And Don’t Come Back!
This family-owned restaurant isn’t afraid to tell nasty online reviewers what it really thinks.
Good Morning!
Here are today’s highlights:
Etsy is pushing its retailers to discount early this holiday season.
As prices start to drop, the housing industry is showing signs of cracking.
Drive-throughs are eating the fast-food industry.
Chip and Joanna Gaines’ latest fixer upper is a hotel.
REPUTATION MANAGEMENT
Tired of bad online reviews, this restaurant decided to fight back: “Dragon Lee, a family-owned Chinese restaurant in upstate New York, is a beloved place. On Google, it has a 4.3-star average, with high praise for its crab rangoon. Every once in a while, though, someone leaves unhappy. The food ‘was absolutely terrible,’ a Google reviewer recently wrote in a one-star rating—so bad that he later called to ask if there had been a sudden change of chefs. (There had not.) The reviewer, who didn’t respond to an interview request, wrote that he threw most of his meal in the garbage. ‘I will never go back,’ he wrote. ‘Disgusting!’”
“Dragon Lee could have ignored the response, or apologized profusely. It did neither. ‘Learn to spell and use grammar,’ the restaurant replied—calling out his misspelled ‘General Soe’s chicken.’”
“This was not a one-off diatribe, a rogue manager on a bad day. Dragon Lee does this all the time. Perhaps you are a one-star reviewer who saw an outdated menu with lower prices? That ‘just shows how ignorant you actually are,’ the restaurant responded—and it doesn’t care if you come back: ‘It’s one less dunce we have to deal with.’”
“More measured critiques tend to receive apologies, even gratitude. ‘Sorry about the Beef and Broccoli being a bit bland,’ the restaurant replied to one customer’s three-star rating, ‘we are using a new soy sauce base (low sodium and gluten free) and adjusting for the difference … Thank you for your helpful review.’”
“Dragon Lee has been in business for more than 30 years and is the only Chinese restaurant in Warrensburg: It doesn’t need unfettered praise from everyone on the internet. Most restaurants, facing thin margins and stiff competition, aren’t so lucky.” READ MORE
PRICING
Etsy is pushing sellers to offer discounts earlier this holiday season: “For the holidays, Etsy is promoting a five-week cyber sale that started on October 23 and will continue all the way through November 29. Etsy is encouraging sellers to opt into the sale by offering 25 percent off or more at some point during the five-week long campaign; in exchange, they will be featured in a personalized deals hub. According to Etsy, the company is ‘doubling down on deals, earlier than ever’ this year. This began in September when, for the first time, Etsy offered shoppers $5 off orders for 48 hours, which the company funded. While some sellers say the ability to participate in sales helps bring in more customers, others see it as a tactic that generates sales at the expense of eating into their margins.”
“Portland-based painter Dusty Ray said that testing the 25 percent off promo brought a few customers to his Etsy shop, but the figures weren’t much different compared to the typical sales he brings in through social posts. Instead, Ray will be running his annual winter sale of 15 percent off in the coming weeks. ‘That should boost my sales as it usually does,’ he said, which is helped by increased holiday shopping traffic.”
“‘Overall I think their promo is just another gimmick pulled because of sellers’ bad reaction to the fee hikes,’ he said. The transaction fee increases, which Etsy implemented in 2022, meant sellers pay 6.5 percent on each sale compared to the previous 5 percent.”
“Another seller, who asked to remain anonymous, said that the Etsy-organized sale ‘doesn’t affect my stores really.’ This seller has built out Shopify storefronts to direct shoppers to — as those pages have higher conversion rates and can directly collect customer data. The Etsy storefronts are used to generate traffic and acquire new customers.” READ MORE
THE ECONOMY
Is the housing market starting to crack? “The challenges of soaring mortgage rates and home prices aren’t just impacting buyers—they’re plaguing sellers, too. Even with limited existing home inventory, a record number of them dropped the prices on their listings in October, according to a new Redfin report. Nearly 7 percent of for-sale homes in the U.S. posted a price drop during the four weeks ending Oct. 29, which is the highest portion since Redfin started tracking this data in 2012 and far surpasses the 3.6 percent of homes that lower their price in an average month. This 11-year record comes as mortgage rates have steadied between 7.5 percent and 8 percent this past month, the highest they’ve been in two decades.”
“Almost a quarter of new buyers are paying at least $3,000 per month for their mortgages, according to Black Knight; the average American earns just $4,600 per month, making that large of a payment unaffordable for most. That’s led to a stunning 15 percent year-over-year drop in existing-home sales activity in September—a ‘deep freeze’ that Zillow warned of back in May.”
“‘Sellers need to cut prices to counteract higher payments, and keep buyers interested in their property in a market with fewer buyers,’ Matthew Walsh, Moody’s Analytics’ housing economist, tells Fortune.”
“Moody’s Analytics predicts home prices will drop about 4.5 percent over the next two years, Walsh says, despite low inventory.” READ MORE
HEALTH CARE
Amazon will offer lower cost primary care to Prime members: “The tech giant on Wednesday revealed plans to offer its millions of Amazon Prime subscribers a low-cost annual membership to One Medical, the primary-care business Amazon purchased for $3.9 billion earlier this year. Amazon says Prime subscribers can now become One Medical members for $9 a month, or $99 a year. The typical cost to become a One Medical member is $199 annually. ‘What we’re doing is applying our skill sets, our fundamentals, in a different industry,’ said Neil Lindsay, the company’s senior vice president of health services. He added that the company is trying to create different paths for customers to reach primary care.”
“The move is the company’s latest effort to disrupt the healthcare industry, including in primary care, pharmacy, and even medical drone deliveries after unsuccessful attempts in recent years to crack the market. Amazon executives including Chief Executive Andy Jassy have said healthcare is one of several new business areas that could become a pillar of the company.”
“While some employers currently pay the $199 One Medical annual membership cost for their workers, it is unclear how many Prime members will see the new lower fee as enticing.” READ MORE
SMALLBIZ TECH
The pandemic drove diners to drive-throughs, and there’s no turning back: “Drive-through traffic rose 30 percent from 2019 to 2022, according to a report from the food service research firm Technomic. Meanwhile, the number of people eating inside fast-food restaurants in the first half of 2023 fell by 47 percent from the same period in 2019. Drive-throughs now account for two-thirds of all fast-food purchases, according to a September report by Revenue Management Solutions. As momentum builds, the $113 billion fast-food industry is leaning in. Popeyes executives are cutting the size of dining rooms in half. Taco Bell is experimenting with eliminating them altogether in favor of more car lanes. Chick-fil-A plans to open a two-story, four-lane drive-through in Atlanta next year that can handle 75 cars at a time and delivers food from the kitchen on a conveyor belt.”
“Why the new wave of drive-through love? Because the experience has become faster and smoother, industry executives say. The pandemic turbocharged upgrades that were already underway, including better mobile ordering, streamlined kitchens and smarter traffic management.”
“‘People don’t like to leave their pets at home,’ said Diana Kelter, associate director of consumer trends for Mintel, a global market-intelligence agency. ‘And you can’t bring your dog into Starbucks.’ But the most striking explanation may be a societal sea change: People emerged from the pandemic with less tolerance for interacting with strangers.”
“Eric Decker, the YouTube star who goes by the name Airrack, recently visited drive-throughs for 100 different restaurant brands. His quest took him and some buddies three days. The resulting 23-minute video has nearly 10 million views.” READ MORE
DEVELOPMENT
Chip and Joanna Gaines have added a boutique hotel to their Waco portfolio: “For dedicated viewers of ‘Fixer Upper’ and the Magnolia Network, Waco is their El Dorado, a design-centric destination where copper and ironwork are considered precious metals. The contractor-designer duo renovated about 100 Waco homes for their hit show, which debuted in 2013 and ran for five seasons. Over the years, they have ventured beyond residences, transforming a pair of abandoned cottonseed mills into the Magnolia Market at the Silos, a retail hub with a coffee shop and bakery, and the former Elite Cafe into Magnolia Table, a breakfast and lunch joint with a gift shop. On Wednesday night, Magnolia Network will air the first episode of the six-part series, ‘Fixer Upper: The Hotel,’ which documents the rise of Hotel 1928. The show will also be available to stream on Max and Discovery Plus.”
“‘We want to bring this building back to its former glory. [It’s] the largest, most complicated . . . project we’ve ever done in our whole career — three floors, 53,000 square feet, 33 guest rooms, two restaurants, a library, a rooftop terrace,’ Chip says in the show’s trailer.”
“The structure was originally the Grand Karem Shrine Building, an ornate meeting place for Freemason affiliates that was built 95 years ago. Before the Gaineses purchased it in 2018, it sat mostly vacant. On the hotel’s sold-out opening weekend, it bristled with life.”
“Visitors are encouraged to drop by even if they aren’t staying the night. Rates start at $375 a night, plus taxes; there is still availability through the end of the year and into 2024.” READ MORE
THE 21 HATS PODCAST
The I-Hate-Marketing Approach to Marketing: This week, Shawn Busse tells Jay Goltz and Mel Gravely why he doesn’t want his firm, Kinesis, to be known as a marketing agency. Part of it is his sense that people just don’t trust marketers. But Shawn also believes that what Kinesis offers its clients is much more than just marketing. Hearing that prompts Mel to take us through his recent decision to spend a lot of money rebranding his construction business, which he says created alignment throughout the business and would have been worth twice what he paid. (Don’t tell his marketing consultant!)
Plus: Mel explains how he manages to generate new business without employing salespeople. Jay asks if it’s still possible in this tight labor market to enforce attendance policies. And, for the first time in the almost four-year history of this podcast, Jay goes extremely quiet for an extended period. What exactly was that about?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren