The Problem with Customer Surveys

In this week’s Dashboard episode, Shawn Busse explains why surveys can be misleading and why you might want to try just talking to your customers.

Good Morning!

Here are today’s highlights:            

• Big companies have a simple way of dealing with minimum-wage hikes.

• Here comes the latest trend in influencer marketing: granfluencers.

• A new NLRB rule could have a big impact on franchising—once we figure out what it means.

• Joe Hill was a one-of-a-kind merchant, back before the shopping malls took over.

THE 21 HATS PODCAST: DASHBOARD

It’ll Change Everything: This week, Shawn Busse explains why he’s long been skeptical of big data, especially the data many businesses collect from their customers. What’s the alternative? Shawn suggests doing something radical and having actual conversations with customers, especially your best customers. Shawn also talks about why it seems so many businesses are struggling even as the economy is surging, at least according to the latest GDP figures. Plus: What exactly is wrong with the titans of Silicon Valley?

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

PRICING

Chipotle plans to pass the cost of higher minimum wages on to its customers: “Starting in April 2024, fast food workers employed at quick-serve restaurants that have 60 locations or more in California will be eligible for a minimum wage of $20 per hour, up from the current $15.50. For Chipotle, the jump will be a little less jarring considering it already pays $17 as starting wage in the state. But the effect won’t be insignificant. Around 15 percent of Chipotle’s 3,300 stores are located in California. The minimum wage increase will add between 2.5 percent and 3 percent to the company’s overall labor costs.”

• “While Chipotle hasn’t disclosed the exact level of pricing to combat this cost pressure, it’s sure that it won’t absorb it all. For customers, ‘it’s going to be a mid- to high-single-digit price increase, but we are definitely going to pass this on,’ the CFO said.”

• “Worker pay triggered menu pricing changes in October 2021 as well. Back then, it attributed a 4 percent hike in menu prices to hourly wages for employees rising to $15 an hour. Between then and now, the company has raised prices three more times, including earlier this month, citing inflation and rising ingredient costs.” READ MORE

MARKETING

Granfluencers are a cultural phenomenon and the latest trend in influencer marketing: “One day, [Lynn Davis, a 67-year-old retired engineer,] says, her son Tim Davis, an out-of-work videographer, asked her to help him shoot some short cooking videos. He needed to do some work to keep his production and editing skills sharp, he said. And it would be fun. In 30 days, the mother and son made 30 short videos and posted them on YouTube, each one a showcase of mom’s quirky sense of humor and cooking skills, and son’s video-production expertise. Among other things, Lynja, as Lynn Davis calls herself on the show, might be doing some crazy antics in the kitchen such as cutting a watermelon with an ax, cooking a 50-pound chicken nugget, or dressing up as a turkey while frying one up for Thanksgiving.”

• “Today, ‘Cooking with Lynja’ has nearly 27 million followers across TikTok, Instagram, and YouTube, Linda Davis says. She says that her large fan base has helped her make deals with brands including Chobani, Impossible Foods, and Disney Cruise Line that she adds have pushed her annual income well into six figures.”

• “Seen on TikTok, YouTube, and other social media, granfluencers are seniors who share their expertise on a subject through short, lively videos. Popular subjects include cooking, auto repair, fashion, health, and life coaching. Most are people who rose from obscurity to stardom in a short time thanks to the quirks of social media.”

• “Brands like the multigenerational fan base that granfluencers enjoy, and their high engagement rates. Looking at the top 10 granfluencers in the U.S., 74 percent of their followers are 18- to 34-year-olds, according to Activate HQ, an influencer marketing agency based in New York City.” READ MORE

FRANCHISING

A new NLRB rule could have a big impact on franchising: “The so-called joint employer standard means a company that is able to exercise control over another one, even indirectly, may be required to collectively bargain with workers at the controlled company. For example, a franchise of a restaurant chain and the franchisor could be considered ‘joint employers’ for the purposes of collective bargaining and liability. The NLRB said in an Oct. 26 news release issuing the final rule that a company may be considered a joint employer of a group of employees if each entity has an employment relationship with the workers and the two companies share or co-determine one or more of the employees' ‘essential terms and conditions of employment.’”

• “Paul Woody, franchise attorney at law firm Greensfelder, said a lot of companies will need to review their existing policies — even though it's not certain yet what potential violations will be. ‘What the NLRB has done is taken the factors that would be considered in determining whether a company is a joint employer and has broadened that circle to include more factors,’ Woody said. ‘Then it smudged the edges so that no one is really clear on where the circle begins and where the circle ends.’”

• “Ultimately, the new rule stems from an effort to ensure large corporations are drawn into unionization and workplace issues at much smaller companies, Woody said. It is easier for those organizing workplaces or pushing for higher wages to bargain with a larger company rather than the often-limited finances of a franchise owner.”

• “‘We are really seeing a campaign to force these mega brands that use the franchise model to do their part to help improve worker standards,’ Woody said, but stressed many of these companies are much smaller and have fewer resources than the big brands.” READ MORE

THE MIDDLE EAST

SodaStream built a factory where Israelis and Palestinians have worked together: “In a factory in Israel not far from the Gaza border, Jews and Arabs have for years worked side by side making SodaStream seltzer machines for homes around the world. Together, the colleagues feasted at Ramadan and lighted candles for Hanukkah. They visited one another’s homes and attended the weddings and funerals of their co-workers’ family members. Throughout past conflicts in the region, they have called their workplace an ‘island of peace.’ That harmony is now being tested.”

• “The current factory is in the Negev Desert in southern Israel. The Gaza border is about 20 miles away. Before the Hamas terrorist attacks on Oct. 7, the SodaStream facility had about 1,500 employees, roughly a third of them Bedouin. More than 100 were Palestinians bused in every day from the West Bank.”

• “The factory is now operating with about two-thirds of its usual staff, the company said. At least one SodaStream employee has been killed, and one has been taken hostage. Other staffers have lost close family members, including a Bedouin employee whose son was killed when a rocket struck their home in southern Israel.”

• “‘I hope that we can come back together. If we do not, that will be a very big mistake,’ said Nabil Bsharat, a recycling manager at the factory who is Palestinian and hasn’t been able to go to work from his home in the West Bank since Hamas attacked Israel in early October.” READ MORE

BUSINESS MODELS

Even David Chang is struggling to find a restaurant model that works: “The biggest and bravest thing [Momofuku] Ko did was to go head-to-head with the most expensive and highly regarded places in the city, the Le Bernardins and Daniels and Jean-Georges, without benefit of a reservationist, or a maître d’hôtel, or a deep wine list, or a printed menu, or chairs with lumbar support, or coffee, or tea. Ko would stand or fall on the strength of its cooking alone. Behind this was Mr. Chang’s hunch that the paraphernalia of fine dining — not just white tablecloths but maybe even tables themselves — had become clunky and dated.”

• “It was food’s punk-rock moment. At least, that’s how it felt in the spring of 2008. It didn’t seem crazy to believe that high-performing restaurants could change, too, by dropping all the folderol that drove up prices and made people uncomfortable.”

• “In 2014, [Momofuku Ko] moved to much more spacious and luxurious quarters off East First Street. The seats had backs, there was more than one restroom, and among the servers gliding along the floor was a sommelier who could help you navigate a wine list that ran to more than 250 pages. In other words, Ko ended up with almost every one of the fine-dining trappings it had rejected, up to and including high prices.”

• “David Chang is ‘pausing operations’ at Momofuku Ko next week, according to a post on his company’s Instagram account. It goes on: ‘we won’t call this a goodbye, but ko will no longer operate in the way it has.’” READ MORE

RETAIL

Here’s how Boston is trying to enliven its streets: “More block parties, fewer brass bands. More local retail, fewer national chains. More pop-ups, fewer empty storefronts. Those are just some of the expectations of Level Up Downtown, a three-year, $2 million economic development initiative from the Downtown Boston Business Improvement District. The project aims to recalibrate downtown, and the BID’s work within it, to a post-pandemic reality.”

• “The effort comes as downtown Boston is still adjusting to a hybrid world, and the struggles that come along with it. There are bright spots: Of the roughly 500 storefronts within the BID’s boundaries, about 75 are vacant — down from 95 last year. And while foot traffic hasn’t returned to 2019 levels, it’s been increasing for 30 straight months.”

• “Level Up’s $2 million in funding will support multiple initiatives, along with a full-time staffer to manage the program. One initiative includes identifying new retailers, particularly BIPOC-owned small businesses and nonprofits, and connecting them with landlords and property owners with vacant downtown storefronts. Another includes creating pop-up business incubation spaces and other gathering spots.” READ MORE

SELLING THE BUSINESS

A Bay Area nude resort is up for sale: “Lupin Lodge, founded during the Great Depression, has for decades been a magnet for social nudity enthusiasts and naturists. But now the lodge and its 112 bucolic acres perched just south of the Lexington Reservoir off Highway 17 are up for sale. What will ultimately become of the property — and the beloved haven for nudists — remains unclear. ‘It’s a spectacular place, a beautiful property and a great community,’ said Lori Kay Stout, the current owner and operator of Lupin Lodge.”

• “Founded in 1935 on the site of an old winery that was forced to close due to Prohibition, the naturist resort has survived economic collapse, a world war, creditors, recessions, wildfires and other adversity. The Stout family has owned the property and the resort — the oldest business in the Los Gatos Chamber of Commerce — since 1977. Stout declined to disclose the asking price.”

• “While the coronavirus sent people fleeing from restaurants and offices, the pandemic spurred increased visits and sales for the nude resort. ‘There’s been a big uptick in business because of the pandemic,’ Stout said. ‘People want to go hiking and go outside. People have a great chance to connect here after being so isolated.’”

• “Over the decades, the resort also hosted national naturist and nudist conferences, Stout said. During the 1940s and 1950s, with assistance from the San Jose Chamber of Commerce, the resort hosted nudist conventions with more than 1,000 attendees.” READ MORE

STARTUPS

Electric Vehicle deals are revving up Detroit’s startup ecosystem: “Long a symbol of industrial decline, the Motor City ranked second, ahead of destinations such as Berlin and Miami, in a PitchBook Data report on venture-capital ecosystems worldwide that have shown the most growth, scoring high on metrics like the amount of venture-capital dollars that startups raised, according to the analytics firm. Electric-vehicle-related tech has been one recent driver of Detroit’s growth in the venture sector, investors said. As automakers based in the Detroit area pour billions into developing electric-vehicle technology and government subsidies aim to boost consumer demand for gasoline-free models, commitments at the startup and venture level have grown.”

• “Detroit has been helped by the state of Michigan committing capital to back the development of electric-vehicle-related tech, and the federal Infrastructure Investment and Jobs Act and the Inflation Reduction Act providing support for the technology.”

• “This investment has trickled down to the startup level and helped boost the ecosystem, investors said. Startups based in the Detroit area raised $429 million in the first three quarters this year, a 12 percent increase from the same period last year and a 40 percent rise from what the area raised during the easy-money days of 2021, according to PitchBook.” READ MORE

OBITUARY

Joe Hill, once a swashbuckling Seaport merchant: “Until he had to abandon the store in 2000 because of rent increases, Mr. Hill was one of the last links to the South Street neighborhood’s seafaring past, holding out against a tide of high-end retail outlets that were transforming a salty corner of Manhattan into an increasingly homogenized commercial landscape and tourist mecca. It was all an act, of course — his pirate’s hat was as fake as the parrot on his shoulder, the patch over his eye and the ‘aarhs’ and ‘mateys’ with which he greeted customers at his nautical junkyard of a store, Captain Hook’s. But his eccentricity was genuine, as was his devotion to the seafaring bric-a-brac he accumulated — pilot wheels, weirdly shaped coral, diving helmets, a dried barracuda, shell coasters, driftwood — all of which gave him a connection to a place that was rich in history and whose bland, commercialized present he steadfastly rejected.”

• “A natural salesman, pushing $2 postcards on customers along with the fancier stuff, he was also persistent about collecting tips. He worked like a demon, and he did well enough to afford a house for a time on Long Island’s North Shore in affluent Sands Point, though he was a ‘misfit’ there, his son Matthew said, surrounded by wealthy corporate founders.”

• “‘The Seaport is losing its character — me,’ Mr. Hill modestly told The New York Times in 1998, when, finally, a tenfold increase in rent began to force him out. ‘It’s a shame,’ he said. ‘People come here for a seaport and what do they get? A shopping mall, just like they have at home.’”

• “‘See, what I did,’ he told a reporter in 1983, ‘was turn a hobby into a business.’” 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.”

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

Thanks for reading, everyone. — Loren