business news in context, analysis with attitude

Published on: September 24, 2014

by Kevin Coupe

"Fresh Talk" is sponsored by Invatron: Proven Technology.  Innovative Thinking.  Intelligent Solutions for Fresh.

Content Guy's Note: "Fresh Talk" is a new MNB feature, scheduled to alternate on Wednesdays with "Kate's Take."  It will examine all aspects of "fresh," in both the broadest and most focused meaning of that term (depending on the whims of the columnist). "Fresh Talk" is sponsored by Invatron...which you can learn more about here…but which has no input into the subjects covered or responsibility for the attitudes taken.


There have been a couple of fresh food-oriented stories this week that I thought were worth sharing…

The Washington Post had a piece about how there is a remarkable change taking place in many US restaurants - their menus are getting smaller.

As the Post writes, "For years, long, winding menus were the fad. The more options a restaurant offered, the less likely that diners would want to go elsewhere, the thinking went. And the thinking was widespread: Everywhere from Ruby Tuesday to the Olive Garden and McDonald's obliged, channeling their inner Cheesecake Factory with menus that spanned several continents and cuisines, challenging even the sturdiest attention spans."

But Americans seem to have gotten tired of that.

The Post goes on: "Industry-wide, the average menu size has fallen to fewer than 93 items this year in the United States, after reaching a peak of nearly 100 items per menu in 2008, according to data collected by Datassential Menu Trends. The average restaurant menu is shorter today than it has been in at least eight years … In all, the country's 500 largest restaurant chains have cut more than seven percent of food items offered this year, per estimates by food industry research firm Technomic."

Now, some of this is economic. Offer fewer options, and your costs go down. Simple math. But I also think there is something else going on here … a sense on the part of some restaurants that because of increased competition, they need to be better at what they do. They can't be good at everything. So they get focused. Which means having a stronger sense of what customers want (also known as the demand chain) so they can provide meals made from ingredients (known as the supply chain) that are not aimed at the lowest common denominator.

(It doesn't always work, of course. There are some restaurants and fast feeders that specialize in food that isn't actually food … and so it doesn't matter if they offer 20 items or 200. It still is going to taste like crap.)

The thing is, many customers "get" this - they also have a stronger sense of what they want. They are researching restaurants before they go, and then blogging about them after they've been. As important as the food chain is, the information chain may be of equal importance.

Which brings me to the other story that grabbed my attention - an Associated Press piece about how "the National Restaurant Association surveyed 1,300 professional chefs on the most desired foods, beverages and culinary themes in the industry and ranked the top 20. Locally sourced meats and seafood, locally grown produce and environmental sustainability were the top three trends the chefs identified. The same report predicted environmental sustainability and local sourcing at restaurants will still be in high demand in 10 years."

Once again, information about food becomes almost as important as the food itself.

These are the issues with which food retailers ought to concern themselves, I think, because they are not restricted to just the restaurant business. I believe that more and more, the best and most competitive food retailers to be good at what they do, to have specialties that distinguish them from other retailers, to have local sources of product that raise the bar on their offerings, and to effectively use the information chain to communicate about all these things.


By doing all these things, I think, retailers can differentiate themselves from the folks who only focus on price and promotions, and they can find for themselves a market niche that is aspirational, specific, and highly competitive.

Published on: September 24, 2014

by Kevin Coupe

Okay, this is one of the weirder stories you are going to hear today.

New York magazine has a story about 55-year-old Matthew Gibson of North Carolina, who confessed to committing murder 17 years ago after being made to feel guilty by text messages from Walmart.

According to the story, "Gibson took a woman back to his Arizona trailer in 1997 and, when she refused to leave, he beat her to death and threw her body in the Colorado River.

"Gibson stayed silent for 17 years, but when he began receiving texts from Walmart that a prescription for a woman named Anita Townshed was ready, he became convinced that Townshed was the name of the woman he killed and that somebody was onto his deadly secret. He also received a mailer from Walmart with no address or name marked on it."

So he confessed to police.

Here's the kicker: the woman he murdered, in fact, was not named Anita Townshed. That was just his conscience talking…

This whole thing sounds like an episode of "Alfred Hitchcock Presents" … a reference which I know dates me horribly.

Still, it is an Eye-Opener.

Published on: September 24, 2014

GeekWire is out with a story saying that a new study from William Blair, an investment bank, concludes after analyzing the price of 4,000 items at 40 retailers, that Amazon is significantly Cheaper than any of its competitors.

The story says that "on average, it said Amazon’s prices are 5.9 percent lower at the 40 retailers when you are a non-Prime customer in a state charging online sales tax. The Amazon pricing advantage increases to 8.3 percent when shipping fees go away (in the case of orders exceeding $35 or Amazon Prime eligible items); and the price savings can go as high as 15 percent for Prime customers in states that do not collect sales tax (but Amazon is now collecting sales taxes for about two-thirds of all U.S. households.)."

The story goes on: "The Seattle e-commerce giant generally does best on items priced higher than $30 and is least competitive on items in the stores priced less than $10, according to William Blair. It found that Amazon’s inventory included 44 percent of the randomly chosen items, and up to 65 percent of items when only looking at items priced over $20."

Published on: September 24, 2014

Fast Company reports that the Council for Education and Research on Toxins (CERT), a California nonprofit, is suing Starbucks, Dunkin' Donuts and other coffee chains, charging that the coffee they sell contains a carcinogen called acrylamide, and California law requires a warning label for such ingredients.

However, there apparently is no reason to worry.

The story also says that experts say that there are other ingredients in coffee that counteract the acrylamide, and that one "would have to drink probably over 100 cups of coffee a day in order to get to that dangerous dose."

Published on: September 24, 2014

The New York Times reports that at this year's Clinton Global Initiative meeting in New York City, the nation's three largest soft drink companies "pledged to cut the number of sugary drink calories that Americans consume by one-fifth in about a decade, through a combination of marketing, distribution and packaging."

The story says that Coca-Cola, PepsiCo and the Dr Pepper Snapple Group "aim to reduce each American’s calorie consumption in sugary drinks by 20 percent on average by 2025. They will expand the presence of low- and no-calorie drinks, as well as drinks sold in smaller portions, and use their promotional skills to educate consumers and encourage them to reduce the calories they are drinking … The program will cover company-owned vending machines and coolers in convenience stores, as well as fountain soda dispensers like those found in fast-food restaurants and movie theaters. The companies control almost all of those machines, in addition to about one-third of vending machines and 80 percent of coolers."

Published on: September 24, 2014

The Wall Street Journal reports that personal financial data that was stolen from Home Depot by hackers "has started to trigger fraudulent transactions that are rippling across financial institutions and, in some cases, draining cash from customer bank accounts, according to people familiar with the impact of the hacking attack.
The fraudulent transactions are showing up across the U.S. as criminals use stolen card information to buy prepaid cards, electronics and even groceries, these people said. In some cases, the fraudulent transactions have been tracked to batches of cardholder accounts that are tied to specific ZIP Codes, they said.

According to the Journal, "It still is too early to tell how many instances of fraud will eventually be traced to the Home Depot breach. The flood of recent incidents across numerous retailers means that cardholders may have shopped at more than one merchant that had been attacked, making it difficult to decipher which fraudulent transaction is tied to which breach.

And, the Journal writes, "Some large financial institutions … have proactively started reissuing cards to customers whose data were exposed in the Home Depot attack. Other lenders are reissuing cards only when they see fraud attempts.
Representatives of large banks were reluctant to discuss the fallout from the attack, saying they didn't want to appear vulnerable to hackers. A spokesman for Home Depot declined to comment on any fraudulent activity tied to its breach."

Published on: September 24, 2014

Tesco has been in the news a lot this week, with reports that its first half profit projections were overstated by the equivalent of more than $400 million (US) because of what the company acknowledged was "early booking of revenue and delayed recognition of costs." Four company employees - including Chris Bush, who runs Tesco's UK business - have been suspended, though not disciplined, pending an investigation. And the company persuaded Marks & Spencer to allow its CFO, to move over to the same job at Tesco a month earlier than planned, so there would be someone in charge of cleaning up the financial mess.

But now, Sky News is reporting that Tesco's last CFO Laurie McIlwee, who made the decision to leave the company last April but was not actually supposed to leave for six months, has not been into the office in more than five months.

According to the story, "One source said that he had not been to the company's Cheshunt headquarters since the week after his resignation was announced on April 4.
Mr McIlwee had also not attended any meetings with either Barclays or Deutsche Bank, Tesco's corporate brokers, or with PricewaterhouseCoopers, its auditor, since then."

The lack of presence is seen as important because an active, engaged CFO presumably would have seen and headed off the financial shenanigans.

Published on: September 24, 2014

The New York Post reports that an attempt by Eddie Lampert to sell Sears Canada has been "a bust … an auction of a majority stake in the Canadian retailer failed to attract any acceptable bids in its latest round, eliminating a potential near-term cash infusion for Sears Holdings that could have exceeded $750 million."

Which apparently is why Lampert had to loan the company $400 million to get it through the holidays.

According to the story, "Sears burned nearly $1 billion in cash during the first half of the year, leaving it with just $863 million on its balance sheet for the Christmas season."

Published on: September 24, 2014

• The Chicago Sun Times reports that "Procter & Gamble Co. is selling its Iams and Eukanuba brands in Europe to Spectrum Brands, shedding the remaining parts of its pet care business." Financial terms of the deal were not disclosed.


• Starbucks announced this week that it will acquire the 60.5 percent of Starbucks Japan that it does not already own. Terms of the deal were not disclosed.

Starbucks Japan has been a joint venture between Starbucks and Sazaby League, but the latter reportedly approached Starbucks about buying the 1,000 stores this summer.

Published on: September 24, 2014

Yesterday, MNB noted the passing of Rick Tilton, the former and longtime president/CEO of what then was called the General Merchandise Distributors Council (GMDC), just days shy of his 80th birthday and not long after having been diagnosed with esophageal cancer.

Subsequently, I got the following message from Dave McConnell, who succeeded him at GMDC, and I thought I would share it with you…..

Thanks so much for your announcement in today’s MorningNewsBeat regarding the passing of a true industry icon in GMDC’s retired President/CEO, Rick Tilton.  I thought I’d augment your comments with a few thoughts on Rick as a leader  and his impact on our industry … his passing has been very difficult for me.  He was my mentor, my friend and often the guy who had to send me to the wood shed to grow up a little bit. 

Prior to  joining GMDC (formerly General Merchandise Distributors Council and today Global Market Development Center) as its top staff executive in 1974, Rick spent 15 years with the Consumer Products Division of Mead Corporation.  Rising to the role of Vice President Sales at the young age of 37 and an active member of GMDC, he was hired by the GMDC Board of Directors to turn around a four-year-old trade association that was floundering. 
 
Between his hire and his retirement on January 1, 2000, Rick more than turned the Association around by creating a business model that relied on highly productive annual conferences and a unique culture that fostered a real sense of belonging by the membership that translated into what many have called a “family”.  Since his passing Saturday many of his friends in the industry have dropped me notes pointing out the incredible impact he had on their lives.
 
For example, Sunday afternoon I received a note from Energizer Holdings’ Lou Martire in which he reflected on his first meeting with Rick by commenting, “I remember coming into Colorado Springs to meet Rick for the first time. It was my chance to sell myself onto the GMDC Associate board. We had dinner and I remember how taken I was with Rick and his executive presence. He was so smart, yet so warm and connecting. All the while he was measuring me as a person and did I fit with GMDC.”
 
And from Mike Sleeper, CEO/President of Imperial Distributors, “Rick was truly a gentleman in every way and I share your deep feelings of loss. Carol and I have such fond memories of our wonderful times together with both Rick and Gail.”
 
The personal connection with Rick that my wife Ann, I and our kids have had for nearly 35 years has impacted so many facets of our professional and personal lives.  Rick taught us to always look at challenges as opportunities, focus on finding a way to be a true servant leader, and at the end of the day focus on being the consummate family man … family always came first for him! 
 
Rick’s greatest legacy was his ability to connect people with different views, objectives and backgrounds and mold them into a cohesive, forward thinking board leadership group collaborating to move the GM/HBW business forward.  His legacy still lives on within the GMDC Board and  Staff structure as we daily strive to emulate the consensus building culture he ingrained within  a small trade association that has truly made a difference for the last 44 years.
 
His loss is so sad to all of us who knew him and most of all to his wife Gail, daughters Renee, Julie, Darcie and their families.  They have the sympathies of a large group of Rick Tilton fans who grieve his passing alongside of them. 
 
There will only be one Rick Tilton … a man with a huge heart and a huge passion for this industry.  Rest in peace my friend!