Chik-fil-A ‘Secret Sauce’: Community

Business Insider: “Chick-fil-A’s recent dominance of the fast-food industry can be tied to one behind-the-scenes secret … It’s less expensive to open a Chick-fil-A than it is to open a location of almost any other chain. Chick-fil-A charges franchisees only $10,000 to open a new restaurant. However, unlike other franchises, it prohibits franchisees from opening multiple locations.” Industry expert John Hamburger says this franchise model puts “somebody in the store that was close to the customer. They’re dealing with the customer, they’re in the community. They’re active in the community. And that’s what Chick-fil-A does.”

“Chick-fil-A franchise owners are involved in hiring and firing employees. The company also encourages franchisees to get personally involved in the community through various local organizations. According to Hamburger, that allows Chick-fil-A to get a leg up on the competition in terms of quality and customer service.”

“Hamburger says chains such as Applebee’s are already seeing the negative impact of losing their community connections. The chain, which went to a 100%-franchised model in recent years, closed 99 stores in 2017 amid sinking sales … Chick-fil-A’s success as a rapidly expanding private company could help convince more public companies to follow in its footsteps.”

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Uber v. Lyft: Sharing Space, But Not Cultures

Anne Kadet: “Most of us think of ride-sharing services Uber and Lyft as virtual outfits—a vast, digital web of drivers connecting with passengers via app. But if you were a driver, you’d have a different perspective: Uber is a place. And so is Lyft. Both companies operate hubs which their drivers, who are contract workers, can visit to sign up, resolve problems or just get a free coffee and use the bathroom. And in New York City, strangely enough, the rivals maintain hubs in the same building.”

“Lyft recently reopened an expanded, 12,000-square-foot hub on the building’s fourth floor. The space looks like a cross between an Apple Store and a third-grade classroom. The décor features the brand’s hot pink, white and lavender hues. Drivers help themselves to bubble gum and chocolate kisses wrapped in purple foil … Lyft General Manager for New York City Vipul Patel says the company hopes its effort to create a welcoming environment will encourage drivers to extend such hospitality to passengers … Downstairs on the first floor, the Uber Green Light Hub is about three times the size of the Lyft Hub, and the look is more tech startup than kindergarten. The two-story loft is stark black and white; the music playing one recent morning favored thumping dance beats. No candy here!”

“While its onboarding process is similar to Lyft’s, Uber also offers two of the (Taxi & Limousine Commission) required classes for free, and the third at a discount. Uber even has doctors on-site to administer the TLC-required physical … Uber says anyone who takes advantage of its free classes, physicals and optional training course can drive for another outfit. But it expects drivers will enjoy the overall Uber experience enough to stay loyal.”

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Retail Politics: Is Fast Fashion Tone Deaf?

The New York Times: “Every once in a while, tucked into the stream of speedily made garments rushed into stores, designs with shockingly bad taste stand out: a shirt comparing women to dogs at Topman, symbols of the Holocaust on a top at Zara … Retail experts blame a heated competitive environment, where companies, many of them based in Europe, are spread thin trying to cater to a global customer base that is easily bored, is extremely demanding and can buy almost anything via e-commerce. Many brands develop a cavalier attitude: Churn out products now, ask forgiveness later.”

“Earlier this year, H&M, one of the largest clothing retailers in the world … was taken to task over a children’s hoodie emblazoned with the phrase ‘coolest monkey in the jungle’ and modeled in marketing materials by a young black boy. The description, which has been used to dehumanize black people, set off protests at South African stores that left mannequins toppled and racks overturned. In the aftermath, H&M chose a lawyer and company insider, Annie Wu, to lead a new four-person team at its Stockholm headquarters focused on global diversity and inclusiveness.” She comments: “We didn’t recognize that in this now new age of transparency, what the brand stands for is super important to people.”

“Fast fashion companies, which specialize in low-priced, quickly produced clothing and have grown faster than the apparel industry as a whole for years, are under pressure to be more prolific and provocative as they sell across more borders. H&M, which added 479 stores last year, now has more than 4,000 stores in dozens of countries … retail experts said that much of the creative process takes place in and around its European home office, far from many of its markets … Fast fashion has produced tone-deaf products for years, passing them off as a rounding error given the enormous volume of items the companies generate each year … Several companies have pledged to diversify hiring, retool corporate guidelines and initiate other measures to prevent mistakes from going out the door.”

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Boyd’s: Retail’s Past as Prologue?

The New York Times: “Like the Liberty Bell and the stone Rocky Steps, Boyds is a Philadelphia landmark, and one equally impervious to the shifting seasons. For 80 years, the family-owned business has outfitted lawyers, bankers, doctors, politicians and famous athletes … The store is where a young man goes to buy his wedding suit, and returns 30 years later, grayer, wealthier, thicker in the middle, this time bringing his son to buy his wedding suit … in this age of dressing down and click-and-buy, in an environment where the big chains have killed off the mom-and-pops and Amazon is killing off the chains, Boyds now feels like a shopping experience out of time … Out-of-towners who happen into this retail anachronism tend to react first with astonishment, followed by a sigh of pleasure.”

“It’s very possible that Boyds isn’t just one of a dying breed of old-fashioned retailers, however. Given its scale (50,000 square feet of selling space over four floors), and the level of service it provides, and the tailor shop and complimentary parking lot, and the near century of independent operation by the same family, it may be the only clothing store of its kind anywhere in the country … To understand how Boyds has avoided oblivion thus far, it’s instructive to spend an afternoon on the selling floors … The operation has a choreographed precision. Chris Phillips, the 43-year-old men’s tailored clothing manager, on this day stood near the elevator. It was his job to greet customers, determine their needs and spin them to the right salesperson.”

“Generally speaking, the men who come to Boyds aren’t there to browse. Overscheduled high earners, they view clothes shopping as one more task to be efficiently completed, an attitude to which every Boyds employee is attuned … Marc Brownstein, the president and chief executive of the Brownstein Group … dates his first Boyds shopping trip to high school, back in the ’80s, and now especially appreciates its delivery service to home or office, and the text messages he gets from the store when a brand is going on sale.” He comments: “The family just outthinks other retailers. They’ll deliver to your house, to your office. You park for free. You know what parking costs in the center of Philadelphia? They’re going to outwork and out-service everyone else.”

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Hershey Story: In Chocolate We Trust

The Wall Street Journal: “In the early 20th century, Milton Hershey transformed chocolate from a luxury good to a working-class staple. It made him a fortune, which he used to establish Hershey, Pa.—a model company town 100 miles west of Philadelphia and the self-proclaimed ‘sweetest place on earth.’ He also established an orphanage, the Milton Hershey School, to provide housing and education primarily for children from the area.”

“Hershey and his wife supported the school through a trust, which they established in 1905. By 1918, when he donated his full stake in his chocolate company to the trust, the trust was valued at $60 million. Today it is worth more than $14 billion—ranking it among the largest nonprofit endowments in the nation, on a par with MIT’s—and has maintained a profound commitment to its locale.”

“Peter Kurie’s ‘In Chocolate We Trust: The Hershey Company Town Unwrapped’ is a study of the town and of its residents’ shifting attitudes toward its institutional trinity of trust, company and school … He demonstrates how a philanthropic institution can continue to reflect a founder’s vision while shaping and being shaped by the community that grows up around it, one whose bonds can often be bittersweet.”

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J&J Credo Starts with Price & Value

Business Insider: In 1943, “Robert Wood Johnson, son of the company’s founder … wrote the company’s ‘credo,’ a 309-word mission statement published ahead of Johnson & Johnson’s initial public offering … The credo opens with, ‘We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices’.”

“It then lists responsibilities the company has to suppliers and distributors, for making a fair profit; to employees, for respecting their dignity and paying fairly; to communities, for supporting charities, paying taxes fairly, respecting the environment, and fostering health education; and to stockholders, for making profits and continually growing the business.”

“The credo is in front of every J&J office in the world. And each year, all 140,000 employees answer a 100-question survey that assesses the leadership team’s performance agains the credo’s values … The resulting ‘credo scores’ then influence individual promotions and the allocation of resources to different teams.” Here’s a link to the Johnson & Johnson credo.

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Tattoo, Ink.

The Wall Street Journal: “While job-hopping is rampant, a surprising number of American workers are expressing a bond with their employers in permanent ink. Employees at such companies as tech’s Red Hat Inc. and sportswear icon Nike Inc. have brand logos plastered on their ankles, shoulders and arms … Like pulling an all-nighter at the office, a company tattoo can signify devotion in a way that impresses colleagues and breeds trust with clients.”

“Paul Bosneag, a manager who works with franchise-holders of the Anytime Fitness gym chain, said he opted for the needle in 2010 as job security. At the time, he said, he recalled thinking, ‘What kind of a jerk would fire an employee that has the logo tattooed on him?’ It turns out Chuck Runyon, chief executive of Anytime Fitness, has fired around seven people who got company tattoos. Performance, he said, is more important than loyalty.”

“Red Hat tech worker Thomas Cameron got reimbursed for his $100 tattoo by filing it as an office supply expense. ‘It’s ink, right?’ he said, ‘and you need ink in the office.’ Mr. Cameron plans another trip to the tattoo shop soon. The company recently announced it was changing its logo.”

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1916: When Department Stores Featured Hospitals

The New York Times: “Lord & Taylor, New York’s oldest luxury department store, founded in 1826, boasted ‘one of the most attractive and completely equipped of the small hospitals in New York City,’ according to an article in The Modern Hospital magazine in 1916. The store operated the hospital when it was located on Broadway and East 20th Street before moving to its new building on Fifth Avenue between 38th and 39th Streets in 1914. On Fifth Avenue, the entire 11th floor was devoted to employee health and welfare, from the hospital to various medical and dental clinics, a roof garden, gymnasium, a schoolroom for boys and girls and an employee restaurant.”

“B. Altman, between Fifth and Madison Avenues and 34th and 35th Streets, operated a 12th-floor emergency hospital that by 1916 was handling as many as 18,000 cases a year, according to Hospital Management magazine. A 1914 brochure celebrating the store’s expansion said, ‘The 12th floor of the new addition has been given over in its entirety to the use of the employees.’ Separate dining rooms served men and women, and a physician and two nurses oversaw a large medical suite and surgery. Also, in a sign of those times, there was a men’s smoking room.”

“Welfare services for department store workers began with John Wanamaker … He wanted to keep his workers healthy and happy, and so in an era of rapacious capitalism, child labor and male privilege he introduced half-day-Saturdays off, medical benefits and a retirement system … His competitors soon followed with medical facilities, employee exercise and lunchrooms, educational training, vacation programs and medical clinics. When Macy’s on West 34th Street expanded in 1924, the new 16th floor included an employee dental clinic with chairs for six dentists.”

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Richard Montanez: Flamin’ Hot Innovator

The Washington Post: “Flamin’ Hot Cheetos — the spicy red version of the classic cheese-flavored snack — are something of a cultural phenomenon … They were invented by a janitor, the son of a Mexican immigrant who dropped out of school because he struggled with English … His name is Richard Montañez, and Fox Searchlight Pictures is making a movie about his life … When he was about 12 years old in 1976, Montañez landed a job working as a janitor at a California Frito-Lay plant. One day, as he told Lowrider magazine, he saw a company-wide video of then-CEO Roger Enrico saying, ‘We want every worker in this company to act like an owner. Make a difference. You belong to this company, so make it better’.”

“Montañez took these words to heart … As he tells it, one day an assembly line at the plant where he worked broke down. A batch of Cheetos didn’t receive the orange, cheesy dust that make them so popular. So he took a few home to experiment. He had formed an idea while watching a street vendor in his neighborhood make elote, or grilled Mexican street corn — corn on the cob covered in cheese, butter, lime and chili. ‘What if I took the same concept and applied it to a Cheeto?’ he thought, according to his memoir.”

“So he did. His friends and family loved the result. Thinking back to the video and figuring he had nothing to lose, he decided to call Enrico to pitch the idea. Enrico took his call and told Montañez to present his product in two weeks … Against all odds, it worked. Enrico loved the idea, and a new line of spicy snack food was born — with Flamin’ Hot Cheetos as its flagship. Montañez has since served in various positions throughout the company, including as an executive vice president.”

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Word of the Day: Convenience

Tim Wu: “Convenience is the most underestimated and least understood force in the world today … In the developed nations of the 21st century, convenience — that is, more efficient and easier ways of doing personal tasks — has emerged as perhaps the most powerful force shaping our individual lives and our economies. This is particularly true in America, where, despite all the paeans to freedom and individuality, one sometimes wonders whether convenience is in fact the supreme value.”

“Convenience has the ability to make other options unthinkable. Once you have used a washing machine, laundering clothes by hand seems irrational, even if it might be cheaper. After you have experienced streaming television, waiting to see a show at a prescribed hour seems silly, even a little undignified. To resist convenience — not to own a cellphone, not to use Google — has come to require a special kind of dedication that is often taken for eccentricity, if not fanaticism.”

“For all its influence as a shaper of individual decisions, the greater power of convenience may arise from decisions made in aggregate, where it is doing so much to structure the modern economy. Particularly in tech-related industries, the battle for convenience is the battle for industry dominance … The easier it is to use Amazon, the more powerful Amazon becomes — and thus the easier it becomes to use Amazon. Convenience and monopoly seem to be natural bedfellows.”

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