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The Regulations Can’t Be as Ridiculous as They Sound
Oh, but they are, says the owner of a brewery in New Jersey, where breweries are prohibited from selling nachos.
Good morning and welcome back! Please note, we are not publishing a Dashboard podcast today. It will return next week.
Here are today’s highlights:
The EPA says poor indoor air quality costs companies more than $13 billion a year in lost productivity.
Shawn Busse says telling employees to go get their own health insurance doesn’t make for strong branding.
Mark Zandi still doesn’t see a recession coming, but rising interest rates are having an impact on smaller businesses.
“Panoramic,” “unalive,” and “seggs”: If you’re trying to promote your business on TikTok, you need to learn the lingo.
Brewers in New Jersey are subject to an array of rules that sound preposterous—but were created to protect restaurants and bars: “No sipping before taking a mandatory brewery tour. No ordering nachos because there are no kitchens. You won’t find any coffee or Coke for your non-imbibing buddies, either. Expect no more than two televisions — each not permitted by the state of New Jersey to exceed 65 inches. Be aware the brewery is allowed just 25 ‘special events’ annually, such as trivia contests, fund-raisers, open-mic nights. There are also stipulations about advertising these events, as well as showing championship sports games like the World Series on TV. ‘People say the rules can’t be as ridiculous as they sound,’ said Lori White, co-owner of Zed’s Beer in Marlton. ‘They are.’”
“The New Jersey Division of Alcoholic Beverage Control initiated the regulations based on 2012 state legislation that labeled brewers as manufacturers with beer-tasting rooms — not bars.”
“The idea was to nurture breweries without siphoning business from bars and restaurants that pay $500,000 or more for liquor licenses. Brewer manufacturer licenses run from around $1,250 to $7,500.”
“‘These rules don’t exist in any other state,’ said Jamie Bogner, editorial director of Craft Beer and Brewing magazine in Ft. Collins, Colo. ‘New Jersey makes it impossible for brewers — including limiting how much beer breweries can make.’” READ MORE
Can sensor technology keep office workers healthy? “In 2015, [Yodit Bekele] Stanton founded OpenSensors, which uses small, inexpensive, battery-operated sensors to monitor foot traffic, occupancy levels and air quality in the spaces we inhabit — particularly offices. Seven years later, after the global pandemic has changed the way we treat indoor spaces, the existence of this technology could not be better timed. Monitoring indoor air quality has become a critical tool in keeping people safe from Covid-19 and other airborne illnesses — particularly now that companies are encouraging workers to return to the office. Studies have shown that office occupancy levels affect indoor air quality and viral transmission.”
“OpenSensor’s devices measure carbon dioxide using internet of things, or IoT, technology, in which sensors publish real-time data over a network. Respiration produces CO2, which is exhaled along with aerosols, so the sensors can be used to measure the buildup of exhaled air within a space — and therefore the potential level of pathogens.”
“A recent Harvard study found that office air quality could have significant effects on employees’ cognitive function, including response times and ability to focus. (CO2 buildup is one reason that workers become sleepy late in the day.)”
“The U.S. Environmental Protection Agency estimates that adverse health and productivity effects from poor indoor air quality cost companies between $13 billion and $32 billion annually.” READ MORE
Prompted by a recent Gene Marks column, we asked Morning Report readers about Health Reimbursement Arrangements. Shawn Busse had a mixed response: “First, I get Gene’s motivation to find a better way for health care. It’s a totally broken system and is a massive burden on small businesses. Indeed, for years we went without (or with crappy coverage) because we simply couldn’t afford it. But, as we grew, and wanted to attract and retain the ‘next level’ employee, it became clear that weak benefits were hurting us. Ultimately, we not only increased our spend, but we also added more benefits like short-term disability, life insurance, maternity leave, and more. Adding a 401K was part of our strategic benefits approach, too. It’s a PAIN IN THE BUTT. However, the results do speak for themselves – high levels of qualified applicants for every role, record-level retention, etc, etc.”
“What Gene understates in his advocacy for ICHRA plans is the employer branding aspect of the benefit. Yes, when a business is very small and hiring young/healthy employees, this kind of plan might make sense. But as you grow and need more senior and experienced employees, telling folks ‘Go get your own plan,’ is a weak brand position.”
“The point I’m making is that for companies like Gene’s where there’s no office, and employees are treated more like contractors than a team, ICHRA could be just fine. AND, for small companies just getting going, I can see a real win with this. But for companies like mine – culture-centric and looking to hire top-talent – this is (for now) a non-starter.” READ MORE
Mark Zandi still thinks we may sidestep a recession:
Rising interest rates are forcing smaller businesses to put plans on hold: “David Gill, chief executive of Cold Freight Services, a provider of dry ice and refrigerated courier services in Austell, Ga., has seen the interest rate on his company’s business credit card jump to 20.99 percent from 17.24 percent since April. ‘We use credit cards for everything,’ including fuel, hotels, supplies and other expenses, said Mr. Gill, who has about 40 employees. ‘We are kind of hostage to the rate.’ Forty-six percent of small-business owners said higher interest rates are affecting their business, according to an November survey of roughly 600 small businesses for The Wall Street Journal by Vistage Worldwide, a business coaching and peer advisory firm. Another 25 percent of those surveyed said rising rates hadn’t yet had an effect, but anticipated they would.”
“At Reverence, a fine-dining restaurant in the Harlem neighborhood of New York, higher interest rates have pushed monthly debt service costs $2,000 higher, bringing them to $5,000. ‘For a business like mine, that $2,000 is my paycheck,’ said chef Russell Jackson, who owns the three-year-old restaurant with his wife Lora.”
“Design Supply Doors, a Kansas City, Mo., commercial subcontractor, paid cash when it purchased four small SUVs for its sales team this summer. When interest rates are 3 percent or 4 percent, ‘it’s not that painful,’ said Rebecca Stowe, chief executive of the 38-person company, which supplies and installs frames, doors and hardware in hospitals, hotels and office buildings. ‘When it’s 6 percent or 7 percent on vehicle loans, it doesn’t make sense to sit on the cash.’” READ MORE
Like a lot of downtown shopping districts, Chicago’s Magnificent Mile is looking for creative retailers: “The long list of stores that exited or will soon exit the street includes Macy’s, Banana Republic, Best Buy, and The Gap, all of which sell goods commonly found in average suburban malls, he said. That’s an unworkable strategy on the Magnificent Mile, which needs to attract customers from across the Chicago region. ‘There is no more exclusivity to Michigan Avenue, and that was its draw,’ [Peter Caruso, a broker who represents Michigan Avenue landlords] added. ‘The onus is on retailers to get more creative.’”
“‘We love that our store surprises people,’ said Gabriel Neely-Streit of Colores Mexicanos, a gift shop that opened last year on Black Friday at 605 N. Michigan Ave. ‘Customers ask us all the time, ‘how did we get here?’”
“The Espinosas and Neely-Streit said Colores Mexicanos offers goods hard to find anywhere but Mexico. Their store now supports about 50 Mexican families that hand produce rainbow-colored blouses, huipiles and dresses, as well as jewelry and other embroidered items.”
“Espinosa and Neely-Streit said their rental rate is likely lower than a traditional retailer, so it’s possible they will have to find a new home when the street recovers and others hunger for their 6,000-square-foot space.”
“‘The rent is by far our biggest expense, but we are able to survive,’ Neely-Streit said. ‘We don’t know if the economics will allow our store to remain permanently, but we will make the most of every month.’” READ MORE
Is this the last holiday season for Sears? “Barely three decades ago, Sears was the world’s largest retailer—as well as the original financial supermarket, owning everything from insurer Allstate and Discover card to Coldwell Banker real estate. And this time of year its stores, once a fixture in malls across America, would be crowded with holiday shoppers snapping up clothing, home goods, appliances or toys that their kids had carefully circled on the pages of the retailer’s venerable Christmas Wish Book.”
“This holiday season the company barely exists, with fewer than two dozen full-size stores in operation, compared with the more than 3,500 Sears and Kmart stores operated by Sears Holdings at its height.”
“In most malls—a retail format that prospered for decades in part because of the drawing power of Sears—the chain’s once-hulking emporiums have been subdivided into smaller spaces for other stores, refashioned for non-retail operations such as medical offices or gyms, or simply left vacant.”
“‘A failure to invest in itself is why Sears melted down to what it is today,’ says Steve Azarbad, a managing director at TradeGuard, which provides credit protection to retail vendors. ‘At this point, investors would have been better off if it liquidated 10 years ago.’” READ MORE
The falling price of chicken is good news for restaurant chains: “Prices for chicken breasts in the U.S. have plunged about 70 percent since the first week of June, according to market-research firm Urner Barry. Wings and tenders have gotten cheaper, too, as poultry companies have increased production while demand from restaurants and supermarkets has remained flat, said chicken industry analysts and executives. Chicken’s rapid price drop has brought relief to restaurant chains as crispy chicken sandwiches and wings have been key to restaurants’ efforts to generate buzz and draw diners.”
“Last spring, Noodles & Co. imposed a $1 surcharge on chicken menu items after its poultry costs had risen around three times the typical average, the company said.”
“Now the chain has dropped the surcharge and is negotiating new long-term contracts with vendors, executives said, given the decline in costs and increased competition among chicken suppliers. ‘By waiting, we’re getting more optimal pricing,’ said Noodles Chief Financial Officer Carl Lukach.” READ MORE
To evade TikTok’s moderation rules, users have created a new vocabulary known as algospeak: “Back in 2021, someone describing a pandemic hobby might have believed (perhaps erroneously) that TikTok would mistakenly flag it as part of a crackdown on pandemic misinformation. So the user could have said ‘panoramic’ or a similar-sounding word instead. Likewise, a fear that sexual topics would trigger problems prompted some creators to use ‘leg booty’ for L.G.B.T.Q. and ‘cornucopia’ instead of ‘homophobia.’ Sex became ‘seggs.’ Critics say the need for these evasive neologisms is a sign that TikTok is too aggressive in its moderation. But the platform says a firm hand is needed in a freewheeling online community where plenty of users do try to post harmful videos.”
“The words could be made up, like ‘unalive’ for ‘dead’ or ‘kill.’ Or they could involve novel spellings — le$bian with a dollar sign, for example, which TikTok’s text-to-speech feature pronounces ‘le dollar bean.’”
Will the new vocabulary last? Probably not. “As soon as older people start using online slang popularized by young people on TikTok, the terms ‘become obsolete,’ said Nicole Holliday, an assistant professor of linguistics at Pomona College. ‘Once the parents have it, you have to move on to something else.’” READ MORE
The pandemic isn’t over for life insurance companies: “U.S. life insurers paid a record $100 billion in 2021 in death benefits, fueled by another year of Covid-19 deaths, an industry trade group said. Payouts rose 11 percent in 2021 to $100.19 billion, most likely due to the pandemic, according to the American Council of Life Insurers. The increase was on the heels of a 15 percent year-over-year rise in 2020, when death-benefit payments totaled $90.43 billion. The ACLI compiles data from annual filings by insurers to state insurance departments. Given limitations in the filings, the group can’t break down causes of death, but it is reasonable to attribute the bulk of the increases to the pandemic, said Andrew Melnyk, ACLI vice president of research and chief economist.”
“Most insurers entered the pandemic with strong capital buffers, said Carmi Margalit, who leads the life-insurance sector at S&P Global Ratings, in a recent webinar. Strong sales across various product lines and diversified earnings streams also help, said ratings firm AM Best in a November analysis retaining the industry’s stable outlook.”
“But an unusually big surge in sales of life policies has ebbed this year.” READ MORE
George Lois, advertising entrepreneur and art director: “In his six-decade career, Mr. Lois founded and led many advertising agencies, wrote books on advertising and art direction, devised award-winning campaigns that sold everything from soap to airlines, and was hailed by colleagues and peers as one of the most influential and creative admen of his era. Some said he was the model for Don Draper, the suave, elegant central character of the long-running AMC series ‘Mad Men.’ It was not likely. Mr. Lois, a bald, bulky, arm-waving tsunami who talked a blue streak with a Bronx accent, scoffed at the idea, and in a CNN report in 2012 he insisted that ‘Mad Men,’ with its depiction of compulsive smoking, boozing and womanizing, grossly misrepresented the advertising milieu he knew.”
“Mr. Lois created witty, irreverent campaigns that shattered the ham-handed advertising conventions that had relied on testimonials and romanticized images. In one campaign, a chimpanzee demonstrated the simplicity of a Xerox machine.”
“Mr. Lois was also known for the Esquire covers he designed from 1962 to 1972, acid-rain critiques on society, race, politics, and war, many of them wordless. One showed the boxer Sonny Liston in a Santa Claus hat, suggesting that he was the last person white America wanted to see coming down the chimney on Christmas.”
“Since his heyday, the advertising world that once nurtured individual creativity has vanished, Mr. Lois told the magazine Creative Review in 2012. ‘What happened finally,’ he said, ‘is these terrible conglomerate, no-talent, so-called marketing monoliths started to buy up agencies, and you have five or six or seven agencies running the world, and if you’re part of them you’ll never be a creative agency. It just doesn’t work.”” READ MORE
THE 21 HATS PODCAST
Are You a Good Negotiator? This week, Paul Downs and Sarah Segal talk about what they’ve learned about negotiating. One key factor, of course, is defining what constitutes a successful negotiation. As Paul points out, one definition is squeezing every last penny out of the other side. That is not Paul’s definition, especially when negotiating salary with a new employee. Sarah, meanwhile, discusses the tactics she uses to try to guide potential clients to the price and options she hopes they will accept. Plus: Sarah explains how she picked her new office space, and Paul explains why his experience with a Vistage peer group has been life-changing.
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Thanks for reading, everyone. — Loren