Goliath Wins Again
In an IP battle over the term “Taco Tuesday,” Taco Bell outlasts two Davids.
Good Morning!
Here are today’s highlights:
A tax rule change is threatening the survival of some businesses.
Olive oil is almost as valuable as the oil that comes from the ground (which happens to be somewhat less expensive of late).
In a sign of the times, an installer of commercial furniture survives by pivoting to de-installing.
The EV-charging land rush is taking off.
INTELLECTUAL PROPERTY
Taco Bell has won the “Taco Tuesday” battle over Taco John’s and Gregory’s Restaurant & Bar: “The fast-food giant, with $2 billion in annual sales, filed a petition in May with the U.S. Patent and Trademark Office seeking to cancel the trademark, which was held by Taco John’s, a smaller chain based in Wyoming, and, in a quirk of legal fate, Gregory’s Restaurant & Bar in Somers Point, N.J. Taco Bell had contended that ‘Taco Tuesday’ is generic enough to be used by any restaurant anywhere. Facing mounting legal bills, Taco John’s gave up its rights in July, and last week, Gregory’s also surrendered, as Taco Bell announced Tuesday.”
“‘Taco Tuesday has brought a lot of pride to our place, and it’s given a lot of good times over the last 46 years,’ owner Gregory Gregory told The Inquirer Tuesday. ‘And now it does allow others in New Jersey the same opportunity. Now that we’ve relinquished the trademark, everybody can build their own traditions.’”
“‘When we set out to free Taco Tuesday, we did it for all who make, sell, eat, and celebrate tacos,’ said Sean Tresvant, Taco Bell’s chief global brand and strategy officer and incoming chief executive officer. ‘Thanks to Gregory’s choice to relinquish the trademark registration, New Jersey businesses and fans can fully enjoy Taco Tuesday, effective immediately.’”
“Taco John’s chief executive, Jim Creel, told the Wall Street Journal that it could have cost as much as $1 million to defend the trademark.” READ MORE
TAXES
This tax rule change is threatening the survival of some businesses, large and small: “A tax code change that impacts how companies account for research and development costs is walloping businesses of all sizes. At best, it is a cash-flow challenge, costing large public companies hundreds of millions or billions of dollars, which finance chiefs have said could dent their R&D spending. At worst, business owners wonder if their companies will make it, with some who run small and medium-size firms slowing growth, laying off workers or dipping into personal savings to cover tax bills due this month. Businesses for decades were allowed to deduct certain R&D expenses immediately to reduce their taxable income, similar to office supplies or rent payments. But under a provision of the 2017 Tax Cuts and Jobs Act that took effect last year, costs associated with R&D activities must now be amortized over many years, five for ones within domestic borders and 15 for those incurred overseas.”
“In the long-run, it evens out, but in the near-term, the change means that companies can deduct less straight away, resulting in higher income and therefore higher tax costs.”
“Smaller business owners share similar concerns, though in many cases they face much bigger hurdles because they can’t easily borrow to cover the tax bills. And they too have been urging lawmakers to change the law.”
“Tristan Louis in January started preparing to file taxes for his software business. Expecting a bill in the five-figures, the Casebook founder was shocked to learn his tax liability for the nearly 50-person firm was over $400,000.”
“The 52-year-old, unsure the business would survive, scrambled to figure out how to come up with the cash to pay the taxes. The reality quickly became clear. Job cuts were needed and by early March, he had to cut staff by around 35 percent. ‘In our case,’ Louis said, ‘it was really a question of life or death.’” READ MORE
PRICING
Here’s why olive oil is so expensive right now: “There is something different lately about the olive oil Michelle Spangler buys, bottles, and infuses with flavors like basil and blood orange for her store in Dallas. It’s not the taste but the cost: Global olive oil prices have soared to record levels, more than doubling over the past year. Ms. Spangler has an agreement with her store’s supplier that protects against such rapid price increases, but she still expects to pay up to 20 percent more. She plans to raise prices 10 to 15 percent in her store, Infused Oils & Vinegars, early next year. ‘It’s not a cheap product,’ Ms. Spangler said, ‘and so that will probably price some of my customers out of that product line in my store.’”
“Like the oil that comes from the ground, olive oil is a globally traded commodity, with events in one part of the world reverberating far away. Drought in Spain, the world’s largest olive oil producer, has devastated recent harvests, and bad weather has hit olive crops in other major growers like Italy, Greece and Portugal.”
“The United States imports almost all of the olive oil it consumes, primarily from Spain and Italy. The result is prices climbing to dizzying heights, well over $9,000 per metric ton, which filters through to pricier bottles of the oil that have become a fixture in many American households.”
“Gray Brooks, who owns Pizzeria Toro in Durham, N.C., said olive oil was crucial to giving the crust of his pizzas the flavor and texture that he described as a ‘hybrid between traditional pizza dough and focaccia.’”
“The soaring cost of olive oil, which Mr. Brooks sources from Italy, forced him to raise prices this month 5 to 10 percent, he said, with about half of the increase due to the cost of olive oil. Most of his pizzas went up $1, with some going up $2, like the lamb meatball and venison sausage pies.” READ MORE
OPPORTUNITIES
Is the EV-charging land rush about to kick off? “The world's largest owner of warehouses is seizing on the biggest transformation of America's roadways since the advent of the automobile. Prologis, the $100 billion owner of industrial and logistical properties, has reached a deal to build a large electric-vehicle charging station that would service commercial trucks in Southern California, a company executive told Insider.”
“The multi-acre property on Denker Avenue in the Los Angeles County city of Torrance is a little more than 10 miles from the ports and is expected to be able to accommodate 120 trucks fueling at a time, making it one of the largest such charging depots dedicated to commercial traffic yet in the country.”
“The project is among the first of potentially tens of thousands of such charging stations across the country that will be necessary to support the growing adoption of commercial electric vehicles.”
“The prospect of such overwhelming demand has attracted the attention of real-estate investors, existing landlords, and a growing number of EV-charging businesses that are eager to work with both.” READ MORE
Since the rise of remote work, this office furniture business has done a 180: “Installnet is a commercial furniture solutions provider, meaning, a service-only company that works with manufacturers and dealers to install their products in commercial settings in partnership with roughly 350 independent installation companies nationwide. A second, ‘very rapidly growing part of the business’ is Ecoserv, which works with Fortune 1000 accounts to decommission their office spaces in a sustainable manner, said Dale Ewing, Installnet’s founder and CEO. Since 2012, Ewing said, Ecoserv has kept 45 million pounds of furniture out of landfills through one of three pathways: selling, recycling, or donating.”
“The business took an initial hit during those lockdown months, but was aided by the Small Business Administration’s Paycheck Protection Program, through which it received $975,000 in April 2020 — all of which has since been forgiven, according to ProPublica's PPP database.”
“‘I thank goodness that was there,’ Ewing said. ‘I know some businesses made out on it. We used it for the purpose it was meant for, keeping our people employed.’ As the pandemic wore on, changing the how and where people work, that boosted the need for Installnet’s Ecoserv program, Ewing said.” READ MORE
THE ECONOMY
Businesses can expect lower heating bills this winter: “Ample stockpiles of natural gas and expectations for a warmer-than-normal winter have forecasters from Wall Street to Washington calling for gas to cost much less than last year, when big utility bills busted household budgets, shocked business owners and helped drive inflation. U.S. households that heat with natural gas, about 60 million of them, should expect their bills this winter to be about $601, on average, according to the Energy Information Administration. That is 21 percent lower than last winter, when the average residential gas expense between Nov. 1 and March 31 amounted to $764.”
“‘Even if this winter is colder than forecast, we still expect households heated by natural gas to pay less for heat this winter,’ said EIA Administrator Joe DeCarolis.”
“Oil-and-gas executives polled last month by the Federal Reserve Bank of Dallas said that, on average, they expect gas prices to be $3.14 at the end of 2023.” READ MORE
INSURANCE
Even in Massachusetts insurance rates are soaring: “Wait? Isn’t this supposed to be a California or a Florida problem? Yes, but now the storm is making landfall here, too. Not only has insurance already gotten pricier and in some cases harder to secure, but the growth in extreme wind and precipitation events in Massachusetts will probably drive insurers to hike rates further or to refuse coverage in some cases, said Jeremy Porter, the head of climate implications research at the First Street Foundation, a Brooklyn-based research and technology nonprofit. Rising insurance costs can be a double whammy, he added, making a property both costlier to insure and also driving down its value. He gave an example from Miami, where a case study found that properties rezoned into a flood zone lost 4 percent of their value.”
“By this point in the tightening insurance market, the causes are well known. Climate change is fueling more intense and damaging storms. Inflation is driving up the price of rebuilding. And the reinsurance firms — the companies that cover the insurers — have raised rates, sometimes by as much as 50 percent, and some of those costs are passed onto the little guy.”
“In Massachusetts, home insurance rates increased by an average of 15 percent from May 2022 to May 2023. That’s on top of an 11 percent average increase the year before, according to an analysis by Policygenius, an online insurance marketplace — or more than 25 percent in a two-year period.” READ MORE
SMALLBIZ TECHNOLOGY
The New York Times investigated what it takes to score a hard-to-get restaurant reservation: “Why does it seem so hard to get a table these days in New York, and so many other places? With the approach of the holiday season, the busiest time for restaurants, we set out to find answers — and ways to improve our chances — by focusing on a single night at a single place: Semma, which has been packed since it opened two years ago in Greenwich Village. Semma let us review a month’s worth of reservation data leading up to a recent Thursday night, Sept. 14. Then we asked the people who scored those tables how they did it. Strategy? Connections? Dumb luck?”
“The reservation game has grown tougher in recent years. At Semma, as at many restaurants, you can no longer wangle a table by calling or emailing. Semma doesn’t even list a phone number. Waiting lists can help, but getting a high-up spot on them doesn’t necessarily pay off.”
“On Resy Notify, everyone on the list is notified at once when a table opens up. And entering the competition requires commitment: putting down that $50 deposit, which Semma imposed to head off the bots, apps and scalpers that corral and sell reservations.”
“Restaurants like Semma often have more tables for four or six, since groups spend more money per diner. So if you can’t find a reservation for two, try expanding your party.”
“Some credit card companies, including Amex, partner with restaurants (though not Semma) to offer priority reservations. But several also offer a concierge service. If yours does, ask if they’ll make the reservation for you, especially if bookings open at an inconvenient hour. Just ask well in advance.” READ MORE
THE 21 HATS PODCAST
And Some Days the Bear Eats You: This week, Liz Picarazzi tells Jay Goltz and Sarah Segal that her trip to a bear sanctuary in Montana to get her trash enclosures certified as bear-resistant did not go precisely as planned. Because of a logistical snafu, she has not yet obtained either the certification or her real goal: a marketing video of the grizzlies attempting to crack open her baited enclosure. Fortunately, things went better for Liz in a more traditional marketing venue, a trade show in Chicago where she promoted her rat-resistant enclosures. Meanwhile, Sarah follows up on how things are going since losing two big clients and having to lay off three employees, and Jay explains his new catch phrase, “Let me not sleep on it.”
“Plus: we discuss the owner of a two-year-old construction business who wonders how long he should keep going if he doesn’t start to make a profit. He also asks why no one ever talks about how hard it is to run a business. While we can’t know for sure what’s happening inside his company, we can be pretty confident that he’s not listening to the right podcast.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren