate Divides Hong Kong

In response to growing public calls to tackle the widening wealth gap, lawmakers passed the minimum-wage bill after a 41-hour session in July. Some of Hong Kong's lowest-paid workers, such as toilet cleaners or security guards, earn as little as HK$20, or about US$2.60, an hour. A Provisional Minimum Wage Committee appointed by the government has yet to recommend a new the hourly rate. HK$28 per hour is the median between what labor representatives and business groups are calling for.

A dispute between labor groups and the business sector last week raised the question of whether a minimum wage might backfire more directly against the workers it is meant to help. Trade unions called for a boycott of one of the city's largest fast-food groups, Café de Coral Holdings Ltd., which operates restaurants in Hong Kong as well as the Manchu Wok chain in North America (Steger).

While the minimum-wage law has yet to take effect, Café de Coral last month acted pre-emptively by increasing hourly pay by between HK$2 and HK$3.50 (Steger). However, because the company eliminated a paid 45-minute paid daily lunch break, the move turned into a public-relations fiasco. Employees found out their original earning of $22 an hour would end up being less less each month if they worked eight hours a day, 26 days a month. The boycott plan soon followed.

Hong Kong Chief Executive Donald Tsang, addressed to business groups that the government was forced to legislate a minimum wage after a "tepid" response from the business community to a voluntary plan for a minimum wage proposed in 2006 (Steger). "[T]ensions are developing in society because the fruits of the economic recovery have not trickled down to all levels of the community," said Mr. Tsang. "Some people feel that they are being ripped off" (Steger).

Workers will not only respond to low wages with boycotts; but it will also be reflected in their work ethic. If employees at restaurants are not working as hard this will directly affect customer satisfaction. Meals may not be prepared as quickly or there mite be less effort put into making them. If the workers got paid normal wages all the disputes between employee and employer will be settled and the consumer will be happy.

http://online.wsj.com/article/SB10001424052748704737504575601832288088158.html

Rise in Input Prices Causes Higher Prices for Consumers

Prices of milk, beef, coffee, cocoa and sugar have gone up recently and restaurants are raising their prices to make consumers bear most of the cost. However, this could cause problems for the restaurant industry because of the position many consumers are in. With high unemployment consumers have found ways to save extra cash by not going out to eat as much, or buying generic brands.

Cheif executive of Stater Bros. Market, a grocery store chain in California said, "The big challenge will be, how much can we swallow and how much can we pass along?" Recently, cereal prices for Stater Bros. has risen 5%. They dealt with this increase by passing half the cost onto consumers, by rising the prices they pay, and by bearing the other half of the cost by cutting other expenses.

Starbucks has decided to leave the costs of their coffee the same, to keep from losing supporters of their main product, but to rise the prices of other harder to make drinks. Kraft, General Mills, and Safeway have decided to pass the rise in prices on to the consumers.

Foood prices are rising faster than overall inflation. The CPI (consumer price index) for all items minus food and energy had risen 0.8% up until September. The Bureau of Labor Statistics has recorded this as the lowest 12-month increase since 1961. However, the food index rose 1.4%. It is predicted that overall food inflation will be at about 2% to 3% next year.

If overall inflation does not begin to rise more sharply then I think the restaurant industry is going to take a huge hit. They will not be able to put a 2% to 3% rise in prices on consumers within the next year. They will have to take some of the burden and cut their costs just as Stater Bros. Market has done. Otherwise, consumers will find the cheapest prices and resort to them if they have to.

http://online.wsj.com/article/SB10001424052748704506404575592313664715360.html?KEYWORDS=restaurant++industry

Can Starbucks Adapt Like McDonald's Has?

According to Forbes, starting seven years ago, McDonald's Corp has been growing slowly in the total amount of restaurants. Also, for the past seven years, McDonald's has been making a serious effort at "smarter more cost-efficient operations." In turn, this change has increased McDonald's stock.

Starbucks, on the other hand, has only recently decided to enter the "slow growth stage". Since then, the company has closed 1,000 locations and similar to McDonald's, tightened up its operations. This has also led to an increase in Starbucks' stocks. Another important change Starbucks is pursuing is making more of its stores licensees. This is also similar to McDonald's.

The article states that McDonald's has a better profit margin due to its "larger network of franchisees." Furthermore, the productive at McDonald's restaurants has risen over the past few years, because of new menu items, cleaner restrooms and faster drive-through times.

With McDonald's as its model, Starbucks is trying out the same idea. Though Starbucks is trying, it is too early to tell if the company is making any progress.

I think Starbucks has the potential to adapt like McDonald's does, but not in the same magnitude. Even though the two companies "operate from very similar real estate" by hiring the same workers and competing for casual dining and snacking spending by consumers, I think McDonald's has more of an edge over Starbucks. McDonald's offers more selections than Starbucks does, it has been around much longer than Starbucks has, and its restaurants are open longer than Starbucks' restaurants on average. Based on the article, it would be great if Starbucks can adapt because it would most likely lead to greater shares, but I am not sure if Starbucks is the type of restaurant that should adapt in the way McDonald's has adapted.

http://blogs.forbes.com/investor/2010/11/04/can-starbucks-adapt-like-mcdonalds-has/

Low Cost Comfort Foods Save Restaurants

Restaurants in the Bay Area of San Francisco were hit hard by the recession, just as everyone else had. However, restaurants are very vital to San Francisco because they draw in many of the tourists. Employment in San Francisco has declined about 6% over the past year, a result of restaurants unable to adjust to the changes in the economy.

Several restaurants have adjusted to the economy by increasing comfort foods, like fried chicken and pizza, and and cheaper menu items on their menus. Those who have failed to do this, have gone out of business. Even restaurants who have adjusted their menus have not all found success.

Anne Le Ziblatt, owner of Tamarine in Palo Alto, has added more affordable dishes to her menu. Rather than serving the same dishes that range from $14 to $28, she began selling Vietnamese dishes that sell for $13 each. This has helped Ms. Le Ziblatt's business to increase 15% from last year.

These kinds of changes have made the future look promising for the Bay Area restaurants. Restaurant employment has decreased at a slower rate than overall employment has in the Bay Area over the past two years. Some restaurants have even found the opportunity to expand higher end restaurants. The most important fact however, is that customer numbers are increasing to pre recession numbers. For without the customers, restaurants can not make a comeback.

http://online.wsj.com/article/SB10001424052748704141104575588982760967058.html?KEYWORDS=restaurant+industry

Holiday Inn to Turn Bars into Social Hubs

According to an article in the WSJ, Holiday Inn intends to "edesigning and expanding its hotel bars to make them livelier." Holiday Inn is a part of InterContinental Hotels Group. InterContinental's reasoning for turning Holiday Inn's bars into social hubs is "dogged midmarket full-service hotels" with 150 rooms or less do not have enough customers to provide full-service food 24/7 that will make a profit.

Another reasoning is frequent customers of Holiday Inn, which are primarily "middle managers, route salespeople, entrepreneurs, and government supervisors, want to be around other people than holed out in their rooms." Holiday Inn came across this through a survey it offered to its most frequent customers. It is replying to its customer's wants.

The way Holiday Inn is approaching this request is impressive. By making the bar area more of a social hub, Holiday Inn plans to have the bar staff serve food, which would allow the hotel to reduce restaurant staff - which will reduce labor cost. This applies to all meals during the day. For breakfast, there will be "buffets and cook-to-order stations." This will also cut labor costs for the Holiday Inn.

However, Holiday Inn will "go slow" with the idea of social hubs, especially because most of its hotels are owned by franchisees. The social hubs will be tested in newly renovated and newly built hotels, most likely beginning in 2012. Holiday Inn is planning to have all of its hotels have the new menus and the breakfast programs (at the least) by 2012. The "pricier changes" will probably happen while the hotels are under periodic renovations. As of right now, Holiday Inn does not have an estimate of the cost of installing these hubs because "the concept is likely to undergo changes during the test during next year."

I think this is a great idea! I feel like these midmarket full-service are too impersonal (obviously not for the people sharing a room). The feeling of these types of hotels are "come in, sleep, wake up, leave, do work, come back," and restart the cycle. There aren't many opportunities in these hotels to meet other guests. Even though some people think of a hotel as just a place to sleep on the go, I believe they will benefit from these social hubs. I also believe these social hubs will attract more people to the hotel, which should raise its profits and help the hotel industry recover in general.

http://online.wsj.com/article/SB10001424052702303443904575578613162270270.html?mod=WSJ_Hospitality_leftHeadlines

City Center failing to pay bills

Last December, the City Center in Las Vegas opened amidst the largest decline in tourist travel in decades. This project, roughly worth 8.7 billion dollars, is more than just a hotel: there are condominiums, a casino as well as a giant mall.  The hotel was supposed to start a new wave of "sophistication and urban living in the gaming capital".  But the innovation of this building has almost been over-shadowed by its huge scale and cost.  There is an outlined plan to seek relief for $1.8 billion loan, but if terms cannot be negotiated then City Center could be responsible.

MGM resorts reported a net loss of $1 billion, which includes a write-down of nearly $600 million.  Also the hotels worth has reported fallen from $5 billion to $2.4 billion in a single year.  MGM is still spending money to end construction as well as keep operations at City Center going.  There was a report in July that stated within a year City Center would see major improvements and for right now they have seen an increase in earnings, yet the hotel is still on track to violate their loan.

The cost control problems with City Center have seemed to induce problems between the partners as some wish to close certain operations while others believe it would be more detrimental to the center.  The executives are also faced with what to do about the nearly 2,000 condos that are unsold.  At first the 2,400 condos were expected to produce a revenue of $2.7 billion, but now the total sales are $372 million.  By maintaining 530 of these unsold units, the center is set to witness an additional $11 million loss in profits.  One plan is to lease 200 of the condos while another is to make City Center more livable by installing a grocery store.

These financial problems co-inside with complaints from customers who say the casino is too dark as well as other design faults.  I believe that this center was built at a completely wrong time in American society.  With the economy still reeling from the crash, people are clearly not making to trips to Las Vegas regularly and spending thousands of dollars to stay the night.  I think that this center should try to target international waters because they might be looking for an experience they could provide.  I believe that it is going to take a very long time before the hotel is going to see a complete pick-up in revenue and for now they are going to have to search for ways to maintain their creation.

Developer Recaptures a Maritime Motif

"Frank Fusaro, of Handel Architects, embarked on a historical reclamation mission of sorts when he took on the job of designing the new Dream Downtown hotel now taking shape in Chelsea with its distinctive punched-out porthole windows"(Rubenstein). Now a developer by the name of Sant Singh Chatwal is converting the annex into a $230 million, 316-room hotel scheduled to open this spring.

After Mr. Chatwal bought the annex for $70 million in late 2007, Mr. Fusaro designed the plan to cover the building in stainless steel tiles fabricated in Kansas City with a special-made coating dubbed the Dream Finish: "it's polished enough to reflect the blues and whites from the sky overhead, but not so reflective as to mirror passersby" (Rubenstein).

In today's recession, consumers are seeking high quality hotels for lower prices. This annex that Mr. Chatwal purchased will prove to fit that standard. He turned the old hotel into a $230 million, 316-room hotel. The hotel industry has been a very competitive industry lately in the United States. Companies differentiate themselves from each other by having different promotions, offering special rates, and basically become the best they can be. For this key industry player, after purchasing the annex for $70 million, he has invested a lot into the annex in hopes of achieving big things in the near future when it becomes operational.

http://online.wsj.com/article/SB20001424052748703708404575586591685653962.html#articleTabs%3Darticle

Big Chains Try Food Trucks

A new trend in the restaurant industry is that a small number of chain restaurants are appearing around the city with their own food trucks.  Vans/trucks come fully equipped with an entire working kitchen.  Customers have little difficulty tracking the mobile unit with sites like Twitter and Facebook, who make their whereabouts easily accessible.  It seems as though customers appetites are expanding "food-on-the-go" and there is an increasing demand for bigger chains to appear with their own truck, which seems to be in the works.  Tasti D-lite is an example of one brand already on the move with plans to increase their number of trucks on the road from 1 to around 10.


Franchisors are also investing in food trucks to promote their upcoming opening of stores. While some cities have restrictions about where the vans can park themselves many do not and trucks are able to pull up  anywhere.  But there is some risk in sales if the weather acts out. For example, Thomas S. Jones and his sister employ "two food trucks to supplement sales for four Cousin Subs restaurants they own in south Wisconsin."  They further explain that they have regular customers who expect the vehicle to show up at the corner, in the park, or by an office building.  He goes on to explain that "I treat those trucks like a store, never once have I not put them out there."  as total sales from this venture account for 5% to 10% of all revenue for the business.


In my opinion this is an innovative idea for restaurant chains.  It is making their businesses more accessible to customers who might be on the run and looking for a quick fix.  I am interested to learn who are the bigger chains that are considering experimenting with this new trend.   These trucks are a simple way to increase revenue as well as expand the customer base of the restaurant.  I believe this will be a lasting innovation.

Wyndham Earnings Rise 50%

According to an article by the WSJ, "Wyndham Worldwide Corp.'s third-quarter earnings rose 50%" This can be accredited to two main factors: a tax benefit and higher demand from the previous year. In July, the "boost forecast" for the company was from $1.78 to $1.88. However, Wyndham raised its "earnings guidance" from $1.94 to $1.98 - well above what was expected in July. Furthermore, according to Thomson Reuters, "[Wyndham Worldwide Corp.] also sees 40 cents to 44 cents this quarter, while analysts' average projection was 40 cents." Wyndham Worldwide Corp. as well as other hotels are seeing this change because tourism demands are on the rise. It should also be noted that "prior cost cutting" of hotel rates is also causing this reaction.

A year earlier, Wyndham Corp reported a profit of $104 million, whereas this year the company reported a profit of $156 million. The revenue of the company increased to $1.07 billion - by a 4.8% increase. The article also states that "revenue per available room" is an important indicator of industry performance. Wyndham's revenue per available room rose 6.7% after a 17% slump last year.

Lately, I have been reading articles about the hotel industry starting to climb back up the ladder since the recession. I believe this article is a great indicator or this climb. The article also notes the Marriot International Corp, saying its timeshare business continued to rebound during the third quarter. Hopefully this trend will continue amongst the competitors in the hotel industry. Looking through this article and previous articles and the given statistics, the industry has really suffered because of the recession. It will be interesting to see what happens over the next few weeks with the hotel industry, especially because of the upcoming holiday season.

Hawaii Local's Inside Play

A Hawaiian condominium converter by the name of Peter Savio recently purchased Honolulu's fading Pagoda Hotel for a mere $7 million. The price that he paid for the 359-room hotel is deceiving. The Pagoda, like hundreds of other buildings in Hawaii, sits on land leased from a trust established more than a century ago by a descendant of the ruler who united the major Hawaiian islands (Sadovi). When the property was put on the market its value was greatly reduced because the hotel's lease had less than 10 years to run.

The Pagoda was developed in the 1960s by Herbert T. Hayashi, a Hawaiian developer who died in 2005 (Sadovi). He created the property after seeing a need for an affordable hotel for locals. It is located in a residential neighborhood several blocks from the beach. This helped keep the rates lower than many beachfront hotels aimed at tourists from outside Hawaii. The daily room rates are in the $80 range. A spokeswoman for Mr. Hayashi's HTH Corp. declined to comment about why the property was sold, but some analysts said the company may have begun reassessing its portfolio in the wake of Mr. Hayashi's death (Sadovi).

The purchase of this Pagoda also comes in at a good time as the Hawaiian hotel market is recovering from the financial crisis. This year through September, hotel occupancies in Hawaii have risen to about 71.2%, from about 65.2% in the year-earlier period, according to Smith Travel (Sadovi). The Pagoda, in its prime, might have had a price in the $16 million range before the downturn. Mr. Savio plans to spend about $6 million in the next few years updating the hotel, starting with its restaurant kitchens.

This was a great buy for the 63-year-old Mr. Savio is a Hawaiian who closed his first real-estate deal at the age of 15. The low room rate should spark travelers from all over the United States with less money to visit Hawaii and stay in this hotel. Mr. Savio is also considering renting out some free rooms to college students which will make college more affordable for them.

http://online.wsj.com/article/SB10001424052702303891804575576251175316696.html?KEYWORDS=restaurant

New Trust In the Restaurant Industry

Venmo is a new app on iPhones and Androids that allow you to link a credit card to your phone, and transfer money right there to your friends accounts. You can simply send them money on your phone, and it will take it out of your account and put it in theirs. They also created a feature called "trust" that allows you to take money from friends accounts without permission.

So where does this fit into the restaurant industry? A restaurant in New York City called the Simple Kitchen is using this new Venmo app and even the trust feature. Regulars who eat at the restaurant frequently are getting up and leaving without asking for the bill after, "trusting" the restaurant to take the money out of their account.

I think that the use of this app in the restaurant industry can gain support by customers if Venmo became commonly used. However, I do not think that this will ever happen since it is hard to trust anyone with access to your bank account these days. If people were not so decieving and people were able to trust, I think that this would help restaurants since time is a major issue. People do not always have time to sit down, eat, and wait for the check, resorting to more fast food. However, by not having to wait for the check, people could take time off their visit and sit at restaurants more often.

http://bits.blogs.nytimes.com/2010/20/25/venmo-wants-its-users-to-trust-each-other/?scp=3&sq=restaurant%20industry&st=cse

New Hotels in NYC

According to a WSJ article posted today, hotels are being built in many unconventional locations within New York City. This is because, "New York is a very, very hot market and everybody wants to be there," according to Jan Freitag, vice president of Smith Travel Research Inc. in Hendersonville, Tenn., a hotel-data provider. As of now, there are 19 new hotels under construction in the outer boroughs (Staten Island, Long Island, Brooklyn, etc.) It should also be quoted that "the hotel wave is coming more than a decade after the 1998 opening of the New York Marriott at the Brooklyn Bridge, Brooklyn's first new luxury hotel in a half century."

In June, a 321-room, full service Sheraton Brooklyn New York hotel opened. Aloft Brooklyn, considered a luxury hotel, will be opened in January around the same area. These are operated by Starwood Hotels & Resorts Worldwide. There will also be openings of full service hotels by 2012 near the new Nets arena in Brooklyn.

Limited-service hotels are also trying to make their way into the city. Comfort Inn and Holiday Inn Express are building hotels near subway and railroad stations, as well as near hospitals and airports. Intercontinental Corp., a big name in limited-service hotels, is opening 14 new hotels within the 5 boroughs over the next few years.

It should also be noted that "Companies say hotels are proliferating in the outer boroughs—and close-in suburbs, too—because of rising demand from business and leisure travelers for affordable lodging outside Manhattan, as well as for meeting and banquet facilities" An example is the Days Inn in Long Island City. This hotel is about 15 minutes from Midtown Manhattan as well as less than a half-hour subway ride from downtown Flushing, CitiField and the USTA National Tennis Center. However, this hotel is much less expensive than a hotel within Manhattan.

I think this is a great opportunity for the hotel companies that take it. It makes more sense to build hotels outside of NYC for the people who want to visit the city but cannot afford to have a hotel for 6 nights in the middle of Manhattan. It is also smarter than building more hotels in NJ because the price of hotels in NJ are very high, because of its proximity to NYC. Also, the cost of traveling back and forth from NJ to NYC everyday will cost more than staying in a hotel in one of the five boroughs, excluding Manhattan.

http://online.wsj.com/article/SB10001424052748704300604575554193765198142.html

The Big City's Big Change

The newest addition to New York City, The Setai Fifth Avenue is, according the Wall Street Journal, "hotel and condo at East 36th Street that's scheduled to open for hotel guests on Nov. 1" (The Wall Street Journal Online). Even though the building is adjacent to the Empire State Building, and located on the intersection of posh Fifth Avenuel; it is an area typically occupied by tourists. That is not necessarily negative, however, the chairman Davide Bizzi, of "Italy's Bizzi & Partners Development"- believe this is, "a location that should improve...[the Setai Fifth Avenue is]...helping with that" (The Wall Street Journal Online).

Thus, New York City brokers believe that the contracts between "$2,000 and $2,300" (The Wall Street Journal Online) a square foot is overpriced for what the land is worth. Prudential broker Douglas Elliman estimated the value to be "$1,600 a square foot" (The Wall Street Journal Online), and that would be the price that he would bring customers over to see the condos. This means that he feels a condominium that is 10,000 square feet should be around $16 million, not $20 to $23 million. However it does not matter what seems like a fair price, but what consumers are willing to pay. According to the article, of the 184 condominiums, " Nearly half the Setai's condos are in contract, most of them all-cash deals to overseas buyers..." (The Wall Street Journal Online). Even though, Bizzi & Partners Development might not be doing the ethical business contract, in the end they need to make a profit, to pay off the debt, and sell these condos.

First off, as previously mentioned, I am disgusted by the unethical behavior of overpricing these condominiums and likely the hotel rooms, and how it is allowed. This will change the area's atmosphere to make the everyday tourists not feel welcomed. Another problem I have is that, Bizzi and his executives assume this will do well. They assume that restaurants and shops will want top open up because this intricate building is located in an area that has not been taken over by the rich? I think that is absurd. What if there is another swine flu, and the foreigners decide to terminate their contracts? During the swine flu outbreak many foreigners feared coming to our country, and this could easily happen again. Then Bizzi will be stuck in a large amount of debt.

http://online.wsj.com/article/SB10001424052748703673604575550463496233810.html

Las Vegas and the Hotel Industry

Although most hotels have been seeing a turn around from this recession, Las Vegas has failed to see the end of it. This has been the worst economic fall for Las Vegas since the creation of casinos in Nevada in the 1940s.

Although economists are still hopeful that casino revenue will bounce back soon, they doubt that it will be able to make up for the fall of the construction industry which is a huge part of Las Vegas' success.

Unemployment in Las Vegas is at about 14%, whereas 10 years ago, it was at just about 4%. The Plaza Hotel and Casino has just announced that they are planning on laying off 400 workers and closing off parts of the hotel and casino for renovation, a common trend in hotels these days. (Nagourney)

Gaming revenues have been declining for the past three years and are continuing to. This is a result of the decreased recreational travel and gambling during recessions. Economists also believe the baby boomer generation is less likely to gamble because of belief that there will be a lack of retirement funds. (Nagourney)

It is tough to say that the hotel and casino industry in Las Vegas will pick up as soon as the economy does because people have not been saving much money during the recession. We have seen turnarounds in the hotel industry caused by business travel. This may be a large reason why things have not been looking any better in Las Vegas. Las Vegas is a huge recreational vacation and tourist spot, rather than business. However, I do think things will slowly begin to turn around as people's expectations for the economy go up.

http://www.nytimes.com/2010/10/03/us/03vegas.html?_r=1&scp=7&sq=hotel%20industry&st=cse

Passing the Test

There has been a revolution. A revolution in the amount of knowledge a consumer is exposed to in New York City. This is due to the fact that, "the city [has] adopted a new system requiring restaurants to post large, brightly colored letter grades rating their cleanliness and safety... (Wall Street Journal Online October 13,2010). The restaurant owners have been waiting impatiently to "defend their kitchens" because they do not want their businesses receiving less than an A rating.

The ratings of A, B, or C are based on how many violations an inspector from the "Department of Health and Mental Hygiene" sees when inspecting a restaurant or food chain. There is a long, tedious process that the food vendors must go through if one, "fails to receive an A, 13 violation points or fewer, on its first inspection, it does not receive a grade until at least one other inspection is made." So, it is possible to receive an A, but very few do, which is causing the lines at the Department of Health and Mental Hygiene to be very long. Thus, to make the process increase in speed, there has been an increase in "hearing rooms and [the Department of Health and Mental Hygiene has been] encouraging restaurants to accept settlements in place of hearings." This means that they can get two inspections, and receive a low score and keep fighting for a high score, or the restaurant owners can pay penalty fines.

People used to have to blindly guess whether a restaurant was sanitary. A well known tip included, checking if the bathroom was clean before eating. This is because it is much easier to clean a bathroom then a kitchen. If a bathroom is dirty, the kitchen will most likely be worse off. However, it is much better now that people do not have to guess the cleanliness of his or her food when eating in New York City; since it has already been investigated by the Department of Health and Mental Hygiene. Even though this is a positive effect for the consumer, the restaurants are going to be negatively affected. The ones that have poor reports for "cleanliness and safety" are going to end up closing since consumers are knowledgable and will choose another restaurant or food chain. Some restaurants might pay the fines, but not be able to have customers continue to come, with the knowledge of unsanitary areas. If consumers are choosing other food chains and restaurants, than the one's that have poor ratings will inevitably shut down. Although, being a frugal college student might make the rating not important to the consumer.

http://www.nytimes.com/2010/10/14/nyregion/14inspect.html?ref=dining&pagewanted=print

Putting the Wine Bar to Work

A new urban winery has taken over what used to be a bar and art venue in the heart of Williamsburg. New and ambitious winemakers will also be able to try their hand at winemaking. "Customers will take part in the entire eight- to 24-month-long process starting with crushing and fermenting the grapes all the way to hand bottling the wine" (Avila). The winery expects to churn out 100 barrels of wine in its first season.

"It's an addicting process," said the 27-year-old proprietor, Brian Leventhal. The new Brooklyn Winery, an 8,000-square-foot space on a residential block, will feature a wine bar and a venue to host events (Avila). "Brooklyn Winery is among several urban wineries that have opened up around the country in recent years, including City Winery on Manhattan's West Side, which also offers the chance to make wine" (Avila). Technology allows winemakers to customize the blend of their wine and design their own labels. This technology eases the process of making different kinds of fine wines and labeling the bottles which leads to a higher growth and development of this industry.

Much of the manufacturing done in this industry is done domestically. "Grapes mostly come from Sonoma, California, and also from vineyards in the North Fork of Long Island and the Finger Lakes of Upstate New York" (Avila). Companies lower their production costs by not getting their components internationally. Since the products are domestically imported, the price of production costs is lower.

http://online.wsj.com/article/SB10001424052748704763904575550544033710092.html?KEYWORDS=restaurant

Results from Study On Restaurant Workers

A recent study found that 60% of workers in the restaurant industry continue to go to work when they are sick. The reasons behind this? Restaurant workers do not get paid for sick time and they receive no insurance. 90% of workers interviewed do not recieve health insurance.(Severson)

This study was conducted with more 4,000 surverys and hundreds of interviews. This was conducted to increase the awareness of the conditions of restaurant workers, and to continue to put weight on this issue.

The Restaurant Opportunities Center conducted this survey. This organization was created after September 11. It's initial foundation was to help unemployed restaurant workers. However, it has evolved into much more. It has been involved in bringing charged to restaurants for not complying with the wage and hour laws, and bringing charges against restaurant owners who have practiced racial discrimination.

I think this organization is doing a great job fighting for restaurant workers rights. The issue of wages and hours has been ongoing, as I have posted several blogs about it, and the new statistics from this survey is going to help new laws go into effect.

http://dinersjournal.blogs.nytimes.com/2010/09/30/restaurant-workers-dont-stay-home-when-sick-study-finds/?scp=1&sq=restaurant%20industry&st=cse

Mario Batali sued by employees for due payment

On Tuesday, 27 workers from Mario Batali's new restaurant Del Posto filled a lawsuit stating they were unlawfully paid.  Ironically this newly helmed restaurant was recently awarded a fourth star by the New York Times.  This lawsuit was filled by busboys, waiters and a few other staff who stated that "managers at Del Posto improperly pooled workers' tips in violation of state labor laws and illegally withheld a portion of some gratuities on wine and cheese sales."

Tip-pooling has increasingly become a problem for many restaurants, especially for those run by celebrity chefs.  Amidst this scandal, the restaurant was praised by "food critic Sam Sifton as a pleasure that lasts, offering memories of flavors that may return later in a dream".  The workers a Del Posto claim that they were subjected to a point system to determine how much they received in gratitude.   The system is set up so the highest waitstaff are awarded six points, followed by five points for the bartenders, four for waiters, and increasingly smaller amounts for lower staff.  The lawsuit also says that staff who worked banquets were not awarded a share of the 23% billed to customers and were instead given a flat fee.  The goals of the lawsuit include "backpay, unspecified damages, and attorney's fees.

I wrote about an article similar to this a couple of weeks ago where multiple celebrity chefs, Batali included, were getting away with underpaying their staff.  I'm not sure if this is a fault of the manager of the restaurants or due to the owners, but you would think that they would have learned from their first lawsuit to pay their employees properly.  I believe that this is an ethical as well as legal wrong doing on the part of the restaurant, especially given all of the positive feedback it has received from food critics.  Customers will not be drawn to restaurants were there is known maltreatment of employees and I believe it is in their best interest to admit their faults and start paying the employees their due amount.

Starbucks Tells Baristas to Slow Down

In an article released by the WSJ, Starbucks Corp is telling its baristas to slow down the coffee-making process. This comes after Starbucks received complaints from customers saying "the coffee chain has reduced the fine art of coffee making to a mechanized process with all the romance of an assembly line." The company insists on baristas focusing on no more than two drinks at a time - where they start making the second one while finishing the first one. There are also other "rules" that will be added, such as "steaming mil for each drink rather than steaming an entire pitcher, rinsing pitchers after each use, staying at the espresso bar instead of moving around, and using only one espresso machine instead of two."

Some Starbucks locations have begun enforcing these rules and baristas are noticing longer lines. A Starbucks barista in Minnesota states "the new method has doubled the amount of time it takes to make drinks in some cases." However, Starbucks Corp "insists the new procedures will eventually hasten the way drinks are made and lead to fresher, hotter drinks."

The article also states that Starbucks has made "numerous changes to its business amid the economic downturn." These changes include closing under-performing stores, trimming its number of bakery suppliers, boosting the perks of its loyalty-card program, and introducing new varieties of its Via instant coffee. Because of these changes, "earnings at Starbucks rose 37% while revenue for the quarter ended June 27 increased to $2.61 billion from $2.4 billion in the year-earlier period. Sales at U.S. stores open at least a year rose 9% in the quarter."

I do not agree with the corporation's view of slowing down baristas. Whenever I walk into a Starbucks, I am usually in a rush and there is usually a long line. I want to receive my drink and leave. I do not believe I will really notice a difference in the milk is steamed for my individual drink or for 5 drinks. I feel that if the lines begin to increase (longer than they already are now) people will start finding other places to get coffee (Dunkin Donuts, local coffee shops, etc). By pleasing the customers who do not like the systematic approach, Starbucks will begin to lose customers who do not want to wait on the longer lines.

Immigration and Restaurants

There is a large fear in the restaurant industry revolving around the issue of immigration. Restaurant owners are being charged for hiring illegal workers with the knowledge that they are here illegally. The restaurant industry is one of the largest employers of illegal immigrants. (Kershaw)

Obama created a policy that began in April 2009 that is getting stricter punishments for employees who hire illegal workers. The Immigration and Customs Enforcement has already investigated 2,073 businesses just this year. (Kershaw) This is a large increase since in the past, government officials have been very easygoing.

An owner of two restaurants in Maryland pleaded guilty to hiring illegal workers and he was forced to give up $700,000 in assets, including his own property. He also is facing up to 10 years in prison.

According to the Bureau of Labor Statistics, 1.4 million workers of the 12.7 million workers in the restaurant industry are immigrants. Both legal and illegal. About 20% of all chefs are illegal, and 28% of all dishwashers are illegal. Immigrants are attractive to employers because they work hard for low wages. This crackdown on illegal workers may cause an increase in prices since workers will be forced to hire more legal, competent workers, increasing wages.

http://www.nytimes.com/2010/09/08/dining/08cracksdown.html?_r=1&scp=5&sq=restaurant%20industry&20industry&st=Search

London’s Pop-Up Restaurants Let Rising Chefs Shine

In London a slew of restaurants has opened and has temporarily brought a new energy to this city’s already lively dining scene. For new and up-incoming cooks they are getting a chance to dazzle an adventurous and demanding audience (Strand). For sharp-whitted Londoners, they give an opportunity to dine ahead of the curve.

These chefs are literally getting their chance to shine. New underground restaurants around London are opening in locations that are often secret. These unknown locations operate in a regulatory gray area which only adds to the sense of culinary adventure (Strand). New chefs are being hired and given a change to show London what they are made of. "Most cooks, though, say they’re less concerned with generating buzz than with creating a menu that’s entirely theirs (Strand)."

Also in London some of these restaurants are beginning to structure themselves differently. "I have complete control," said Ben Greeno, the 30-year-old behind Tudor Road, a supper club he holds in his home (Strand). He does all the shopping and all the prep for his home business. This is a different approach to taking on this type of work in the restaurant business but its logical because he is his own boss and he doesn't have to leave his house for work.

"Underground restaurants in the United States usually involve amateurs trying to cook like professionals. Tudor Road presents a professional who cooks in an amateur’s kitchen" (Strand). While these pop-up restaurants and supper clubs can also found in the United States, the ones in London are beginning to shape the dining landscape.

http://www.nytimes.com/2010/10/06/dining/06london.html?ref=dining

Caution Wide Load

When I think of airplanes, I can only think of a few- the Boeing 747, the Boeing 757, and the Concord. However, according to Andy Pasztor and Peter Sanders, who wrote this article in the Wall Street Journal on October 5, 2010, the Federal Aviation Administration (FAA) want to set stricter policies for the new Boeing 787 model that is to be released after the spring of 2011. This commercial jet, and the 747-8 cargo planes will need to have five miles between airplanes traveling the same direction (versus the three mile distance now in place by the FAA). When planes are behind these new Boeing models, no matter their size, during great intervals of decent, they will need to keep a distance of 10 miles.

I will be one person not riding in a 787 or 747-8 due to questions over the timeliness and safety. Currently, according to the article, the 787 is three years behind schedule because of "design issues, manufacturing problems, and engine malfunctions." That is the main reason I have difficulty flying over the wing, because I think I will either be seated next to a terrorist; or the engines will go out and next thing I know I'm dead, or stuck on an island with a polar bear and a smoke monster. Forging ahead, the 747-8 is a thick woman, coming in "at nearly one million pounds", you can bet there will be wake turbulence. Wake turbulence is that feeling like the airplane is failing, and "typically increases with aircraft weight." Not only is it loud, and so is the passenger plane, the 787; but both will have severe consequences if people have heavy bags, that are over the maximum 50 pounds.

Honestly, I thought investing in an airline company would be a good idea, since this year tourism is supposed to increase (WSJ late September article). This means that competitive and discount pricing, is not as much of a deal as it was last year. These airlines know that people who can afford the flights will shell out a few extra dollars to go home this holiday season, since those who can think about it can probably afford it.

However, the new Boeing airplanes- 747-8 and 787- seem like they will make traveling more of a hassle, and make people less likely to want to fly. If airplanes have to distance themselves, then this means less airplanes, and so higher prices. However, whether people will continue to fly or not beats me. I assume that people will continue flying at the same rates because there are necessities that flying is needed for- business, going home if you live far away for work, or school, et cetera. Although, Boeing itself has not been timely, and efficient to the customers with the release of the 787 airplane. This makes me suspicious that the Boeing company will not actually be able to follow through on the promised dates for the release of the two planes. Then again, rather safe than sorry.

http://online.wsj.com/article/SB10001424052748704631504575532373845280544.html#printMode

YUM Brands taste grows increasingly foreign

The fast food chains, KFC, Taco Bell, and Pizza Hut, while not prospering in our economy, are showing investors that they need to turn their attention outside of the US.  YUM Brand, the restaurant chains' parent, third-quarter earnings are likely to demonstrate that the business is increasingly international, and specifically Chinese.  The China locations are expected to gross 5% in sales, where as the US branches are only expected to rise 1% or 2%.   This data points to the fact that YUM Brand will soon find most of its revenue coming from China, rather than the US.

Yum's profits point to a shift in consumer spending from the Western economies to Asia and Latin America.  As Kelly Evans, the author of this post says, "the transition of those nations from export-led growth toward consumer-driven economies bodes well for retail and restaurant demand".   But there are very few publicly traded US companies that are set to take advantage of this trend.  For example McDonalds, an international competitor of YUM brands, only earns 20% of their sales from Asia where as YUM generates 36%.  Also Burger King is private and Starbucks and Domino's Pizza both have smaller overseas operations.  Although Yum's stock may be expensive, its "long-term, global growth prospects look tasty indeed".


This article makes perfect sense to me.  Asian countries have increasingly growing populations which demand more and more sources of food and YUM brands has capitalized on this fact.  I think this shows a movement towards other companies opening more branches overseas that will increase their revenue and increase their stock prices.  I believe that more companies should take advantage of our global economy in order to keep their sales up and broaden their audience.


http://online.wsj.com/article/SB10001424052748704847104575532414070566570.html?mod=WSJ_FoodAndTobacco_leftHeadlines#articleTabs%3Darticle

Domino's Tries Increasing Its Pizza Prices

In an article published by the Wall Street Journal, Domino's Pizza is increasing the price of its specialty pizzas from $5.99 to $7.99 per pie. Domino's has decided to increase its "average ticket" after getting heat by one of its main competitors - Pizza Hut. Pizza Hut has recently changed the prices of their pizzas from $10 each to $8, $10, or $12 each, depending on the type of pie. One of the "deals" Domino's is promoting is upgrading from a two medium, two-topping pies (priced at $5.99) to the "premium American Legends specialty pies" (priced at $7.99) The extra $2 will give customers more options of toppings - which Domino's hopes will encourage costumers to buy the American Legends specialty pies.

Currently, the $7.99 deal is only being promoted online. There is no confirmation about advertisement for this offer on television as of now. It is stated that "Medium "American Legends" pizza can cost around $13.99 in some markets". Since Domino's only charges $7.99 for these pies, they are suffering from the price cut. Therefore, Domino's is hoping its promotions will attract more people to keep the "traffic" up.

I believe this is a smart move by Domino's. The company has to keep up with its competitor (Pizza Hut), especially because both companies are very similar. However, I believe Domino's should start advertising this $7.99 on television because many people may still be under the impression that Domino's pies are $5.99 until they receive the receipt. I also think television advertising at this price will be more effective because many Americans watch television and the more advertisement the company has, the more people will order the pies. I also think it is important to note: "Domino's shares have surged on the sales gains. In 4 p.m. New York Stock Exchange composite trading, shares were up 1.2% at $13.25, up 58.1% on the year, though down from the 52-week high of $16.32 hit in April." Hopefully this $7.99 price will bring up the shares as well.

http://online.wsj.com/article/SB10001424052748703843804575534403767643686.html?mod=WSJ_business_whatsNews

I Scream, You Scream

On the top and center of the "Ben and Jerry's" infamous pint of ice scream is a debatable little phrase; it says "all natural." The only problem is that, in my opinion, this is misleading because natural verses beneficial for the body are two different things. Another potential loophole for Ben and Jerry's is that "the Food and Drug Administration has no formal definition for natural." I believe that this is a very difficult term to define, and also the fact that Ben and Jerry's was trying to still use it is not ethical. After so many years of nutritional advancements, we can finally see the side effects of all of this lying.

If a company does lie, or imply one thing because it means another it is wrong. "Ben and Jerry's" claimed they were using all natural to remind the consumer that there are "no added color, additional flavors, or synthetic substances." However, if Ben and Jerry's meant this, then I feel they could have just put that on the label, instead of the misleading all natural.

I feel as though this will negatively affect "Ben and Jerry's" but also negatively affect the ice cream industry. FIrst off, if the ice cream is no longer natural, than why would a consumer feel the additional obligation to purchase it? This will probably affect the ice cream industry, because "Ben and Jerry's" is such a large part of the industry, that consumers will feel lied to, and betrayed and not able to get ice cream from any source. However, if the consumer is someone as in love with ice cream as myself, the would be able to eat it, knowing that it does in fact go straight to one's hips, and enjoy the flavors while they last.

Tuesday September 28, 2010 Edition of the Wall Street Journal
Article "Ice Scream Maker to Drop 'All Natural' From Labels"

"A Day Without a Mexican"

In 2004 the movie A Day Without a Mexican proposed the question, what if one day we woke up and all of the Mexican illegal immigrants had disappeared from California, meaning no cooks, maids, or nannies.  The film, although through extreme hyperbole, still makes the point that without these illegal immigrants the economy would suffer and basically making the point that the jobs once filled by illegal workers would now belong to legal workers and cost the employers much more.


Sarah Kershaw, of the New York Times, asks "what if the restaurant industry — one of the largest employers of immigrants, a good number of whom, it is no secret, are undocumented — had to do it all above board?"  She proposes a valid question as, according to a survey in 2008, 20% of this country's chefs, head cooks, cooks and around 28% of dishwashers are illegal immigrants. Additionally, as the Obama Administration begins to scrutinize those employers who hire an undocumented workers, restaurants should be wary of who they are hiring now cause it could cost them more in the future.  


Interestingly enough, it appears as though the consumer would be the one to pay if restaurants were to only hire legal workers as they would see the price of their meals shoot up drastically.  This issue could be seen as an ethical one as the employers are knowingly hiring these workers, yet those people need the jobs to stay in the country.   Also it asks the question to customers whether or not they would still go to eat at a certain restaurant if they knew some of the employees were illegal immigrants.  I personally I am not sure where I stand on the issue of immigration but I do believe that it's important for the country to examine its values in order to pursue this issue.  


http://dinersjournal.blogs.nytimes.com/2010/09/07/what-if-restaurants-stopped-hiring-illegal-immigrants/?scp=3&sq=restaurants&st=cse

Restaurants To Create New Tipping Laws

The article I posted on ethics was about lawsuits formed based on workers being deprived of their wages and tips. A recent Wall Street Journal Article explains that recommendations for the state of New York for worker's tips and pay have been created over a year ago, and have yet been acted on. These recommendations could decrease the lawsuits filed against restaurant owners drastically.

Restaurant owners have expected the proposals for months now, but they are still waiting. The new laws are expected to consider everything from minimum wage to tipped employees to how tips are to be handed out. (Reddy) One of the recommendations was raising the wage of tipped employees to $5 rather than $4.65. Also, restaurants are required to give between $4 and $9 every week to workers who are required to wear a specific uniform. It was recommended that this rule be taken away.

The state Labor Department has said that the new wage order will be posted within a couple of weeks. Following that, there will be a 45 day period for people to comment on their thoughts. Once all comments are considered and edited, the wage order can be put to use.

President of the New York State Restaurants Association has said that there is so much confusion because the laws are not clear enough. People are hiring attorneys just to tell them what the law means. (Reddy) Hopefully, the order will be presented soon enough to clear up problems that could have been solved a long time ago.

http://online.wsj.com/article/SB10001424052748703.html?KEYWORDS=restaurant+industry

Hotels Make Slight Comeback

As of last week, room rates in North America have risen 2%. (Plank) The increase in room rates is due to the increase in business travel.

They are more willing to spend money on hotel reservations then in the past. Omni Hotels and Resorts reported that the number of meetings booked at his company is now the same as they were in 2007 and early 2008. 75% to 80% of its business has come from corporate travel.

Editor of Travelocity has reported that hotel bookings through the sight for this past summer remained constant with that of last summers. However, there has been a 3.5% in bookings this fall compared to last. Although there is improvement, bookings are still 12% lower than in 2008, before the recession. (Plank)

Apple Core Hotels has also seen a 25% in RevPAR since 2009. When compared to 2008, revenue is still down about 20%. It is clear that the hotel industry is making improvement, but business travel must increase to keep hotel revenue increasing.

http://online.wsj.com/article/SB10001424052748703.html

Trump Entertainment Resorts Hires New CEO

In an article posted today in Businessweek, the popular Trump Entertainment Resorts is replacing its current CEO, Mark Juliani, with Robert Griffin, who is the president and CEO of MTR Gaming Group Inc. He is also the president of the Casino Association of New Jersey. Robert Griffin has already been praised by Trump's board chairman, even though Mr. Griffin will not begin working as CEO until late October or early November.

Mr. Griffin's company MTR has casinos in West Virginia, Pennsylvania, and Ohio. He has many well-regarded casinos in Columbus, Ohio. Furthermore, he was also involved in Trump Entertainment years back. He was a senior manager at Trump Marina from 1992-1998.

Mr. Trump, who currently owns 10% of Trump Entertainment, said "Mark (the current CEO) was a wonderful guy, and we think the new CEO will do a fine job as well. They (the board) just felt it was time to do something new." The article also states that Mr. Juliano's exit marks a near-complete change of top management in the company.

I believe that every certain number of years, a company should change its CEO. Even though that may be difficult, I believe having a new boss with new ideas will benefit the company more in the long run than not. Also, I find it incredible that Mr. Griffin has 30 years experience in the Hospitality industry. He is only 51. He has seen the industry during its best and worst times and has seen how far the industry has come over 3 decades. I believe his experience will help Trump Entertainment Resorts in the future. I think it's important that Mr. Griffin was a part of Trump at one point. Even though he was involved in it years back, he has at least a basic background about how things are operated within the Company.

http://www.businessweek.com/ap/financialnews/D9IH4TUG0.htm

First Look at the Italian Eately

On August 31st, Mario Batali and Joe Bastianich opened an Italian food and wine marketplace in the Flatiron District.  Although it appears to be a giant food court, Batali swears that " this isn’t a selection of restaurants under one roof. This is a retail store where we peddle the greatest of Italian gastronomy to people who want to eat it and know how to appreciate it."  The ideology in the market comes down to the goal of providing New Yorkers with a home-cooked meal outside of the house.


According to the Wall Street Journal, "the interiors have a Whole Foods-meets-Bloomingdale’s-via-Tuscany feel".  So far 300 the restaurant employees 300 people.  Eataly mainly uses Italian products with few exceptions and serves such food as handmade mozzarella and oysters as well as plenty of wine and a future rooftop beer garden.


I believe that this marketplace will mark a new movement in the restaurant industry.  Customers are drawn to the concept of a home-cooked style meal thats already ready to eat.  As Batali said, "you ask any Italian and all of the smart Americans where the best meal they ever had in the last ten years was, and it was never in someone’s restaurant. It was always in the house. And with these products, and this ideology, we’re hoping that’s what we’re going to bring to New Yorkers.".  This new endeavor could mean the appearance of other eateries like the Eately as the owners find it is a successful venture.  


http://blogs.wsj.com/metropolis/2010/08/25/first-look-at-mario-batalis-monster-italian-marketplace/

Darden Restaurants 1Q Profit Up 20%; Red Lobster Struggles

Darden Restaurants Inc.'s first-quarter earnings increased 20% as the casual-dining giant's same-store sales rose at Olive Garden and LongHorn Steakhouse (Ziobro). Shares of Darden dropped approximately 2.2% to $43.07 as investors became cautious over Red Lobster's sales. "The seafood chain's sales fell 1.7% in the quarter, resulting in Darden's overall sales missing estimates, though profits beat expectations as labor costs were held in check. Darden also backed its outlook for the year" (Ziobro).

Darden sees the recovery as a difficult journey especially as consumers are still worried over the stability of the recovery and the slow pace of new job creation. By the end of the quarter on August 29, the company posted a profit of $113.1 million, or 80 cents a share from a year earlier. "Revenue increased 4.2% to $1.81 billion, as combined same-restaurant sales at its three main chains grew 1.1%" (Ziobro).

Red Lobster's store sales have recently declined 7.9% in the past year. This decline is most certainly due to the new competition of other sea-food restaurants opening in areas near Red Lobster. "Darden said Red Lobster's sales were hurt after it started its popular Endless Shrimp promotion two weeks later this year than a year earlier" (Ziobro). This new promotion played a major role in the downward trend of the Red Lobster store sales in the past year. "Some analysts were hoping that another promotion, Crabfest, which offered a selection of meals featuring crab, would have provided a stronger boost" (Ziobro).

During the recession, Darden generally has avoided discounts and has instead he offers short-term promotions that highlight some of the unique attributes of its brands (Ziobro). This plan by Darden has helped protect companies profits, while other chains have focused on price-driven deals. In conclusion, the competitive landscape changed during the recession due to the fact that promotions for these restaurants have been causing sales to decline in the past few years.

http://online.wsj.com/article/BT-CO-20100921-713280.html

Can a Luxury Hotel Survive in this Economy?

According to Travel and Leisure’s September 2010 issue, the Armani Hotel Dubai is a hotel everyone needs to go to at least once in his or her lifetime. This hotel is located inside the world’s largest building- the Burj Khalifa. This adventure land is not only competing for the World’s tallest building, which it has claimed the title of, but also trying to get tourists to come to the various activities offered in the building. From an indoor ice skating rink, the Dubai mall, an upper level pool that wraps around the entire hotel, a spa with its own outdoor pool, to an upper level observation deck; this hotel has more to keep a person entertained in its own building than some hotels have in a city.
Although, the cost will take a number of hard working years to save up for- the double rooms start at $1,000 a night, and go up to suites over $10,000 a night. However, a personal assistant and concierge, called a “lifestyle manager” are on call around the clock, and they are provided free of charge. The hotel opened in April 2010 (which was delayed a week by volcano ash storm), by the funding of Mohamed Ali Alabbar and the designs of Giorgio Armani. Together this power duo has planned out the design of 10 hotels and resorts around the world so far, but this is the first one that is actually open to customers.
Personally, I admire Armani for being one of the first designers with various endeavors outside of fashion industry. This is quite revolutionary for the hospitality market, and will probably inspire other major fashion designers to test out the success of other industries. In general, it is risky to be gambling on a business during a recession that is affecting the world. Not to mention the fact that this hotel is a luxury hotel. Seeing as this is such a small market, if the profits are not substantial, then this company is going to suffer. Meaning people losing jobs, and Dubai losing tourists. As long as the Armani Hotel Dubai can maintain an image of luxury, and impeccable service to the guests, then it is unlikely that the hotel will fail.

http://www.travelandleisure.com/articles/the-new-armani-hotel-dubai/3

http://online.wsj.com/article/SB10001424052748704868604575433583524896308.html?KEYWORDS=dubai+hotel

Hotels emerge in NYC

This year New York City is expecting the greatest number of hotels to develop in several years. 44 new hotels are planning on being opened, which creates 7,561 new rooms, and 8.5% espansion in the city's room supply. (Hudson) These projects were started a couple years ago, but due to the economy, they had to be put on hold.

Usually when supply increases, room rates decrease since consumers have more options. Therefore, hotels drive down their prices to win guests. However, NYC hotel owners expect the prices to remain about the same.

Michael Depate, who owns four hotels in NYC stated, "About six months ago, every hotelier in New York was very worries about all of the new supply coming. But there has been such a resurgence of business travel that, even with all of the supply coming, we haven't had any troubles absorbing it."

Depate's statement shows the confidence hotel owners are having in the industry these days. This may be due to the 7.1% increase in occupancy rates this year. Revenue per available room has risen by 13.4%, and nightly rates have raised 3.1%. (Hudson)

This supply growth is not expected to last for very long. They suspect that next year it will decrease greatly. In conclusion, the hotels are not feeling pressured by the increase in supply of rooms. Room rates are expected to stay about the same and they are not expecting occupancy rates to drop much due to the increases in travel and RevPAR.

http://online.wsj.com/article/SB10001424052748704.html?KEYWORDS=new+hotels

Wyndham Worldwide Corp to Manage Planet Hollywood Hotels

According to a Wall Street Journal article, the Wyndham Worldwide Corporation and Planet Hollywood Resorts International LLC have finally reached a licensing deal. This deal states that the Wyndham Worldwide Corporation will franchise and manage Planet Hollywood hotels all around the world. This means great news for the Wyndham Worldwide Corporation, even though existing Planet Hollywood hotels "will continue to own its brand trademarks and intellectual property".

By franchising and managing Planet Hollywood, Wyndham hotels will be able to surpass the offerings of their current hotels. In other words, Wyndham's hotels will be more attractive to a larger percent of the population because of the added appeal of Planet Hollywood's hotels. Another advantage of franchising Planet Hollywood is the alteration of future Wyndham hotels. According to the article, Wyndham "plans to offer developers various entertainment-based Planet Hollywood concepts for future hotels, including several restaurant chains based on hotel or resort size and location."

I believe this is a great deal for Wyndham Corp. Planet Hollywood resorts are one of the best known resorts around the world. Since it's creation, Planet Hollywood has made a strong name for itself. I have personally stayed in a Planet Hollywood resort and had great service, relaxing visits, and enjoyable dining, as well as shopping and activities. Furthermore, Wyndham Corp. is another big, strong name in the industry. The article states that Wyndham has 7,200 hotels under a dozen other brands including Ramada, Howard Johnson and Days Inn. Again, I have personally stayed multiple times at a Ramada and Days Inn and never had any type of problem. Since these companies are both strong, I think Wyndham Corp franchising Planet Hollywood will only make them stronger and more appealing. I believe it is also important to note that Wyndham "recorded a 34% increase in July in second-quarter earnings and raised its 2010 guidance. As well as company shares increased 1.1% at $28.17 in recent trading and the company stock is up 40% this year alone." Wyndham is doing extremely well.

Lastly, I believe this will create more competition in the industry. More well-known global hotel companies may want to quickly begin brainstorming licensing deals with other well-known companies, based on how well Wyndham does over the next months.

http://online.wsj.com/article/SB10001424052748704129204575506004059115436.html?mod=WSJ_business_whatsNews#&mg=com-wsj

How far does Chipotle's 'integrity' reach?

Chipotle prides themselves as “purveyors of food with integrity”, yet new evidence has come to light that proves otherwise.  A new ethical issue has arisen in the restaurant industry as farms are employing illegal workers to produce food for some so-called ethical companies.  Recently the Department of Justice officials unveiled an indictment for the eighth time in over ten years over “forced labor in Florida’s agricultural fields”.   According to the federal court, three labor bosses have hired dozens of illegal Haitian workers with the “promise” of access to their passports and they were forced to work and live in horrible conditions, constantly threatened with deportation.  

A Florida-based farmworker association,The Coalition of Immokalee Workers, is pioneering the movement to end “modern-day agricultural slavery”.  The CIW’s goal is to “train local, state and federal law enforcement to investigate, uncover and prosecute existing slavery operations, in addition to working to eliminate the root causes of the problem: farmworkers' structural powerlessness and grinding poverty”.  They were also recognized by Secretary Clinton, for its persistence and innovations in the battle against human trafficking, who said stopping slavery is more than a one person job and we have to act against it.  

Chipotle is a respected brand due to its quick growth and mission statement of “Food with integrity is our commitment to finding the very best ingredients raised with respect for the animals, the environment and the farmers”.  Yet the company is unwillingly to help to fix the abuse of Florida’s agricultural workers as they have opted for a solo approach that encourages oversight of farm work.  Chipotle has outwardly acted against the ethical standards that have commercialized and encouraged the success of their company.  

Their stance exemplifies the “reckless disregard” that Secretary Clinton has criticized in the modern fight against slavery.  This is a risky move for a company that primes themselves on “ethically produced” burritos.  Their behavior is in direct conflict with their mission statement and I believe when this information comes to light people will think more carefully about how the food they are putting into their systems was produced. 

http://www.huffingtonpost.com/sean-sellers/chipotle-farmworkers-integrity_b_712007.html

Michelle Obama to Restaurants: Cut Fat

Today, the restaurant industry was given cooking advice by First Lady Michelle Obama. She said, "a little less butter and cream, and hold the fries." Obama gave her first address to the National Restaurant Association. She made fighting childhood obesity her primary cause. Her message included remarks to an industry widely viewed as a main contributor to the nation’s exceeding waste lines and rising diabetes rates. Obama called on restaurants to consider changing their kids’ menus with healthier ingredients and to encourage more nutritious foods in their marketing to children.

Some ethical issues that have arisen in the restaurant industry are dealing with the health of children. Obama thinks it would be wise to reformat children's menus in restaurants to make it beneficial for children's health. Michelle said, "I wasn’t calling for cutting so much as to sacrifice flavor, but just enough to make a meaningful difference in the amount of calories and fat." She cited a recent study that discovered only a small portion of kids advertising is aimed at healthy food.

The big concern of restaurants and other food companies is that Obama's push may lead to federal regulation of children’s advertising. The NRA responded to her speech by pointing out that two-thirds of U.S. fast food operators now offer healthier choices for children than they did two years ago. Michelle wasn't asking for restaurant industries to make drastic changes to every one of their recipes or to totally change the way you do business; but she was asking that industries consider reformulating their menu's in minor ways to create healthier versions of the foods that everybody loves.

Hopefully companies and consumers will respond in a positive way by starting to sell healthier foods so the nation will begin eating healthier. Obama said, "the healthier menu substitutions might not just be a sacrifice for kids."

http://blogs.wsj.com/washwire/2010/09/13/michelle-obama-to-restaurants-cut-the-fat/