'We’re Still Buying'
Despite an inventory glut, a cash crunch, and a weakening economy, Jay Goltz is still buying goods for his home store. “It's kind of like cutting Samson's hair,” Jay tells us in our latest podcast.
Here are today’s highlights:
Is Slutty Vegan a burger chain or a marketing company?
When an employee asked to work remotely, said Mr. Taylor, “a lightbulb went off.”
It’s not getting any easier for business owners to cover health insurance.
Should companies be able to fire employees for being overweight?
THE 21 HATS PODCAST
We’re Still Buying Inventory: This week, Jay Goltz tells William Vanderbloemen that even with an inventory glut, a cash crunch, and a weakening economy, he’s not going to stop buying goods for his home store. “It's kind of like cutting Samson's hair,” Jay tells us. “I don't want to mess with telling the buyer, ‘Stop buying stuff.’ Because that's the business we’re in.” All of which has Jay feeling the pressure, but he’s very glad he’s been maintaining a credit line equivalent to 10 percent of sales. Plus: William explains how hiring can go wrong even at a staffing company and how he managed to raise his prices without actually raising his prices.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Slutty Vegan, the Atlanta-based burger chain, has been valued at $100 million: “The company’s founder and CEO, Pinky Cole, is thirty-five years old, with waist-length pink ombré dreadlocks. She wears a necklace with the word ‘vegan’ and a marijuana leaf encrusted in diamonds. Her entrepreneurial streak dates back to her youth in Baltimore, when she and a high-school friend would buy McChickens for a dollar and sell them to their classmates for two. Cole estimates that three-quarters of Slutty Vegan’s customers are meat-eaters. ‘We like it that way,’ she told me recently. ‘It’s not a vegan concept where we’re this glorified group that’s better than everybody else.’”
“The day Cole was born, her father, Stanley, a Jamaican immigrant, was sentenced to thirty years in prison for his role as the leader of what prosecutors described as a ‘large-scale cocaine distribution ring,’ whose proceeds he laundered through fronts including a Baltimore nightclub called Exodus. ‘He did what he had to do to provide for his family,’ Cole said.”
“In early 2022, the New Voices Fund, co-founded by the entrepreneur Richelieu Dennis, and Enlightened Hospitality Investments, run by the restaurateur Danny Meyer, bought a combined twenty-five-per-cent ownership stake, bringing Slutty Vegan’s valuation to a hundred million dollars.”
“A young Black man walked into the room, wearing tortoiseshell sunglasses and an Atlanta Hawks ball cap. He was a representative from Lululemon, the athleisure brand. Cole had called the meeting to discuss a potential partnership. After some introductions, she launched into a pitch:”
“‘Slutty Vegan is not just a restaurant,’ she said, and mentioned a recent team-up with the footwear designer Steve Madden to create a limited-edition vegan-leather sneaker. ‘Sold out in forty-eight hours,’ she said, leaning toward the rep. ‘We did a partnership with Shake Shack: sold out in an hour. People look at us as a lifestyle brand.’” READ MORE
It turns out there’s a form of remote work that employers are eager to try: “The idea came to Johnny Taylor Jr. early last year, after one of his employees made a case that her technology position could be done anywhere. She wanted to leave Virginia, where she held a job at the Society for Human Resource Management, a professional association based in Alexandria. She asked to work remotely in North Carolina. ‘Then a lightbulb went off,’ said Mr. Taylor, the association’s chief executive. Instead of having the employee work in another state, he outsourced her job to India, where his organization is saving around 40 percent in labor costs, he said. Welcome to the next wave of remote work.”
“Now companies are responding to lingering labor shortages and rising wages by sending jobs overseas, according to labor consultants. In August, 7.3 percent of U.S. senior managers surveyed by the Federal Reserve Bank of Atlanta said they were moving more jobs abroad as a result of remote work.”
“Deel, a human-resources company that helps clients hire abroad, said hiring through its platform more than doubled last year. The share of job listings that are remote has surged since 2019.”
“‘There was a time when I would have said there’s no way you can have these sorts of jobs be done remotely, and I don’t say that anymore,’ Mr. Taylor said. ‘The pandemic proved the point for us.’” READ MORE
For small businesses, it isn’t getting any easier to offer health insurance: “George Xouris and his wife have managed to grow Andia’s ice cream to two retail locations in Cary, North Carolina, with a third on the way — but staffing has been a big roadblock. He was once unable to open one of the company’s retail locations because they did not have the staff, so when they found a great candidate to fill one of their openings, he was excited. Ultimately, that person had to pull out because Xouris was unable to offer health insurance. ‘For three years now, we have been talking about providing health insurance for our employees — and we have not been able to afford it,’ Xouris said. ‘If the federal government can do something to help small businesses have access to affordable health care for employees, that would be great.’”
“About 56 percent of small business owners surveyed recently by the National Federation of Independent Business said they offered health insurance to employees. Meanwhile, surveys by the Kaiser Family Foundation have found that nearly all firms with 1,000 or more workers offer health insurance to at least some of their workers.”
“Businesses with less than 10 employees are the least likely to offer health insurance, with just 39 percent saying they were able to. About 65 percent of small businesses that did not offer health insurance cited costs as the main reason.”
“Small-business owners also point to rising health care costs as a factor that has delayed their growth, with 45 percent of those surveyed by Small Business for America’s Future saying they had to delay growth opportunities because of health insurance costs.” READ MORE
New York City is considering legislation that would block employers from firing people for being overweight: “The effort is part of a growing national campaign to address weight discrimination, with lawmakers in New Jersey and Massachusetts considering similar measures banning the practice. Michigan and Washington State already prohibit it, as do some cities, like Madison, Wis., and Washington, D.C. The momentum to add weight to the list of protected groups, which now includes race, gender, religion, and disability, comes as the body-acceptance movement continues to gain popularity. Podcasts like ‘Maintenance Phase’ and social media creators have spread awareness that not all overweight people are unhealthy and that health metrics like the body mass index are flawed.”
“Kathryn S. Wylde, president of the Partnership for New York City, a business advocacy group, said that the City Council should provide documentation to prove that weight discrimination was a ‘significant problem’ in the city.”
“‘This is another mandate where enforcement will be primarily through litigation, which imposes a burden on employers, regulators, and the courts,’ she said.” READ MORE
New legislation could send Texas beekeepers to jail for mislabeling their honey: “House Bill 590, authored by Rep. Ernest Bailes, R-Shepherd, states that a product cannot be labeled as ‘Texas honey’ unless the product consists ‘exclusively’ of honey produced from apiaries in the state. While the concept of the bill seems simple, Texas beekeepers say it could sting producers and their livelihood. According to Texas A&M’s AgriLife agency, Texas contributed 8.9 million pounds of honey — worth $17 million — to the national honey production.”
“Running one of Texas’ 157,000 honey-producing colonies can get complicated. Weather conditions could make it difficult to produce enough honey for a business, so some will create a Texas-heavy blend with honey from other states.”
“Relabeling products can get expensive or even lead to a loss for some producers. Beekeepers on border territories can have nectar DNA that inevitably blends between the two states.”
“But even with all the room for error, HB 590 would effectively make mislabeling Texas honey products a class B misdemeanor and potentially send a producer to jail for up to 180 days.” READ MORE
British seafood is prized in France and Spain but Brexit has made the trip much more difficult: “Of all the vexing regulations that Brexit has thrust upon Paul Knight’s shellfish exporting business, the one he finds most absurd is this: Before he can deliver his crabs and lobsters to France and Spain, they must be certified by a veterinarian. ‘I don’t mean anything against the vets — they are lovely people,’ said Mr. Knight, managing director of PDK Shellfish, as he and his staff prepared the voluminous forms now needed to send a truck down from Scotland. ‘But when did you take your pet lobster to the vet?’”
“Brexit has tied Mr. Knight and other Scottish exporters in knots, adding reams of paperwork and extra checkpoints that delay the transport and causing more live shellfish to die en route.”
“When it took full effect, in January 2021, Brexit ended an era of easy trade with his markets in continental Europe. Mr. Knight likens the impact to a bomb exploding under his firm.” READ MORE
Climate change is destabilizing the insurance industry: “Aon PLC President Eric Andersen told a Senate committee that climate change is injecting uncertainty into an industry built on risk prediction and has created ‘a crisis of confidence around the ability to predict loss.’ Reinsurance companies, which help insurers pay catastrophic losses, ‘have been withdrawing from high-risk areas, around wildfire and flood in particular,’ Andersen told the Senate Budget Committee. He added, ‘Just as the U.S. economy was overexposed to mortgage risk in 2008, the economy today is over exposed to climate risk.’”
“Major hurricanes and wildfires have driven insurance markets into crisis in Florida, Louisiana, California and are weakening insurers in other Western states such as Colorado and Oregon.”
“Florida’s state-run property insurer warned recently that Hurricane Ian had ‘significantly depleted’ its reserves and that it might impose a surcharge on millions of policyholders in the state if another major hurricane generates massive claims.” READ MORE
Leon Levine founded Family Dollar: “Mr. Levine’s approach to retail was contrarian. As malls and big-box discounters such as Walmart and Kmart began popping up in America’s suburbs during the 1960s, Mr. Levine focused on lower-income neighborhoods in cities and rural areas, selling family staples such as batteries, socks, underwear, toiletries, and makeup at steep discounts. Family Dollar stores were small — never more than 8,000 square feet — so shoppers could zip in and out. ‘There’s a convenience factor,’ George R. Mahoney Jr., the company’s senior vice president, told Business North Carolina magazine in 1987. ‘You can see the entire store when you walk in, and there are no long lines at the checkout counter.’”
“To identify communities for expansion, [Levine] visited grocery store parking lots, where he would search for splotches of oil — a signal that residents in the area drove old cars and didn’t have a lot of money for repairs. The more oil, the better.”
“Stores were minimally staffed, sparsely decorated, and he was a brutal negotiator with suppliers. On visits to their showrooms, Mr. Levine would wait until nobody was inside. Then he would walk in and say to the sales representative, ‘I see business is slow. What can I help you with?’”
“By 1984, Family Dollar had 850 stores in 17 states. Sales were $341 million a year. Expansion quickened. In 1989, the chain grew to more than 1,500 stores. By the mid-2000s, Family Dollar had more than 5,000 locations and sales topped $5 billion.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Is There Really a Credit Crunch? Gene Marks says he’s not seeing it yet, but there’s reason to believe it’s coming. He also discusses the best password managers for businesses and explains why addressing the mental health of employees is a financial issue as well as an ethical issue and offers some suggestions. Plus: Gene says he expects unlimited paid time off to remain a much-sought-after benefit for employees even though in many ways it favors employers.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren