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.
Wednesday, October 13, 2010
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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