3:45 pm - Mon, Oct 31, 2011
10 notes

Chipotle’s (CMG) share price hit a 52 week high today as reported by the Street. 

The company’s strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations.

Translation : Chipotle has great sales and great revenue figures. In fact, analysts are recommending investors to buy Chipotle stock. 

So, a profile piece in the WSJ couldn’t have come at a better time for the company.Chipotle’s brand image is powerful - sourcing ingredients from small farmers and sustaining small agriculture. And the piece from WSJ highlights this.

Chipotle is getting all sorts of press and some reports are not necessarily of the glowing kind. This blog post from chef and activist Daniel Klein re-posted on the Huffington Post gives a counter view and questions whether Chipotle really does serve “Food with Integrity”.

dbloom:

Love this Journal piece about the founder/CEO of the Chipotle burrito chain. Unlike their competition, they invest heavily in providing sustainably raised meat and produce, and it’s paid off with massive success, as customers pay more for good quality at what is still a very good price. The chain is now the biggest buyer of sustainably, humanely raised meat in the country. Very impressive. 

4:38 pm - Sun, Oct 30, 2011
102 notes

Photo reblogged from classifiedhumanity:
July 26th, 1902

The more things change, the more they remain the same. This article could very well be a news item in today’s paper. And to no one’s surprise, it actually is. This article from Crain’s NY Business touches on the same story.
The National Mobilization Against Sweatshops has been running a campaign for ten (yes, ten!) years called Justice Will be Served!  (JWBS!). According to their site -

Chinatown restaurant workers were first instrumental in exposing the existence of sweatshop conditions in the U.S.

JWBS! has had some success with negotiating terms with the owners of the Zen Palate and the Golden Bridge restaurants. 
But the problem still exists. Capital New York looks behind the “bulletproof glass" and reports on the staff at Chinese takeout restaurants in Mott Haven.
So, campaigns like JWBS! will be here for some time….

Photo reblogged from classifiedhumanity:

July 26th, 1902

The more things change, the more they remain the same. This article could very well be a news item in today’s paper. And to no one’s surprise, it actually is. This article from Crain’s NY Business touches on the same story.

The National Mobilization Against Sweatshops has been running a campaign for ten (yes, ten!) years called Justice Will be Served!  (JWBS!). According to their site -

Chinatown restaurant workers were first instrumental in exposing the existence of sweatshop conditions in the U.S.

JWBS! has had some success with negotiating terms with the owners of the Zen Palate and the Golden Bridge restaurants.

But the problem still exists. Capital New York looks behind the “bulletproof glass" and reports on the staff at Chinese takeout restaurants in Mott Haven.

So, campaigns like JWBS! will be here for some time….

  • Tagged: foodbiz_nyc food business restaurants nyc chinese unions
  • 5:39 pm - Wed, Oct 26, 2011
    11 notes
    Rashmi Raman

    Wacky foods - real moneymakers

    There is always a market for innovation and there is an even bigger market for humor. What happens when you combine the two with the fact that people love to try new things to eat? You could have a solid business proposition. And that is no joke.

    CNBC’s Funny Business listed two “gifts” which were innovative - in that, they can tickle the taste buds and the jugular.  But their creators are serious about the product offering.

     

    Exhausted by the holiday? “Coffee is so 2009”, says the promotion for "Perky Jerky" — energy boosting beef jerky. The company claims the product was the result of an accident during a boozy ski trip when an energy drink spilled into an open bag of peppered beef jerky. The website is apparently marketing tired professionals, as its banner blares, “GET YOUR BOSS TO PAY FOR IT”.

     Jacked up jerky may be the best food idea yet.

    Or maybe this is.

    Photo credit: pizzadonut.com

    I present to you the Comfort Food of 2010: The Pizza Donut.

    "Pizza Donut is garlic bread pizza in the shape of a doughnut," says Richard Davis, President and CEO of Kosher International, which is selling the product to street vendors, claiming these donuts actually lower cholesterol.

    I’ll have to take his word on that. I mean, it’s a pizza…donut…

    "We use bagel dough and bake it, not boiling like a bagel," Davis says. He adds that vendors can sell the product for "about a buck, like a NYC Kosher Hot Dog." The profit margin on that? Sixty-six percent! That’s a lot of dough.

  • Tagged: foodbiz foodbiz_nyc wacky humor food business
  • 9:11 pm - Mon, Oct 17, 2011
    21 notes
    Rashmi Raman

    Restaurant Battles in the East Village

    On a rainy Monday evening, a group of people looking for chicken tikka masala head towards a block on East 6th Street in Manhattan. This block - dubbed Curry Row - is home to more than 10 Asian Indian restaurants. Mr. Gofur of the Raj Mahal restaurant greets them on the sidewalk and tries to usher them in. The group looks at the sitar placed against the window of the restaurant and asks if there is live music. As if on cue, sitar player Dileep Singh begins to play his set. The decision is made and they walk in. Gofur remarks, “Sometimes they come specially for the live music - and sometimes they don’t.

    The restaurants on Curry Row, mostly owned and managed by Bangladeshis, fall into two categories. The more upscale restaurants are at the street corners. They offer a full bar and charge higher prices. The second group, located opposite the Sixth Street Community Synagogue in the middle of the block, are easier on the wallet and serve only beer and wine.

    Curry Row is home to Asian Indian restaurants like Spice Cove and Raj Mahal. Photo/Rashmi Raman

    Raj Mahal, like its neighbors Spice Cove and Angon, belongs to the second category. While Spice Cove and Angon are trying to establish themselves under new ownership and management, Raj Mahal has been around for 15 years.

    Raj Mahal’s business model hinges on competitive pricing. It has been offering prix-fixe dinners, discounts and promotional offers from the beginning. Although such initiatives have low profit margins, they still generated profits until the recession.

    The current climate has not been good for business. Sales have dropped as the number of people eating out has fallen drastically. Costs have increased because of rising prices of produce and dairy. Their chicken tikka masala has been $10.95 for the past five years. Says owner Raj Mia, “If food price[s] increase, no one eats”.

    Spice Cove and Angon are playing catch-up. Mr. Rehman says that there is “not much money in prix-fixe dinners, but we had to introduce it because of competition”. Spice Cove also offers the cheapest chicken tikka masala among the three - $9.95.

    Angon, on the other hand prices its chicken tikka masala at $13.95. Nicolas Gomez, the manager says that the restaurant makes a $3 profit on the dish, but they need to sell 10-12 dishes of chicken tikka masala every day to justify the cost of the ingredients and the labor.

    The ingredients are the most expensive component. For chicken tikka masala, it is the Garam Masala (a spice paste), heavy cream and cashew nuts that make up almost 40% of the cost.

    The next highest cost is labor. Unlike Spice Cove and Raj Mahal, Angon did not need to hire chefs – the owners, Mr. and Mrs. Gomez, are the chefs. But they do need to hire servers, a sidewalk host and managers. Angon tends to hire students who have prior experience and can speak English as servers. Salaries start at $30 for a 7 hour shift plus tips.

    For publicity, the restaurants rely heavily on reviews posted in news media as well as sites like yelp.com. They also use traditional practices like distributing the menu in a five-mile radius.

    But nothing beats word of mouth. Lilly Magid, a customer who has visited Spice Cove four or five times, found the restaurant when she "stumbled upon this place". She had "one meal and got attached". She has recommended the restaurant to her friends who have also become frequent visitors.

     Passers-by look at Spice Cove’s menu. After going through the menu for 5 minutes, they walked away. Business has slowed down for restaurants on Curry Row due to the current economic climate.

    Photo/Rashmi Raman

    The restaurants have to constantly introduce offers to interest customers. For example, customers who download coupons from Angon’s website can buy a discount coupon worth $25 for $10 to dine in at the restaurant. Raj Mahal offers a free bottle of wine or dessert with a meal. The owners are aware of the promotions offered by all the restaurants in the block.

    Mr. Gofur, as the sidewalk host of Raj Mahal, plays an important role in generating sales. His job is to pull in passers-by. He uses persuasion, charm and sometimes persistence.

    He spots a group of NYU students passing by and greets them with a “Hi, how are you?” He then goes on to tell the students about the prix-fixe menu “Best dishes….good for student budget," he says. His spiel is succinct but persuasive. The students are convinced and he ushers them in.

    While four years ago, he could pull in 150 customers per day, these days he can only attract around 60 to 70. On that Monday evening at 7.30, Raj Mahal was almost full, Spice Cove was serving three tables and Angon was empty.

    The constant competition takes its toll, and Mr. Gomez says he’d like to sit down with his counterparts and discuss the rules of the game – pricing, ethics, viability of offers etc. While he does not want the restaurants to offer the same promotions, he feels the competition has forced Angon to come up with offers that hurt the bottom line. He argues that Raj Mahal, as an established restaurant, can afford the low prices but Angon cannot.

    He approached Raj Mia and Mr. Rehman with the idea one month ago during a conversation and says that they initially thought it was a good idea. But both of them later concluded that they did not need this meeting as they were happy with the current promotions and pricing. Mr. Rehman and Raj Mia did not comment on this matter.

    Notes :

    NY state law does not permit restaurants within 200 feet of a place of worship to serve any alcohol other than beer and wine.

    Mr. Gofur has lived in the area for 22 years. He was a restaurateur and part of this competition for 15 years before he had to sell his restaurant due to bankruptcy.

  • Tagged: foodbiz_nyc food business competition recession
  • 12:41 pm - Tue, Oct 11, 2011
    16 notes

    Last year, more than a dozen San Francisco restaurants that levy surcharges each kept more than $100,000 that had been allocated to HRAs*, though in some cases the restaurants also offer health insurance to employees that isn’t paid for with HRA funds, according to city data. One Market, for example, allocated $118,799 to HRAs for its employees but only reimbursed $2,398. The restaurant says it spent an additional $10,248 on health insurance for employees.

    (via gainfulunemployment)

    Investopedia explains Health Reimbursement Account - HRA - 

    As a benefit, an employee may be reimbursed for qualified medical expenses from his or her employer. The funds received are tax-free, but because the plan is employer funded, the employer has the right to cancel or alter the distributions at any time. In spite of this, many employees consider HRAs as a valuable benefit given the rising cost of health care.  

    Health insurance is a serious labor issue….this video from the Wall Street Journal takes on the issue.

    Menu Surcharge Can Be Misleading - WSJ.com

    Diners are charged around 3% of their entire bill—with a 20% tip and near 10% sales tax, diners pay almost 30% above menu prices for the food/beverage total. The burden is on the staff to fill out paperwork to be reimbursed from the restaurant’s allocated healthcare funds. Every dining check nets funds for the healthcare pot, but paperwork for these funds aren’t necessarily filed. The restaurant keeps the unclaimed surcharge as profit.

    Now, whenever I see the healthcare surcharge line item in my bill I will think of how I’m lining the pockets of some rich restaurant owner/investor, not chipping into healthcare for the people who serve the food, wash the dishes, etc.

    (via gainfulunemployment)

    12:38 pm
    25 notes

    Love a counter-trend story! This one is from various towns and cities in Maryland.

    ohheyrebecca:

    I feel like recently there has been a flurry of bars and restaurants being rehabbed, opened and/or moved. If this is an indicator of good times to come, you better go buy yourself a new drinking hat. Here’s a run down of places that have recently opened or soon to come in the Land of Pleasant…

    10:00 am
    Rashmi Raman

    You will now need to pay more for that jar of peanut butter

    Another hot, dry summer has devastated this year’s peanut crop, sending prices for the legume skyrocketing and forcing peanut-butter brands

    says the Wall Street Journal.

    ABC KOAT reports that heat, strong winds and dryness that caused the failure of the peanut crop.

    Peanut butter could now cost 30-40% more than last year because of the failed crop. So, you will need to pay about 94 cents more for the next jar of peanut butter.

    Also, due to the shortage of peanuts, you may not find your favorite variety as brands like Smucker may host only a limited variety till next January. 

    The quality of the crop is also being questioned as also the fact whether your favorite peanut butter will continue to taste the same.

    This could cause widespread buying of peanut butter as people will stock their shelves before the next batch comes in.

  • Tagged: food foodbiz_nyc peanut_butter business
  • 9:28 am - Thu, Oct 6, 2011
    Rashmi Raman

    A sweet deal

     

    US confectionery maker Hershey has announced a tie-up with rival Ferrero to share resources in stocking and distribution of their products earlier yesterday.

    The aim behind this alliance is two-fold : increasing productivity by streamlining operations and reducing their carbon footprint. The effects of this move on the workforce at these two companies is to be seen.

    The confectionery space does well during economic recessions - people turn to candy for comfort as reported by Christine Haughney in the New York Times

    Hershey has benefited from this trend. Investors.com has reported that Hershey will post “solid Q3 results”.

    However, Forbes has reported that - 

    …despite HSY’s impressive performance on the charts, most of the Street remains sour on the stock. According to Zacks, only four out of 13 analysts consider the equity worthy of a “buy” or better rating, leaving the door wide open for potential upgrades to fuel future gains. In the same vein, Thomson Reuters pegs the consensus 12-month price target on the stock at a measly $61.42 — just a stone’s throw from HSY’s current share price. 

    The alliance between Hershey and Ferrero might be a precursor to further joint ventures between these two companies.

  • Tagged: foodbiz_nyc candy business food
  • 12:17 am
    Rashmi Raman

    Business is in the black

    Coffee prices have been rising since 2009. The highest price was recorded in May 2011. Photo by Rashmi Raman

    The price of coffee beans has risen steadily over the past three years, creating a squeeze for mom-and-pop businesses like D’Amico Foods in Brooklyn.

    In 2008, the wholesale cost of a pound of Arabica coffee beans was about $1.50 in the New York market. The price, stayed under $2 till July 2010 and hit an all-time high of $3 in May 2011; it hasn’t decreased significantly since.

    The D’Amicos (L-R) Joanie, Frank Sr. and Frank Jr. share a warm moment. Photo by Rashmi Raman

    D’Amico, which was rated “best coffee in NYC” by Zagat Survey in 2006 and 2008, has seen coffee prices swing back and forth before. D’Amico has been roasting gourmet coffee since 1948, though it started as a grocery store run by father-son duo Emanuele and Frank D’Amico Sr. They were soon joined by Frank Sr.’s brother-in-law, Alessandro Viola, whose roasting techniques are still used. Today, third-generation D’Amicos Frank Jr. and his wife Joanie run the bulk of the business.

    Coffee sales overtook groceries and the D’Amicos phased out the grocery business to concentrate on coffee, both brewed and to take home, and small eats like sandwiches and cold cuts. Their e-commerce venture, started in the mid 1990s, is popular, just like their original mail order service started by Frank Sr. in the 1970s. About 65% of coffee sales orders come through the website. The latest addition to their business is wholesale delivery of coffee to about 100 restaurants and cafes in NYC.

    D’Amico offers about 120 varieties of roasted coffee, ranging in price from $8 to about $13 per pound. But because D’Amico caters to a huge variety of aficionados ranging from dockworkers to lawyers and retired seniors, they have had to keep their pricing competitive.

    Frank Jr. says that “coffee prices are crazy” and notes that Fair Trade coffee (a market system that links farmers directly to importers by eliminating middlemen) costs about 30 to 40 cents more than coffee bought in the open market.

    While roasting their own beans helps lower some costs, pricing remains a balancing act. They had to increase the price of a cup by a quarter, a 25% change, last year (see graphic), even though bean prices increased by 33%. As a result, the store has seen a 15% reduction in profits on coffee in the past year.

    The price hike was a drastic move as the rate had remained almost unchanged for about five years. While Frank Jr. has had to reason with some irate customers, he observes that most customers “are OK with the prices as they aware of what’s happening”. In fact, overall sales have increased by 20% this year as compared to the previous year.

    Joanie notes that a cup of their signature Red Hook Blend ($12.29/lb) costs the same as that of the House Blend Light (8.39/lb) when brewed at the store. That is partly because brewed coffee isn’t a big part of their business. Indeed, 85% of D’Amico’s revenue comes from selling coffee that can be made at home, so they can afford to keep a common price for the brewed coffee and cater to the local clientele.

    For customers like lawyer Meg Manchester, D’Amico represents a sense of old New York and a chance to strengthen ties with the community. Robert Painter, a customer for eight years, says “the place has so much character, the character bleeds into the coffee.” Longtime customer Alfonso Salas believes that “The neighborhood has changed and an institution like D’Amico needs to reflect that.” The store had a “more rustic” decor before Frank Jr. and Joanie changed the interior a few years ago. The D’Amicos realized that attracting the young professionals moving into the neighborhood was as important as retaining their more loyal customers.

    The employees feel it too. Christian Lee Branch has been roasting the beans, and recommending coffee varieties, to customers for six years. For him, working for the D’Amicos is like “working with family”. D’Amico has never had layoffs, and some employees have stayed around for 20 years.

    Employee retention, competitive pricing, its reputation in the community and multiple sales channels have helped build the brand. But the D’Amicos are looking for ways to expand the business and decrease overhead. They are considering ideas like discontinuing the sandwiches and increasing seating. They might also reduce business hours and hire more people because of their health concerns.

    And the D’Amicos are aware that inflation and recession haven’t deterred consumers from getting their caffeine fix. Americans are even more passionate about it. According to the National Coffee Association of America, for every 10 cups of coffee consumed last year, four were gourmet. And while gourmet coffee costs more than regular, the profit margins are higher too.

    The price of coffee beans has risen steadily over the past three years, creating a squeeze for mom-and-pop businesses like D’Amico Foods in Brooklyn.

    In 2008, the wholesale cost of a pound of Arabica coffee beans was about $1.50 in the New York market. The price, stayed under $2 till July 2010 and hit an all-time high of $3 in May 2011; it hasn’t decreased significantly since.

    D’Amico, which was rated “best coffee in NYC” by Zagat Survey in 2006 and 2008, has seen coffee prices swing back and forth before. D’Amico has been roasting gourmet coffee since 1948, though it started as a grocery store run by father-son duo Emanuele and Frank D’Amico Sr. They were soon joined by Frank Sr.’s brother-in-law, Alessandro Viola, whose roasting techniques are still used. Today, third-generation D’Amicos Frank Jr. and his wife Joanie run the bulk of the business.

    Coffee sales overtook groceries and the D’Amicos phased out the grocery business to concentrate on coffee, both brewed and to take home, and small eats like sandwiches and cold cuts. Their e-commerce venture, started in the mid 1990s, is popular, just like their original mail order service started by Frank Sr. in the 1970s. About 65% of coffee sales orders come through the website. The latest addition to their business is wholesale delivery of coffee to about 100 restaurants and cafes in NYC.

    D’Amico offers about 120 varieties of roasted coffee, ranging in price from $8 to about $13 per pound. But because D’Amico caters to a huge variety of aficionados ranging from dockworkers to lawyers and retired seniors, they have had to keep their pricing competitive.

    Frank Jr. says that “coffee prices are crazy” and notes that Fair Trade coffee (a market system that links farmers directly to importers by eliminating middlemen) costs about 30 to 40 cents more than coffee bought in the open market.

    While roasting their own beans helps lower some costs, pricing remains a balancing act. They had to increase the price of a cup by a quarter, a 25% change, last year (see graphic), even though bean prices increased by 33%. As a result, the store has seen a 15% reduction in profits on coffee in the past year.

    The price hike was a drastic move as the rate had remained almost unchanged for about five years. While Frank Jr. has had to reason with some irate customers, he observes that most customers “are OK with the prices as they aware of what’s happening”. In fact, overall sales have increased by 20% this year as compared to the previous year.

    Joanie notes that a cup of their signature Red Hook Blend ($12.29/lb) costs the same as that of the House Blend Light (8.39/lb) when brewed at the store. That is partly because brewed coffee isn’t a big part of their business. Indeed, 85% of D’Amico’s revenue comes from selling coffee that can be made at home, so they can afford to keep a common price for the brewed coffee and cater to the local clientele.

    For customers like lawyer Meg Manchester, D’Amico represents a sense of old New York and a chance to strengthen ties with the community. Robert Painter, a customer for eight years, says “the place has so much character, the character bleeds into the coffee.” Longtime customer Alfonso Salas believes that “The neighborhood has changed and an institution like D’Amico needs to reflect that.” The store had a “more rustic” decor before Frank Jr. and Joanie changed the interior a few years ago. The D’Amicos realized that attracting the young professionals moving into the neighborhood was as important as retaining their more loyal customers.

    The employees feel it too. Christian Lee Branch has been roasting the beans, and recommending coffee varieties, to customers for six years. For him, working for the D’Amicos is like “working with family”. D’Amico has never had layoffs, and some employees have stayed around for 20 years.

    Employee retention, competitive pricing, its reputation in the community and multiple sales channels have helped build the brand. But the D’Amicos are looking for ways to expand the business and decrease overhead. They are considering ideas like discontinuing the sandwiches and increasing seating. They might also reduce business hours and hire more people because of their health concerns.

    And the D’Amicos are aware that inflation and recession haven’t deterred consumers from getting their caffeine fix. Americans are even more passionate about it. According to the National Coffee Association of America, for every 10 cups of coffee consumed last year, four were gourmet. And while gourmet coffee costs more than regular, the profit margins are higher too.

  • Tagged: foodbiz_nyc coffee food business
  • 7:24 pm - Thu, Sep 29, 2011
    2 notes
    Rashmi Raman

    Will your friendly neighborhood restaurant be around next month?

    The restaurant business is not for the fainthearted.

    First there is the whole idea of starting one. A Google search for "how to start a restaurant business" gives 485,000 results. Sites with names like “www.startarestaurantbiz.com” or “www.how-to-start-a-restaurant.com” provide advice to budding restaurateurs. And while they talk about creative satisfaction and how people like to eat out, they also emphasize heavily on a business plan. This article from Forbes, although 4 years old, still gives an idea of the costs of starting a restaurant.

    At the end of the day, a restaurant is a business. Running it is tough work, says NY restaurateur Bruce Beschel in the New York Times.

    We are losing money. That was expected. But we are losing less than we anticipated and attracting more guests than we imagined. We broke even last week except for the money I owe me. 

     As for restaurants which have been around for a while, they have their work cut out for them. The media have reported several restaurants filing for bankruptcy this year across the US. A weak economy, rising housing prices, cost of labor are some of the reasons cited for the situation.

    Here are a few of the articles published today :

    • 80 year old restaurant chain Friendly’s is filing for Chapter 11 bankruptcy reports the Wall Street Journal. A weak economy and rising prices for food items have contributed to this squeeze.                                             As Shira Ovide puts it -

      We don’t know what’s going on this year with restaurant chains/food companies from our childhood. 

    • Some Papa John’s franchisees in Colorado and Minnesota have declared bankruptcy as per this article on the KRDO site.
    • The St.Louis Today reported that the franchise owner for Chevy’s has asked for his lease to be terminated in St.Charles, Mo.

    The restaurant business is huge - in size, amount of job creation, revenues generated etc. In fact, there are more than 20,000 restaurants in NYC alone. What will be the figure next month - now, there’s some food for thought.

  • Tagged: business food foodbiz_nyc restaurants
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