Food Snark

I wasn’t planning to do a follow-up on yesterday’s post about IHOP – or, as they have temporarily re-branded themselves, IHOB for International House of Burgers. I figured that mocking them for the promotion – not so much because it was ill-advised as much as it was pointless and probably redundant – would be a fun post to write, and hopefully read, and that everyone else would lose interest in the story as quickly as I did. A generation ago, or even a decade ago, that would probably have been the case, but in the world of social media nothing ever goes away quietly…

Not surprisingly, Business Insider ran a short piece on Tuesday recounting some of the replies that competing hamburger chains had tweeted, which is a valuable service for those of us not currently on Twitter, by the way. Wendy’s already has a reputation for snarky tweets, so you would probably have been expecting them to comment. Their reply was “Can't wait to try a burger from the place that decided pancakes were too hard,” which I feel shows the proper spirit. Red Robin, another likely competitor I had mentioned in yesterday’s post tweeted that “We’re as serious about pancakes as @IHOb is about burgers,” which is probably also what you’d expect. Seeing A&W Restaurants get into it by tweeting a version of their logo turned upside-down and adding “We don’t know what it means either,” was a bit more unexpected, because I hadn’t realized that the restaurants division of A&W was still in business…

IHOP appears to have been expecting the tweet storm, as well, since their response “We don't want any beef with you, we just want to share our beef with the world," seems a little too rehearsed to be natural. Their CEO was later quoted as saying that “If we have other people in the world of burgers commenting on our burgers, it can only help,” which also suggests that they had anticipated the reaction from the industry. I personally thought that Waffle House had the best reply, though; asked by one of their fans (in a tweet) “Please stay waffle house don’t become burger house!” the company’s own Twitter account replied “No worries here...”

We’ve discussed the question of whether all publicity is good publicity, or whether being publically mocked – regardless of the platform on which that is happening – is worth the lost business from people who will decide that your original move was bone-headed enough to motivate them to avoid your company. In this case, I really doubt whether IHOP is actually going to lose business over the IHOB strategy; they’re an iconic part of American life, and anybody who wants cheap breakfast food at all hours of the day or night (and doesn’t have a Waffle House nearby) will probably continue going there…

Whether or not their new burger offerings gain traction, or whether people start visiting the restaurants during the off-peak lunch and dinner shifts in which they were trying to pick up ground remains to be seen, however…

Start Looking Ahead

I was reading the article from Business Insider about the Boyd’s department store in Philadelphia last week and reflecting that the business model that reporter Mary Hanbury describes may have even greater importance to future business operations, and particularly start-ups, than it does to the present company. If you’re not familiar with it, and I wasn’t until I read the linked article, Boyd’s has been in operation on the same site for the last 80 years, and is currently being managed by the grandson and great-grandson of one of the brothers who originally founded the company. It’s a very upscale retailer that features personalized service, custom tailoring, and a great number of value-added services that may have been common in pre-WWII Philadelphia but are considered a specialty strategy today…

We’ve all heard this story before, of course. Consider any of the more outrageous customer service efforts you may have heard about Nordstrom’s, for example (nearly all of which turn out to be true, as it happens), or more specialized retailers like Tiffany and Co. Boyd’s has features like free valet parking, sales associates and personal shoppers who form lasting relationships with repeat customers, and alterations handled for free (with the cost of purchase) by a 39-person tailoring shop on the premises. The salespeople keep in touch with their customers with hand-written notes and updates on new products for sale – the level of service that people who don’t understand retail think they should always receive, but rarely want to pay for…

In a world where more and more department stores are closing, and the handful still in operation, it may seem amazing that Boyd’s not only maintains its operations but is in fact expanding, hoping to increase its sales to female customers by expanding the women’s clothing department. But where the article extols the virtues of Boyd’s as a throwback to a previous century and suggests things that current members of the industry could learn from their example, what struck me was that the company seems to have happened across the concept that will keep them running regardless of the competition from Amazon (or other online retailers) – and those are the lessons we should be examining…

For all that it can be incredibly difficult to execute correctly, let alone profitably, the basic concept of retail has traditionally been to find something people want to buy and put a large selection of it somewhere that those people already do. Firms following a cost leadership strategy will then attempt to gain an advantage by lowering their operating costs, increasing their profit margin and possibly by lowering their prices, while firms following a differentiation strategy will attempt to find reasonably cost-effective ways to add value for the customer. With massive advantages in overhead costs (they don’t have to build or operate a store) and inventory (they can and do have warehouses and distribution centers all over the world), Amazon can out-perform almost any cost-leadership competitor, and it is getting harder to find anything that will add sufficient value to interest retail customers in shopping in the real world…

But what if we came at the problem from the other direction? Just assume that anything we can buy can be sold online for cheaper, and anything we can make will be duplicated by the competition as soon as they can figure out how we do it; what’s left? Can we offer a unique product, custom-made or custom-tailored? Can we offer a service that isn’t possible for a web retailer? Can we offer a level of quality, either in product or in services, which can only be provided through a relationship business, between employees who know their customers? There was a time when a retail business could succeed simply by being the only place in a local area where a specific set of goods or services was available, but those days are gone; can we out-perform not just the competitor across the street but everyone on the Internet?

I’m not suggesting that any of these concepts will be easy to develop, let alone implement. But the more we consider the retail sector, the clearer it becomes that location, inventory control, and competitive prices are no longer enough. Just as the mercantile businesses of the 1800s were replaced by the national brands of the 1900s, this new century is shaping up to be a time where the competition is always present, and always has massive advantages in terms of volume, purchasing power, and breadth of product line. But if the folks running Boyd’s are anything to go on (and they’ve been right for 80 years so far) then retail isn’t going away any time soon. It’s just evolving into yet another new form…

Was That a Goat?

Over the years I’ve written a lot of posts about Amazon for much the same reason that a sports blogger would write about the New York Yankees – love them or hate them you can’t ignore them, any more than someone in the business community can ignore Amazon. We’ve all spent time pondering Amazon, and watching them as they diversified from an online bookstore to a retailer of other kinds of media to a retailer of practically everything. Now it appears that the company has moved into providing random home and personal services as well, which appears to be taking them into some very strange waters indeed. Who would have imagined, back in the old days, that this modest Internet bookstore would one day grow up to be a place where you can rent a flock of goats?

I got the story off of the Business Insider website, but it looked too fantastical for words, so I went onto the Amazon site and looked for myself. Sure enough, there is an Amazon Home Services page which lists services available through the auspices of the company. Some of these include things that make perfect sense as a value-added adaptation for a retail company, such as service personnel who will come to assemble the outdoor grill you just purchased, or install the wall-mount for your new plasma-screen television. Some are just mundane things, presumably for people who don’t want to deal with Sears, get referrals off of Angie’s List, advertise on Craig’s List, and so on, like gutter cleaning and pressure washing services. And some of them are quite eccentric indeed, such as aerial yoga classes (yoga done while hanging from the ceiling on loops of soft fabric), language lessons (currently in Spanish, French or English, but keep checking back!), musical and vocal performers (hire a band for your next big event!) or hiring a goat grazing service…

As I have mentioned in some previous posts, goats are an extremely efficient and cost-effective way of clearing brush, or unwanted vegetation in general, from almost any terrain. They don’t require gasoline or electricity, don’t make much noise compared to chainsaws and wood chippers, dispose of the cut vegetation (except for the occasional goat dropping, which the Amazon page points out make excellent fertilizer), and can actually work faster than some human brush-clearing services (depending on the terrain and the number of goats, presumably). How much the service will cost depends on how much land you want cleared, whether it is fenced in or whether goatherds will be needed to keep control of the flock, and how many goats you want, but unfortunately I can’t tell you how it compares in price to other methods or contractors…

When I pulled up the Other Services page it was immediately clear that none of these services were available anywhere near my zip code. There weren’t any offers on the Lessons page, either, which is disappointing to anyone who wanted to learn aerial yoga in the Lansing area. Nor did I find anything under the Home Improvement or Lawn and Garden pages before I gave up. As was the case with Angie’s List and Craig’s List, there are no listings for services of any kind anywhere near where I live…

Now, in fairness, we should probably note that Amazon Home Services is a fairly new area for the company, and it may take them a while to get enough contractors listed to cover everywhere. We should also note that East Lansing is kind of a backwater – it’s a nice enough place, but it is somewhat remote when compared to Seattle or Chicago, for example. It’s quite possible that if you live in or around a major city that you would find plenty of offerings in every one of these categories (although I suppose the goats might be a challenge in urban areas). A much more serious point is that every other business referral service out there should probably take notice of the fact that Amazon has now entered their industry, because if they aren’t careful the same thing that happened to all too many local bookstores could also happen to them…

The Ethics of Standards

Here’s another hypothetical for you: Let’s suppose that you have gained a national or international reputation because of your success with whatever it is you do (doesn’t matter what) and you decide to cash in on that public image by creating something (doesn’t matter what) and putting your name on it. Let’s also suppose that after a while you get bored with the venture and sell it to some investors, but as part of the purchase price you agree to let them keep your name on the property, because without that brand identity it will be much harder to sell. Now let’s suppose that after a few years go by the new owners have let the venture (whatever it is) run down to the point where you are no longer willing to have your name on it; the property is now so low quality that you feel it will hurt your reputation to be associated with it. Do you have the right to demand that they take your name off of the property?

If you didn’t catch it on the news I should probably just tell you that this is more or less what happened to Donald Trump this past week. Although Mr. Trump no longer owns two of the Atlantic City casinos that bear his name (he sold 90% interest in each to an investment group), they are still called the Trump Plaza and the Trump Taj Mahal, and at least part of their brand identity is a holdover from the days when Trump was building the biggest, gaudiest and most expensive everything in the world and slapping his name on the front. Unfortunately, Mr. Trump and his advisors now believe that these two properties are not being properly maintained, and have now decayed to the point where he is no longer willing to have his name on them. He is therefore filing a lawsuit to force the current owner to change the names of these facilities…

Now, I would be the first to admit that it isn’t easy to feel sorry for Donald Trump, or for anyone who has enough money to buy a hotel/casino from him in the first place. But the story does raise a serious point, even for those of us who aren’t billionaire reality-television star real estate developers. Assuming that you have licensed someone to make use of your name, and by extension your reputation or public image, at what point do you have the right to demand that they either conform to a standard that you would find acceptable (at least) or else stop using it? Or, to look at it from the other side of the desk, if you have purchased the right to use someone’s name, likeness or reputation in order to help sell your product, how much responsibility do you have to maintain quality at a level that won’t damage the reputation to which you have purchased the rights?

We should probably also acknowledge that if someone had purchased a license to use a celebrity’s name or likeness and that celebrity began acting in an embarrassing or repugnant way, no one would question the business owner’s wanting to drop the celebrity association, and a lawsuit to recover whatever fees were paid would not be considered inappropriate (although it might or might not succeed). But does the business have a corresponding responsibility to the celebrity? Does our answer change if the celebrity is a more sympathetic figure than Donald Trump, or if it is clear that the shoddy product or service really is threatening his or her livelihood?

No one is going to argue that any business should not comply with the terms of the contract it signed, or that a celebrity who is being paid for the use of his or her good name shouldn’t insist on a clause in the contract guaranteeing them the right to rescind use of that name in the event the business is damaging it. But assuming that no material breach has occurred, and that the celebrity has no such escape clause, does the business have any ethical responsibility to comply with such a demand? For that matter, does the celebrity have an ethical responsibility to let the business get whatever benefit they can from the use of his or her endorsement, assuming they were paid for it in the first place?

It’s worth thinking about…

Imagine My Surprise

Last week I was talking about the development of Google Fiber, and the rather amusingly lame response to this new threat from Frontier Communications. It isn’t surprising that any company that finds itself confronted by a new challenger for its market share might attempt to respond through the media, although one might expect something better than the CEO saying that her customers are too backward in their technological requirements to need a service like Google Fiber and too stupid to know the difference. But if a company I was in charge of faced this sort of challenge, my first move would be to improve my company’s service until we reach parity with the new competitor – or at least until we were able to say something about “Almost as good, and a LOT cheaper,” which will usually work. It’s nice to see that somebody else also thought of that… 

An article in the Kansas City Star online site this week tells of how two of the main Internet providers in the KC area are improving their access speeds in direct response to the arrival of Google Fiber in that market. Comcast is doubling the speed of its lower-tier customers; improving their 25 mbs service to 50, and their 50 mbs customers to 105, while the 105 mbs customers will be moving up to 150, all at no additional charge. It isn’t clear how fast the upgraded Time Warner Cable service will be, since it won’t be ready until next year, but I would expect them to at least match the Comcast offer if they want to stay in the game. It’s already bad enough that Comcast will have the upgraded service online within a few days, or a week at the outside…

It is worth noting that even with these upgrades the existing providers will be at a considerable disadvantage relative to Google Fiber, which is offering a 1,000 mbs service for roughly the same rates that Comcast will be charging for 150 mbs. But doubling the access speeds should help, especially if the company can delight users with how much faster its service has become while maintaining price parity with both Time Warner and Google. Even more importantly, this could give the company the time it will need to upgrade its own systems and create even faster services, much cheaper service tiers, or hopefully both. A much more immediate question from where I’m sitting is what has taken them so long?

Even assuming that Google Fiber didn’t exist, or that it wasn’t coming to the Kansas City area yet, Comcast has been competing directly with Time Warner for some years now, and they have clearly had both the technology and the funds to upgrade their systems in the Kansas City area. It’s hard to imagine why they wouldn’t have wanted to gain the massive competitive edge that having service that was twice as fast as the competition (for a comparable price) would have given them. It’s possible that the company’s attention was elsewhere, or that they didn’t want to get into a price war with their competition, but the most likely explanation is that they were satisfied with the revenue being generated by their facilities in this market, and did not consider the increase in sales that the upgrade would provide to be worth the cost of doing so…

That is, until a new competitor turned up in the market offering a better service than either existing provider, and threatened to take away all of their market share. I can definitely see the arguments in favor of their strategy – if this was, in fact, a deliberate strategy. Maintaining market share by maintaining parity would have made sense, whereas entering into a war over either price or features (access speed) probably didn’t. But I’d still have expected them to keep an eye on potential competitors crashing into their market, and plan accordingly. Unless, of course, they have had this capability all along, and have only started offering the new service for sale because of the appearance of a more powerful competitor…

I’d like to tell you that would surprise me – but I’d be lying…

I’ve Seen This Before…

I wasn’t really planning on an update to my last post, or anything else about the ongoing burger wars, but over the weekend I kept seeing the new Taco Bell ad (the one with a bunch of guys who are actually named Ronald McDonald eating the new Taco Bell breakfast products) in heavy rotation, and I could not shake the feeling that I had seen this somewhere before. Of course, I am getting older, and given my ongoing memory problems there are going to be times when a sensation of déjà vu is unavoidable. But then I saw an article on the AdWeek site which points out that this has, in fact, been done before…

You can pick up the original article here, if you want to, but the details are simple enough. About 12 years ago, one of the other quick-serve hamburger chains called Jack-in-the-Box pulled exactly the same stunt, finding a guy whose legal name was Ronald MacDonald and getting him to eat and express appreciation for their new burger product on camera. The Jack-in-the-Box people apparently selected a guy who uses the alternate spelling of MacDonald on purpose, just in case their larger competitor decided to give them grief about the campaign, but their ad agency admits that they also chose that particular Ronald because he performed well on the video. Other than that, though, the commercial uses almost exactly the same gimmick in almost exactly the same way…

Whether or not this will have any effect on the ad campaign – or on sales of the new products it is trying to promote – remains to be seen, of course. As of this writing the Jack-in-the-Box chain is only operating in 19 of the states, and with only 2,200 locations it’s still relatively small when compared to Taco Bell’s 6,500 locations, let alone McDonald’s. People in many parts of the country may never have seen a Jack-in-the-Box restaurant (the Company’s website lists the nearest one to East Lansing as being 210 miles away in Indiana), or even seen one of its ads. And even if they have, people don’t necessarily devote that much time to memorizing ads run by (relatively) small fast-food chains a decade or more ago. There’s also the issue that Taco Bell itself has a history of running with unconventional advertising…

Probably the best-remembered Taco Bell campaign is the Talking Chihuahua series of the late 1990s, although the late 1980s “Make a Run for the Border” campaign is still widely satirized. My personal favorite will always be the company’s stunt in 2001 when the Mir space station was falling out of orbit, and the company put up a 40’ by 40’ target in the South Pacific and broadcast that if any part of the falling station hit the target they would give a free taco to every person in America. With a history like that it’s hard to imagine that anyone would get that worked up about this new Ronald McDonald campaign, even if it is ripping off an earlier commercial made by a rival company. A much bigger issue is how McDonald’s will respond to the Company’s new breakfast products…

As I noted in my last post, the off-peak sales have been a key factor in making the McDonald’s locations more profitable than any of their competitors, and while it will take time for any new product to gain traction, let alone non-traditional offerings like a taco made out of a waffle, it seems highly likely that they will have to do something in reply to this new challenge. There is no question that McDonald’s represents an entrenched competitor with an established customer base and a large network of locations already optimized to sell breakfast products during the relevant business hours; the question is whether that will be enough to carry the day. Or, more to the point, perhaps, how will they respond to the challenge? Because if the history of the Burger Wars has taught us anything, it’s that McDonald’s is unlikely to just sit still for this…

The Ethics of Beauty

A while back I brought you the story of a dating website for “beautiful” people only which is now branching out into an employment service, also for candidates who are (or believe themselves to be) of exceptional aesthetic quality. I’m not going to comment on the ethics of hiring someone on the basis of looks over any other consideration because there is no other side to that argument; any company that hires on any basis other than ability (and primarily on cognitive ability, at that) and retains/promotes on any basis other than performance is not likely to succeed – and we’ve got nearly a century worth of Management research to back up that contention. But what about cases where the only feature distinguishing two applicants is their appearance? Do we have an ethical responsibility to make the decision blindly – in this case, literally? It seems worth discussing…

The affirmative argument would appear to be that in almost any field of human enterprise there will be occasions where an attractive person has an advantage over an unattractive one. There are professions where this effect is exaggerated or even central to performance – acting, dancing, modeling, some forms of customer service or sales, travel (tour guides and flight attendants, for example) and so on, but even in purely white-collar business there will be occasions that favor a visually attractive employee. Again, this is supported by the research. If we accept that the role of any manager is to maximize performance and thereby increase profitability, and that the odds of achieving higher performance are better with a good-looking workforce, it seems reasonable that we should attempt to hire one. It could even be argued that we have a fiduciary responsibility to the owners of our company to improve its financial performance, if not in fact an ethical one as well…

The negative argument is somewhat more complex, as being visually unattractive does not yield any particular advantages in and of itself. In a broader sense, however, one could argue that such a hiring policy will almost certainly be viewed as elitist and/or discriminatory by other individuals and groups, since visual attractiveness is usually associated with economic class distinctions. There could also be issues with employees being insulted or even threatened by the idea that they were hired for their looks, and not because the hiring manager also believes that their abilities and skills were at least comparable to any other candidates. Whether this external resentment and internal erosion of confidence would be sufficient to offset the advantages of such a workforce would depend on a large number of variables, of course, but should not simply be ignored…

In reality, of course, it is highly unusual to find any two applicants for any position with identical skills and abilities, let alone experience, personality, networks and connections or other factors to the extent that the only identifiable difference between them is their visual appearance. Most of the time a hiring manager will have the unenviable task of assigning values, or at least priorities, to each of the assets that a given applicant could bring to the job, and trying to determine which of those applicants would be the best fit for their organization. There is also the issue that visual attractiveness is a matter of personal taste, and what appeals to the hiring manager may or may not be the appearance best suited to gaining a competitive advantage in the future circumstances. In fact, even factors such as charisma, leadership ability or management skills may be completely subjective – which is what leads me to today’s question:

Do we, as hiring managers, have an ethical responsibility to make personnel decisions based entirely on the objective skills, abilities as assets an applicant has, leaving aside all aesthetic criteria? Or, to look at it another way, does our responsibility to be fair and impartial in all management decisions require us to ignore a possible source of competitive advantage simply because possession of that resource is beyond the applicant’s control? Basketball teams hire tall players over ones of excellent moral character or with wonderful personalities, to take the obvious example. And certainly no question would exist in cases where a give applicant’s skills and abilities are clearly superior, regardless of his or her appearance. But do we have an ethical responsibility to ignore everything else about an applicant?

It’s worth thinking about…