Should We Tell the Employees?
In our latest podcast episode, the owners talk about the challenges of buying and selling businesses.
Good morning!
Here are today’s highlights:
This is how Jeni’s Splendid Ice Cream came back from disaster.
The Carbone’s v. Carbone food fight has ended in a surprising way.
It really seemed like business travel was coming back.
Gene Marks says forcing your customers to tip is a mistake.
THE 21 HATS PODCAST
This week, in episode 134, Shawn Busse, Jay Goltz, and Laura Zander talk about the buying and selling of businesses: Laura thinks her recent purchase of a small distribution business could change the trajectory of her whole company, helping her finesse the challenge of selling wholesale products to retail competitors. Jay, meanwhile, has been trying to help an aging business owner sell the kind of business that too often just fades away. Underlying both discussions is an intriguing question: While it’s common practice for owners trying to sell a business to keep the potential sale a secret, is that really the best approach? Or is it actually a betrayal? Plus: We answer a listener's question about finding the right balance between being a kind boss and being a pushover. And we play a quick game of Who Said It: Elon Musk or Mr. Burns?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
CRISIS MANAGEMENT
The founder of Jeni’s Splendid Ice Creams, Jeni Britton Bauer, talks about the 2015 bout with listeria that almost took down her business: “It did take us down, and then we got back up. It ended up being a hairline fracture in the floor. We have multiple third parties inspecting our kitchen just to make sure that we’re doing everything right. We’re not microbiologists; we’re ice cream makers. Well, after this event, we decided that if this ever happens again, we will not get a second chance. We became really strict about all of this. We learned that you never bring fresh strawberries from a farm into your kitchen where you’re making ice creams. You have to have them processed somewhere else.”
“You’ve got to survive your recall, which was 265 tons of ice cream in March when we were going into summer. As a company, we couldn’t open stores. We have employees we didn’t want to have to lay off.”
“Then we had to restructure all of our ice cream so that we could get help, which was awesome. I hadn’t considered it until all the ice cream companies started calling me and they’re like: ‘Let us help you. Let us make your ice cream for you.’ It was amazing.”
“Then there was the whole coming back from that as a company and as a brand. I will say, being further out, when I look back, I think of it as a time when we were kind of clarified by fire and we learned about ourselves. I learned about myself as a human being, but also as a company in a way that we never would if we hadn’t had to burn it down that far down to the ground.” READ MORE
INTELLECTUAL PROPERTY
The Carbone’s v. Carbone food fight has ended: “Julian Barsotti, the owner of Dallas restaurant Carbone’s Fine Food and Wine, launched a trademark lawsuit in June 2022, three months after the similarly named Italian joint Carbone opened in Dallas and created confusion for Barsotti’s business. Now Barsotti has agreed to close his restaurant on Oak Lawn Avenue on Jan. 1, 2023, with plans to reopen under a new name — not one that sounds anything like Carbone’s Fine Food and Wine. Barsotti said he planned to renovate the 10-year-old restaurant Carbone’s anyhow. He’d like to close for 90 days.”
“Neither party would disclose the terms of the deal, but Barsotti’s attorney Matthew Yarbrough clarified that ‘New York Carbone is assisting Julian in opening his new, elevated family Italian concept.’ Barsotti can keep and display his family memorabilia, photos and Carbone’s logos inside the new restaurant.”
“In another unexpected outcome, Barsotti and Jeff Zalaznick, the co-founder of Carbone parent company Major Food Group, say they have become friends. During a mediation session in August 2022, Barsotti and Zalaznick agreed the lawsuit could be settled instead of going to trial.”
“Afterward, the two ate Tex-Mex and drank tequila at Barsotti’s Dallas restaurant Odelay. They tossed around plans to travel to Aspen and Guadalajara. They swapped industry stories. Barsotti said it was easy to work out a deal once they sat in the same room.” READ MORE
GIVING BACK
An innovative pizza joint is trying to encourage what it calls reverse gentrification: “North Philadelphia youth will soon have an empowering space to learn about possibilities in the tech industry, thanks to the revitalization efforts of a local pizzeria. The Down North Treehouse is a nonprofit working to provide free educational experiences to underprivileged Philadelphia youth in a soon-to-be refurbished library in Strawberry Mansion. The project is an extension of Down North Pizza, known for its Detroit-style pies and social justice mission. ‘This is an idea I had when I opened up Down North; step one was getting a footprint with the restaurant,’ owner Muhammad Abdul-Hadi said Tuesday. ‘And long-term goals were always to revitalize the community with the individuals that are currently residing in the neighborhood. Kind of like a 'reverse gentrification' was always the plan.’”
“Down North Pizza, located at 2804 Lehigh Ave., is renowned for its food, featured in prominent publications and in an episode of ‘Your Attention Please’ on Hulu. But the restaurant is not only focused on serving pizza.”
“The pizzeria exclusively employs formerly incarcerated individuals, helping to erase employment barriers by providing culinary career opportunities and fair wages. Down North also provides employees with resources like legal representation, transportation and even housing — the two apartments above the pizzeria are available to workers.” READ MORE
MARKETING
Amazon is becoming a much worse customer experience—according to an analysis in the Jeff Bezos-owned Washington Post: “Back in the 2000s, when we started learning to buy all kinds of things online, Amazon was investing heavily in a new kind of shopping science: personalization and recommendations. Amazon’s mission was to marry up everything it knew about its products with everything it knew about you to help you make the best choices. ‘The store radically changes based on customer interests, showing programming titles to a software engineer and baby toys to a new mother,’ Amazon researchers wrote in an academic paper published in 2003. This is probably how most of us imagine Amazon still works.”
“But today advertisers are driving the experience. Amazon’s focus has shifted from ‘trying to find ways to delight consumers with great recommendations, personalization and discovery to building better advertising technology,’ says industry analyst Juozas Kaziukenas of research firm Marketplace Pulse, who has written about how everything on Amazon is becoming an ad.”
“Amazon also now uses search results to push its own in-house products. An investigation from The Markup exposed how Amazon results list its own brand and exclusive products ahead of others with higher ratings.” READ MORE
HUMAN RESOURCES
Remote jobs are increasingly in demand but harder to find: “Nearly three years into a pandemic that reshaped workplace norms and put the balance of power squarely in the hands of employees, the tides are shifting again. The job market — although still hot — is slowing, and many Americans who had been working from home are being called back into the office. That has led to a tug-of-war between what employees want and what employers are willing to give them. Wage increases are plateauing, signing bonuses are cooling off, and fewer companies are allowing people to work from home than they did even a few months ago. Demand for remote jobs remains near all-time highs, even as companies roll back telework positions.”
“Fifty percent of job applications submitted on LinkedIn are for work-from-home positions, which make up just 15 percent of listings, according to a recent report from the jobs site.”
“‘I do think it’s hard to put the genie back in the bottle on this one,’ she said. “Once you hire a remote employee who lives elsewhere — as many companies have — it’s very hard to insist that people who live near the office come in all the time.”
“‘It’s the ‘great remote-work mismatch,’ said Rand Ghayad, head of economics and global labor markets at LinkedIn, who wrote the recent report. ‘In the past, labor mismatches have been about skills. Now we’re seeing a different kind of mismatch, where workers are looking for jobs that offer certain attributes — like the ability to work remotely — that employers aren’t willing to offer.’” READ MORE
BUSINESS TRAVEL
It really looked like business travel was recovering: “Business travel came back this year more strongly than most industry analysts had predicted in the depths of the pandemic, with domestic travel rebounding by this fall to about two-thirds of the 2019 level. But in recent weeks, it appears to have hit a new hurdle — companies tightening their spending in a slowing economy. Henry Harteveldt, a travel industry analyst for Atmosphere Research, said that corporate travel managers have told him in the last few weeks that companies have started to ban non-essential business travel and increase the number of executives needed to approve employee trips.”
“Kellie Kessler, a pharmaceutical clinical researcher in Raleigh, N.C., said the travel disruptions she faced this year were too much. She changed jobs recently to take one that requires her to travel on business 10 percent of the time, compared with 80 percent in her previous position.”
“‘The reason I took a non-travel position is that I can count on one hand the number of on-time flights I had this year,’ she said.” READ MORE
RESTAURANTS
Gene Marks says forced tipping is a mistake: “A restaurant in Hyde Park, Ohio, called Dutch’s has this on its bills: ‘We offer living wages to our employees partially funded by a 20-percent automatic gratuity.’ The reason behind this? Profitability, of course. ‘Restaurants are behind the eight-ball, and we are taking a lot of the costs on and are trying to figure out kind of again reactively,’ the owner of Dutch’s told a local news station. I get it. It’s not easy to run a restaurant nowadays, what with lingering supply-chain issues, rising costs, labor shortages and a slowing economy. But adding an automatic gratuity to a customer’s bill is not a great way to address these issues.”
“For starters, it’s deceptive. Getting an unexpected charge (and yes, it’s unexpected, because regardless of how many signs you hang on the wall notifying your customers, people aren’t used to this practice and don’t pay attention) is off-putting.”
“Not only are customers in the U.S. expecting to tip, many of us feel like it’s our opportunity to show our gratitude, our largesse, or even our disappointment in the services we received. It gives us a perceived control over the buying process.”
“Finally, there are other ways to make sure your employees are properly compensated. Make sure your point-of-sale system prompts for tips. I get this all the time, even at retail stores where I don’t normally tip. Next, raise prices.” READ MORE
MANUFACTURING
China is giving the world another reason to manufacture somewhere else: “The swelling protests against severe pandemic restrictions in China — the world’s second-largest economy — are injecting a new element of uncertainty and instability into the global economy when nations are already struggling to manage the fallout from a war in Ukraine, an energy crisis and painful inflation. For years, China has served as the world’s factory and a vital engine of global growth, and turmoil there cannot help but ripple elsewhere. Analysts warn that more unrest could further slow the production and distribution of integrated circuits, machine parts, household appliances and more. It may also encourage companies in the United States and Europe to disengage from China and more quickly diversify their supply chains.”
“The protests highlight the political risks associated with investing in China, but analysts say the recent wave doesn’t reveal anything that investors didn’t already know.”
“China now surpasses all countries as the biggest importer of petroleum. It manufactured nearly 30 percent of the world’s goods in 2021. “There is simply no alternative to what China offers in terms of scale and capacities,” [Kerry Brown, an associate fellow in the Asia-Pacific program at Chatham House, an international affairs institute in London] said.” READ MORE
HEALTH INSURANCE
Jim Kalb offers an intriguing comment to our ongoing conversation about health insurance: “So about 20 years ago, we adopted a plan where the company would offer multiple levels of health insurance—low-deductible, high-deductible (HSA compliant), HMO, etc.—and provide our employees with a monthly health insurance stipend where they can choose and pay for their own plan. Since that time, the Obamacare exchanges have essentially eliminated the need for the company to offer any healthcare plans since they can purchase their insurance directly from the exchange with the monthly stipend we provide them.”
“The stipend is the same for every employee (top to bottom) and is recalculated each January using a simple formula that anyone can replicate on their own. This plan also eliminates the situation where an employee already has insurance from another source (from a spouse or perhaps military benefits) and is now able to use the healthcare stipend as additional compensation.”
“Most importantly, the monthly health care stipend takes my business out of the health care business and simply allows me to focus on providing higher compensation to attract and retain employees.” READ MORE
Thanks for reading, everyone. — Loren