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The Vomit List
In the latest 21 Hats Podcast, the owners talk about what it takes to keep your very best people.
Here are today’s highlights:
Why one NYC restaurant and one airline are doing better than ever.
Intuit’s acquisition of Mailchimp has reignited an old debate about financing startups.
Kroger is ending some benefits for the unvaccinated, California is reinstating a mask mandate, and Philadelphia will require proof of vaccination.
THE 21 HATS PODCAST
The Vomit List: This week, Jay Goltz and William Vanderbloemen talk about what it takes—in the throes of an unprecedented labor shortage—to hold on to your best people, the ones whose departures might send you looking for a trash can. They also discuss whether “hire slow” still works, whether it’s a good idea to rehire a former employee, whether it’s still possible to do a meaningful reference check, how to use 360 reviews and personality tests, and finally, whether Jay and William would be ready to sell their business if someone were to come along and offer them twice what they think it’s worth.
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Against all odds, a NYC restaurant, Dirt Candy, is doing better than ever: “For [Amanda] Cohen and restaurateurs like her, surviving the pandemic meant making once-unimaginable compromises. She was forced to lay off almost all of her staff. She offered delivery (then gave up on it), built the shed (then pretty much gave up on that, too), navigated massive new government aid programs, and raised prices and wages. In the process, she reexamined almost every part of her operation. The experience was brutal, a case study in entrepreneurial adaptation during a crisis. It was also a revelation.”
“The restaurant had previously offered multiple tasting menus; now there was a single five-course option that cost 55 percent more than it did before.”
“The pandemic had also opened Cohen’s eyes to how vulnerable her workers had become. So she began offering a minimum of $25 an hour, an increase of almost 40 percent, along with the option to buy into a company health insurance plan after three months—an unheard-of benefit in the industry.”
“The late-2021 version of Dirt Candy is more profitable than it’s been at any point in its 13-year history, she says, suggesting that the future for restaurants—at least some restaurants—might not be as grim as conventional wisdom would suggest.” READ MORE
For Virgin Atlantic, the pandemic has been an opportunity to stop the losses: “Shai Weiss, who took over as chief executive in early 2019, cut costs and laid off nearly half the staff. He ditched Virgin’s cumbersome fleet of 747s and hit up investors for emergency cash. The perennially money-losing company launched new passenger routes across the Caribbean and Asia, and made cargo a central part of the business. Although the Omicron variant has added some new headwinds, Virgin is ramping up its schedule again. In November, the U.S. reopened its borders to non-citizens from Europe and elsewhere, reviving the airline’s core U.S.-U.K. route. Aircraft that had been parked in Spain are back at Heathrow Airport.”
“Pilots and cabin crew have brushed up on training. New menus include smoked duck and fennel salad and roasted trout.”
“To make up for lost revenue, Virgin started flying from European cities outside the U.K. It added its first cargo flights from Brussels to Los Angeles, shipping pharmaceutical equipment and, later, vaccines.”
“‘Everyone was given the pandemic, this devastating thing on lives and livelihoods,’ Mr. Weiss said. ‘The question is, what did you do in response? And we radically transformed Virgin.’” READ MORE
A couple of Nike designers decided to start an online cremation service, Solace Cremation: “The process, they heard again and again, was antiquated and cold, leaving most people feeling it was all about money. The pair was also surprised to learn that the cremation rate surpasses the burial rate in this country and no one’s building new funeral homes. So they ditched their initial idea and focused on modernizing the experience of saying goodbye to a loved one.”
“The industry is notoriously opaque about pricing. Even in California, where funeral homes must list prices online, a loophole allows many to get out of that basic requirement.”
“The cost of cremation increases significantly when handled by a traditional funeral home—to an average of $2,550 in the U.S.”
“Solace adds no extra fees. Its $895 flat fee includes: picking up the body (of any size), removing a pacemaker, cremating within 48 hours, completing paperwork, and returning a loved one’s ashes in a simple cardboard box.” READ MORE
Intuit’s acquisition of Mailchimp has revived an old debate: Bootstrap or raise capital? “Founded in 2001, Atlanta-based Mailchimp had reached about $800 million in revenue before acquisition and had never sourced any outside funding along the way. The key that sealed this deal was the extensive data and customer reach Mailchimp had collected among small and medium-scale businesses (SMBs). ... I want to share some questions that founders should ask themselves to help them navigate the path that best suits their businesses.”
“Do you want to do it all yourself? For most founders, the biggest concern when it comes to taking outside funds is giving away control. But not every company can afford the price of freedom.”
“Do you have the resources and skills to do it on your own? “Most VCs offer primarily cash on the balance sheet, but oftentimes they also bring in intangible assets.”
“Is the market opportunity compatible with a slower growth model? “From my own experiences and conversations with multiple founders, bootstrapped companies have more time to consider their options as they grow the business.” READ MORE
An economist with Glassdoor says it’s not really a labor shortage: “‘I would say labor shortage is kind of a tricky term because it does imply that there aren't workers available,’ Zhao said when asked whether he thinks the U.S. is facing a labor shortage. ‘And what we do know is that there are a significant number of workers on the sidelines who would be willing to come back to work if the conditions were right.’ The trouble, he said, is that the conditions just aren't right. Employers could turn to the people who are between 25 to 54 years old, the prime age of workers, who have left the labor force. As of November, the labor-force participation level for workers in that range was 1.1 million below the February 2020 level.”
“Some have realized it's not worth staying in a job they don't even enjoy, and others have quit for higher-paying opportunities.”
“In his new workplace trends report for Glassdoor, Zhao concluded that the ongoing pandemic would contribute to another hard year for hiring.” READ MORE
For the first time, data shows where Americans are quitting the most: “Liberty County, a 45-minute drive southwest of Savannah, is Quit Town USA — one of many places across the country where the pandemic slammed the brakes on propulsive job growth and startling numbers of people have quit their jobs this year, including more than 12 million Americans this fall alone. The result, according to business owners and county officials, is a place where people are thinking about work in new, sometimes revelatory, ways — but also feeling the pain of reduced services, pinched bottom lines and a diminished sense of community.”
“Many Liberty County residents left minimum-wage positions at restaurants, hotels and retail outlets to take jobs at the county’s burgeoning warehouses and distribution centers.”
“The upside: as much as double the pay and more flexibility in work hours. The downside: severe strains at the mom-and-pop businesses they quit — and damaged or severed long-standing social bonds.”
“[Justin Frasier] owns Just Kutz, the barber shop where half the cutters were let go when everything got locked down, and most didn’t come back when the business reopened.”
“‘The difficulty is finding people who want to work,’ he said. ‘It’s a new frontier. People have learned that it’s cheaper for them to stay home — working costs them more for child care and for commuting and for health insurance." READ MORE
Kroger is ending some benefits for unvaccinated workers: “The Cincinnati-based grocery chain told employees last week that it will no longer provide two weeks of paid emergency leave for unvaccinated employees who contract Covid-19, unless local jurisdictions require otherwise. Kroger will also add a $50 monthly surcharge to company health plans for unvaccinated managers and other nonunion employees, according to a memo viewed by The Wall Street Journal. Both policies are effective Jan. 1, the memo said.”
“Taking away paid Covid-19 sick leave is risky because many hourly wage workers likely don’t have the savings to stay at home, said Molly Kinder, a fellow at the Brookings Institution’s Metropolitan Policy Program ...” READ MORE
THE COVID ECONOMY
Businesses located near office buildings are continuing to struggle: “Sales at restaurants, bars and other small businesses near office buildings have suffered for nearly two years, causing these operators to scramble to make rent payments and keep their operations alive. Some are already reconciling themselves to a poor start to the new year. ‘January gets pushed back to February. February will get pushed back to March,’ said Rick Passarelli, owner of a Bobby Van’s steakhouse in Midtown Manhattan. ‘It keeps getting pushed back.’”
“While less than half of the office workers have returned in major urban markets, landlords take some solace knowing that the number continues to edge higher.”
“An average of 41 percent of the workforce was back in the 10 major cities monitored by Kastle Systems in the week after Thanksgiving, a record level since the pandemic hit.” READ MORE
With Omicron looming, California has reinstated its state-wide mask mandate: “The move comes as coronavirus case rates in California have risen by almost 50 percent in the last 2½ weeks, and Covid-19 hospitalizations are up by nearly 15 percent. County health officials across the state say they suspect they may be seeing the start of a winter jump in coronavirus cases. The U.S. Centers for Disease Control and Prevention ranks California as having a high level of transmission of the coronavirus, the worst tier in the federal agency’s four-tier scale.”
“A number of California counties — including Los Angeles, Ventura and Sacramento — and most of the San Francisco Bay Area already have their own indoor mask mandates that were implemented in the summer and have no end dates.”
“The statewide indoor mask mandate order will last a month, expiring on Jan. 15.” READ MORE
Philadelphia is going to require vaccinations indoors: “Proof of Covid-19 vaccination will be required to eat indoors, see a movie, attend a wedding, or go to a Sixers or Flyers game in Philadelphia starting in January, officials announced Monday, as coronavirus cases and hospitalizations continue to surge in the city and state. Anyone entering an establishment where food is served indoors will need to show proof of vaccination at the door.”
“The announcement comes as Philadelphia’s rate of new cases of Covid-19 has doubled and hospitalizations have increased 50 percent in the past few weeks — a spike that officials blame on Thanksgiving, cold weather, and indoor gatherings.”
“‘This winter looks like it could be very difficult,’ said Philadelphia Health Commissioner Cheryl Bettigole. ‘We have to do something to slow the spread now before it’s too late.’” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren