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.
Thursday, October 28, 2010
Wednesday, October 27, 2010
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.
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.
Tuesday, October 26, 2010
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
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
Tuesday, October 19, 2010
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
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
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
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
Wednesday, October 13, 2010
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
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
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.
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.
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.
Wednesday, October 6, 2010
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
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
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
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
Tuesday, October 5, 2010
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
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
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