Citibin Gets Some Good News
After a couple of harsh critiques of a pilot program, Liz Picarazzi's trash bin business received a more favorable report in The New York Times.
Good morning!
Here are today’s highlights:
Would you pay $426 a night for a Motel 6 (with an ocean view)?
Inflation decelerates more than economists expected.
Apparently, Italians don’t think Domino’s delivers.
Limitations on the pass-through tax break are extended another two years.
SOCIAL MEDIA
Cracker Barrel offers a lesson in handling a social media backlash: “One doesn’t normally expect controversy over a corporate Facebook post. Then Cracker Barrel decided to offer vegan sausage. ‘Discover new meat frontiers,’ the company wrote in the post announcing this exciting news. ‘Experience the out of this world flavor of Impossible Sausage Made From Plants next time you Build Your Own Breakfast.’ Some of the company’s customers reacted badly, belligerently proclaiming their love of meat — or even threatening a boycott. ‘Get woke, go broke,’ read one post. ‘You just lost your customer base,’ said another.”
“By Aug. 4, the post had more than 7,000 comments, as all the think pieces it spawned kept informing us. That’s 7,000 comments! On a post about a minor menu addition!”
“If you read the think pieces, you start to notice that they are all quoting from the same handful of (admittedly unhinged) comments. If you go to the post itself, you will be hard-pressed to find those lunatics among the hundreds of vegetarians thanking Cracker Barrel for finally providing them an option ...”
“The folks at Cracker Barrel … ignored the cranks, politely said that they intended to keep serving meat eaters the same delicious blends of meat byproducts and nitrates, while making a new option available to those who want it. And then they did what the rest of us ought to, and got on with their lives.” READ MORE
PRICING
Sixty years ago, the very first Motel 6 location debuted, charging $6 a night. The same location in Santa Barbara is now charging more than $400 a night: “Room rates at other Motel 6s soar during peak season and special events—a location in Scottsdale, Ariz., is asking $699 a night during next year’s Super Bowl. And rates are sky high everywhere this summer as travel surges. But the Motel 6 Santa Barbara Beach regularly commands the highest rates in the chain of 1,400-plus hotels in the U.S. and Canada. And it regularly sells out, thanks to its prime location in a tony, year-round vacation destination. It’s so busy, the motel’s new owner hasn’t been able to spend the night there yet. He bought the place from Motel 6 parent Blackstone Group in June.”
“Is any budget motel worth $400, or even $300, a night? Average daily rates in economy lodging averaged $81.77 January through June, according to the latest data from industry analytics firm STR.”
“Veteran hotelier Sanjay Patel, chief executive of Los Angeles-based family business Sanj Hotels, bought the motel in June for $14 million after having his eye on it ‘for ages.’ The company owns five other Motel 6s in California.”
“He says that the outsize room rates in Santa Barbara are driven by market factors and that they bring higher expectations—expectations he plans to start addressing. First on the list: in-room coffee makers. Then better mattresses.” READ MORE
TAXES
The Inflation Reduction Act extends limits on the pass-through tax break for two more years: “Republicans originally enacted the pass-through limitation in the 2017 tax law known as the Tax Cuts and Jobs Act. Specifically, the law disallowed pass-through owners from using business losses exceeding $250,000 to offset non-business income. That dollar threshold is for single taxpayers; the law set a $500,000 cap for a married couple filing a joint tax return. Those caps are higher in 2022 due to an inflation adjustment: $270,000 and $540,000, respectively.”
“‘The business losses can only offset other business income, not salaries and interest and investment gains,’ Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, said of the measure.”
“The limitation for pass-throughs was initially scheduled to expire after 2025, along with the other provisions of the Republican tax law that affected individual taxpayers.” READ MORE
THE ECONOMY
Inflation decelerated more than expected in July: “The consumer price index increased 8.5 percent from a year earlier, cooling from the 9.1 percent June advance that was the largest in four decades, Labor Department data showed Wednesday. Prices were unchanged from the prior month. A decline in gasoline offset increases in food and shelter costs. So-called core CPI, which strips out the more volatile food and energy components, rose 0.3 percent from June and 5.9 percent from a year ago.”
“Economists in a Bloomberg survey projected a 0.2 percent rise in the overall CPI from a month ago and an 8.7 percent year-over-year increase. Core CPI was forecast to rise 0.5 percent from June and 6.1 percent from a year ago.” READ MORE
Prices for goods bought online declined last month: “Americans shopping online got a break from soaring prices in July. Overall, prices for online goods fell by 2 percent on the month, as electronics, electronics, clothes, and toys became cheaper, according to the Adobe Digital Price Index. It was the first drop in more than two years of rises as consumers cut back on online shopping and businesses discount overstocked inventories.”
“Before the pandemic, online prices mostly moved in the opposite direction as those in brick-and-mortar stores: down. But they spiked in the spring of 2020 as Americans cooped up at home shopped more online and continue to rise. July’s data suggests a return to the pre-covid-19 trend.”
“But not all online goods are cheaper. Grocery prices jumped 1.4 percent month-over-month, and 13.4 percent compared to last year.” READ MORE
Gas prices continue to fall: “Gasoline prices in the United States have fallen for 57 consecutive days since reaching a high of more than $5 a gallon in June. The national average price of gas was $4.01 on Wednesday, according to AAA. That’s higher than it was a year ago but still well below the record of nearly $5.02 in mid-June (not adjusted for inflation). Energy costs feed into broad measures of inflation, so the drop is also good news for policymakers who have made limiting the fuel price increases a priority.”
“The drop reflects a number of factors: Weaker demand because high costs have kept some drivers off the roads; a decline in global oil prices in recent months; and a handful of states suspending taxes on gasoline.” READ MORE
Small business sentiment rose in July: “U.S. small business confidence edged up in July as fuel prices eased and job openings became marginally easier to fill, but inflation worries intensified, a survey showed on Tuesday. The National Federation of Independent Business said its Small Business Optimism Index rose four-tenths of a point last month to 89.9, the first monthly increase since December.”
“Still, the level remains well below the 48-year average of 98. Some 37 percent of owners reported that inflation was their most important problem, the highest level since the fourth quarter of 1979.”
“The NFIB survey showed 49 percent of owners had job openings they could not fill last month, down 1 percentage point from June, and the quality of labor remained in second place behind inflation as a concern, with 21 percent ranking it as their top business problem, down 2 points from June.” READ MORE
LOGISTICS
Supply chain pressures have been easing: “Compared with before the pandemic, ports and warehouses are still congested, and companies are still contending with shipping rates and delivery times that remain much higher than normal. Still, this more smoothly functioning supply chain is likely to provide one source of relief for an economy that is still struggling with rapid inflation.”
“Importers are now paying about $6,632 on the spot market to move a 40-foot container from China to the U.S. West Coast, compared with $18,346 at this time last year (but still significantly more than the $2,900 two years ago), according to data from Freightos Group.”
“‘It’s a massive traffic jam that is now unclogging,’ said Phil Levy, the chief economist at Flexport, a freight forwarder.” READ MORE
FINANCE
Gene Marks highlights a slew of sources of capital for women and people of color: “If you’re a person of color who owns a business, getting the funding you need is harder than for your counterparts who are white. But there are funding opportunities available specifically for you. Here are some you should know about.”
“Amazon’s Black Business Accelerator Program: “The program offers financial support, mentorship, business advice, and promotional support for Black-owned businesses. Eligible sellers will have access to free imaging services, cash grant opportunities, advertising credits, and money toward start-up costs.”
“Amber Grant Foundation: With a simple goal of supporting female entrepreneurs, the Amber Grant Foundation was founded in 1998 and awards a $10,000 grant each month, and an additional $25,000 grant each December, to female entrepreneurs with a compelling story.”
“The Black Founder Start-up Grant program from the SoGal Foundation, a worldwide funding platform for diverse entrepreneurs, provides grants of as much as $10,000 to Black and multiracial women and nonbinary entrepreneurs.” READ MORE
GOING GLOBAL
For some odd reason, Domino’s Pizza has failed to catch on in Italy: “Domino’s will no longer be offering its specialty cheeseburger, Hawaiian and bacon-and-chicken-topped pizzas, after the company running the Italian franchises shuttered all of its locations, according to a Bloomberg News report. The company blamed reduced demand on consumers’ preference for delivery from mom-and-pop shops and for restaurants reopening after pandemic shutdowns.”
“Italian company ePizza s.p.a. became a ‘master franchiser’ for the U.S.-based company in 2015, opening as many as 33 locations, according to a report to investors, which tracked fourth-quarter results for 2021. But sales were down nearly 38 percent from their projections at the end of the year.”
“‘We attribute the issue to i) the significantly increased level of competition in the food delivery market with both organized chains and mom & pop restaurants delivering food to survive and ii) restaurants reopening post pandemics and consumers out and about with revenge spending,’ the report stated.”
“Tweets included: ‘Omg can u imagine anyone other than drunk American tourists ordering dominos in Italy?’” READ MORE
THE 21 HATS PODCAST
This week’s episode focuses on Liz Picarazzi’s first brush with negative publicity. As it happens, she got better news after we taped when The New York Times weighed in with a more positive look at the pilot program Citibin is helping conduct: “The city’s Clean Curbs pilot program involves a deceptively simple proposal for dealing with the bags of trash that New Yorkers often see waiting to be picked up on sidewalks and corners: Put them in a bin. Sanitation officials placed a few sealed, rat-resistant sheds for trash bags in front of businesses in late June and mid-July. There are two sheds near Times Square and two on Montague Street. The containers are from the Brooklyn-based company Citibin, and more are on the way — a pilot program for residential blocks will roll out in the fall, starting in Hell’s Kitchen.”
“Recently, The New York Post reported that one of the bins in Times Square was leaking garbage juice into the street. ‘Tweaks are continuing through the pilot. That’s what a pilot is about,’ said Liz Picarazzi, the founder and chief executive of Citibin. “
“Using the broom and dustpan like tongs, [Djana Hughes] removed a dead rat, the chubby body of which was easily a foot long, from beneath the shed and disposed it in the plastic trash can on wheels she had been pushing. The rat did not get inside the Citibin, but it had died trying.” READ MORE
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