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McDONALD'S CEO FACES FRANCHISEE REBELLION, BRAND IS IN A 'DEEP DEPRESSION' AND FACING 'ITS FINAL DAYS'

Can McDonald's new CEO Steve Easterbrook lead the company through a franchisee rebellion? (Click Image To Enlarge)

According to a new survey, McDonald's franchisees believe the brand is in a "deep depression" and could be facing its "final days." 

One franchisee wrote in response to the survey by Nomura analyst Mark Kalinowski.

"We are in the throes of a deep depression, and nothing is changing.  Probably 30% of operators are insolvent."

Another wrote,

"The CEO is sowing the seeds of our demise. We are a quick-serve fast-food restaurant, not a fast casual like Five Guys or Chipotle. The system may be facing its final days."

More than a dozen franchisees expressed frustration with McDonald's management, saying that CEO Steve Easterbrook's turnaround plan — which includes initiatives like all-day breakfast and a shift to digital ordering kiosks — is a distraction from the core issues of McDonald's, like food quality and customer service.

One franchisee wrote.

"The lack of consistent leadership from Oak Brook is frightening, we continue to jump from one failed initiative to another." 

A second wrote.

"I have been in this business since the early 1970s but have not seen us this leaderless in all my time."

The company's reaction to their frustration, one franchisee claimed, is for operators to "get out of the system" and quit the business.

Several franchisees complained about all-day breakfast, saying that it has complicated kitchen operations and goes against Easterbrook's repeated promises to simplify the menu.

One franchisee wrote.

"The system is very lost at the moment.  Our menu boards are still bloated, and we are still trying to be too many things to too many people. ... Things are broken from the franchisee perspective."

Franchisees also criticized the "Create Your Taste" program, which allows people to customize their burgers with premium ingredients.

One franchisee wrote.  

"They are throwing everything they can against the wall to see what will stick." 

Kalinowski interviewed 29 US franchisees covering about 226 restaurants for the survey. McDonald's has more than 14,000 restaurants in the US. 

In response to the survey, McDonald's said it's hearing a different story from franchisees — specifically pertaining to all-day breakfast. 

A company spokeswoman told Business Insider.

"We’re hearing from customers and the overwhelming majority of our 3,100 franchisees that all-day breakfast is a hit!  In fact, since the launch, McDonald’s has reached its highest brand score in two years according to YouGov BrandIndex."

McDonald's is trying to revive business following seven straight quarters of same-store sales declines in the US.

In addition to adding all-day breakfast and "Create Your Taste," McDonald's has also made some changes to its core menu items.

The company started toasting its hamburger buns longer, making its beef patties slightly larger, and changing how the patties are seared.

McDonald's has also announced plans to remove antibiotics from its chicken.

There are at least a few franchisees who are on board with the changes.

Among the myriad negative responses to Kalinowski's survey, several franchisees expressed hopeful attitudes.

One wrote.

"I think our leadership is headed in the right direction.  It will take time."

Another said.

"The CEO seems to be doing OK so far!"

COMMENTARY:    Although McDonald's new CEO Steve Easterbrook does not have the confidence of a lot of franchisees, there seems to be a disconnect between how McDonald's shareholders perceive Easterbrook's leadership and how the franchisees feel about him.  Proof this lies in the performance of McDonald's share price.    

McDonald's Stock Up 10% For Year

McDonald’s has been the target of relentless analyst fire for all of 2015; yet here we are in mid-October and McDonald’s shares are up 10% for the year. This week they hit a new all-time high of $103.84.

McDonald's Corporation Share Prices Last Five Years - Jan 2011 Through Oct 2015 - Google Finance (Click Image To Enlarge)

McDonald's Brand Stronger Than Ever

The naysayers mistakenly aim at the small target, but they miss the big picture: McDonald’s formidable brand recognition and performance-oriented culture virtually guarantee long-term success.

On the former, McDonald’s is a top 10 global brand, according to Interbrand, a brand management consultant. McDonald’s ranks ninth on Interbrand’s list, with a $42.3 billion market value. Strong brands have the same effect on consumers that magnets have on metal shavings – they draw them in.

McDonald’s magnetism is especially strong on kids, and not just kids in the United States. Here, I speak from experience. On a weekday road trip from Antibes, France to Geneva, Switzerland, my wife and I stopped at a McDonald’s near Digne, France. We stopped not because of hunger, but because of curiosity. The parking lot was packed.  When we walked in, we found a restaurant overflowing with middle-school-aged kids. So much for indomitable French cuisine.

McDonald's Culture Remains The Same 

But it’s really McDonald’s culture that magnetizes the brand. As Steve Wynn, chairman and CEO of Wynn Resorts (NASDAQ: WYNN), said in a 2014 Wall Street Journal interview,

“You got the culture, you got the problem solved.”

McDonald’s has the culture, and has had the culture for decades, so the problem always gets solved.

Franchisee Rebellion Is A Distinct Possibility

After much anticipation, the newly installed chief executive officer of McDonald's, Steve Easterbrook, has announced a sweeping turnaround plan aimed at cutting annual costs by around $300 million at the struggling fast-food behemoth. Wall Street was unimpressed: the stock fell after Easterbrook made his announcement.

But a far important constituency is also grumbling: the franchisees who own most of the outlets. Many have already expressed skepticism about Easterbrook's leadership, complaining that McDonald's was imposing new burdens, products and obligations without any understanding of the strain the changes will place on franchise owners.

There's little evidence that Easterbrook's plans to turn McDonald's into a "modern, progressive burger company" -- which include selling 3,500 of the restaurants it owns -- allayed the concerns of the franchise owners, who have experienced falling sales in many parts of the world.

Easterbrook's plan seemed largely aimed at creating value for shareholders, not helping franchisees. The vexed history of franchising suggests it may be a mistake to disregard this constituency.

After World War II, McDonald's and other fast-food restaurants introduced "business format" franchises. Unlike conventional franchises, this wasn't a way to delegate distribution; it was a means to sell an entire way of life to aspiring small-business owners. McDonald's founder Ray Kroc described this as an "updated version of the American Dream," and his company, along with Howard Johnson's and other restaurants, made it a mainstream phenomenon.

In business-format franchising, the parent company maintains a rigorous level of control over franchisees, holding them to standards of appearance, cooking times, the dress of employees, accounting methods, and just about anything else that can be standardized and controlled. McDonald's went so far as to create its famed "Hamburger University" in 1961.

In principle, this insured success for both the corporation and the franchise owners. But in practice it relegated franchisees to a genuinely subordinate position. Harold Brown, a lawyer and critic of business format franchising claimed in 1970 that "numerous franchisors have stated that their franchisees are like children, demanding constant discipline and control."

This attitude didn't always sit so well with franchisees. The control imposed from above was fine so long as the decisions made at corporate headquarters worked well on the ground, but that wasn't always the case. In the late 1960s, a number of high-profile franchising ventures ended in revolts. 

• Domino's Pizza, for example, expanded its franchise operations throughout the 1960s, but failed to deliver sufficient support, financing and training. Profits plummeted and the company almost went bankrupt in 1969.  Two years later, enraged franchise holders sued Domino's, alleging that the corporation had imposed obligations on outlets without providing the necessary support. There was much anger as well at Domino's insistence that outlets only purchase supplies from the parent company or an approved supplier. Eventually, Domino's bought out the embittered franchisees, increasing the number of outlets under direct ownership.
• Chicken Delight, founded in 1952, expanded over the course of the succeeding decade, but then failed to deliver the necessary support to franchise owners, despite forcing them to pay the corporation higher prices for everything from paper plates to batter for the chicken. A number of franchisees eventually sued the company, setting in motion a chain of events that led to what the Wall Street Journal described in 1972 as "the virtual dismantling of the Chicken Delight organization."
• Shakey's Pizza, Mister Donut and other companies faced similar revolts around the same time. Some, notably Mr. Donut, mended fences with their franchisees, granting them increased control over local decision-making, financing, accounting, and even the expenditure of ad dollars. Others moved away from top-down decision-making, setting up venues where franchisees could express their concerns. Still others sought to curtail the number of franchises, bringing stores back under corporate control. All of this worked: many companies turned around, and the reputation of business-format franchising eventually improved.

McDonald's, which sailed through this period without problems, might want to take a page from the past as it tries to right the ship. It's suffering from many of the same problems. In a recent survey, franchisees struck much the same tone as their disgruntled predecessors of the 1960s, citing an out-touch management that seems more interested in off-loading costs onto franchisees than fixing the problems that beset the chain.

Unfortunately, Easterbrook's turnaround plan made almost no mention of the franchisees that are the public face of the company. Worse still, is his vow to increase the number of stores in the hands of franchisees from 81 percent to 90 percent — which some franchisees believe will make the company even more remote from the concerns of the owners on the front lines.

Easterbrooks Turnaround Plan

In May 6, 2015, McDonald's CEO Steve Easterbrook announced a restructuring plan to help it compete with fast-casual restaurants like Chipotle Mexican Grill. To foster a quicker reaction to changing trends, McDonald’s is restructuring its units into four groups based on the maturity of its presence in the particular market, where previously the business was segmented by geography.

• The flagship U.S. market.
• Established international markets such as Australia and the United Kingdom.
• High-growth markets such as China and Russia.
• The rest of the world.

McDonalds also said that 90 percent of its more than 36,200 restaurants around the world will be franchised over the next four years. This is up from 81 percent currently, and will mean the company will rely more heavily on franchising fees and move away from the daily running of restaurants. The organizational changes will contribute to 300 million dollars in cost-cutting targeted by McDonald's, most of which will be realized by 2017.

The company is working on streamlining its menu recently cutting seven items including the Deluxe Quarter Pounder burger and six chicken sandwiches, while at the same time working on improving perceptions about the quality of its food with a trio of new sirloin burgers being added.

Standard and Poors were left underwhelmed by the plan and subsequently downgraded their rating on McDonalds to A-, while Moody’s put their rating on review for downgrade. Both rating agencies showed concern over McDonald's plans to return between 8 and 9 billion to shareholders in 2015 and to hit the high end of its 18 to 20 billion 3-year goal by the end of 2016, worrying that any stock repurchases will be at the expense of higher debt levels than initially anticipated.

The fast food chain in April reported first-quarter comparable sales down 2.3% and revenue of 5.96 billion, falling short of the 6.02 billion analysts had expected. Unfortunately for McDonalds shareholders, the quarterly results were a familiar tale, which for nearly two years has seen its share price fall and same-store sales crumble in the U.S. market and abroad.

Conclusion

Having served as the CFO for a tanning salon franchise, I was at the forefront of a franchisee rebellion. This taught me some valuable lessons:  1) Do not deviate from your core franchise principles and vision, 2) Always deliver on your franchise promises, 3) Select the most qualified and experienced franchisee owner/manages, 4) Location, location, location, select the best franchisee locations, 5) Invest in adequately training and providing marketing support to your your franchisee network 6) Don't let unresolved problems and differences vent themselves into an allout franchisee rebellion.

It would not surprise me if McDonads top management has ignored or strayed away from some of the above franchise must-do's.  In many businesses the customer comes first, but in a franchising business environment, the franchisees come first, because they are the face of McDonalds.  It is doubtful that the vast majority of McDonalds customers know who McDonald's CEO is.  They don't care either. They want their Big Mac sandwich made exactly the same each time they visit and served as quickly as possible.  

By paying more attention to the bottom line and improving shareholder value, McDonalds top management may have violated one of the most important covenants of franchising.  Take care of the franchisees, and they will take care of you.

Courtesy of an artricle dated August 9, 2015 appearing in Bloomberg, an article dated October 19, 2015 appearing in ETF Daily News, and an article dated October 16, 2015 appearing in Business Insider

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AMAZON'S PLAN TO DELIVER ITS OWN PRIVATE-LABEL GROCERY PACKAGED GOODS AND FRESH PRODUCE

Following the playbook of countless retailers, Amazon.com Inc. is preparing to broadly expand its fledgling lineup of private-label brands to include an array of grocery items such as milk, cereal, and baby food as well as household cleaners, people familiar with the matter said.

Amazon’s planned expansion in the private-label business mirrors a more traditional retail model where name-brand products are sold beside store-owned goods. Private labels have become a vital business for mass-market retailers, generating stronger margins and building loyalty with consumers who no longer view generic products as lower quality.

In early May 2015, Amazon sought trademark protection for more than two dozen categories under its Element brand, including coffee, soup, pasta, water, vitamins, dog food and household items like razors and cleaning products. Diapers and baby wipes—the latter of which is still on the market—were Amazon’s first line of Elements, available to customers who pay $99 a year for a Prime unlimited shipping membership.

Amazon Element private-label brandname (Click Image To Enlarge)

Amazon has approached some private-label food manufacturers seeking a partner, according to people familiar with the matter. Those discussions included TreeHouse Foods Inc. of Oak Brook, Ill., one of the larger private-label producers, with $3 billion in sales last year, said one of the people.

Amazon declined to comment. A spokesman for TreeHouse declined to comment on any talks with Amazon but noted the company does “business with all of the nation’s top retailers and operates in 15 grocery categories.” 

Click Image To Enlarge

The business isn’t without challenges. Amazon must rely on outside manufacturers to design the products and then vouch for the quality, as it did when it launched its Elements brand of diapers last December.  The next month, Amazon pulled the diapers from its site, citing a flawed design—customers had complained about quality issues.

Many of Amazon’s coming private-label products will be ingested, making quality-control a critical issue.

The Seattle retailer has long dabbled in private labels. Besides diapers and wipes, it has offered all customers batteries, USB cables, backpacks and even ceramic plates under the Basics label, noted for its spartan black-and-white color scheme. And Amazon sells patio furniture and linens under its Strathwood and Pinzon brands.

Not all of Amazon’s private-label ventures have been winners. It discontinued a line of cookware endorsed by a Seattle chef in 2012 and a tool line, in addition to the diaper snafu.

Never before has Amazon ventured into perishable goods. By rolling out a broad portfolio of private-label products, Amazon could yield higher profit margins, while also gaining leverage with its largest suppliers to pare prices—though many of Amazon’s vendors also produce private-label goods.

Rivals ranging from Costco Wholesale Corp. to Target Corp. to Walgreens Boots Alliance  Inc.offer an array of store-brand products with names including Kirkland, Archer Farms and Nice, respectively. Private labels made up about a third of Target’s $73 billion in sales last year.

Eddie Yoon, a principal at brand consultancy The Cambridge Group, says.  

“It makes a lot of sense for any retailer to get into private label.  Private label has a lot of room to grow in terms of sales and can attract a new value-focused customer.”

Mr. Yoon said that despite their lower price tags, private label merchandise tends to have higher margins than name-brand goods for both retailers and manufacturers because of savings on marketing and brand development.

Market researcher Information Resources Inc. estimates private-label packaged goods was a $120 billion market in the U.S. in 2014, up 2.1% from a year earlier. Private-label merchandise represented about 18% of money spent on all packaged goods in the U.S. last year.   

For the year ending 2014, Amazon reported a $241 million loss on $89 billion in sales, has been pushing to expand sales of food online, including through its Fresh grocery delivery. And last year it rolled out Prime Pantry, which allows customers to order small items that the company generally only offered in bulk, such as a single shampoo bottle or bag of potato chips.

Private-label goods also could bolster Amazon’s reputation as a lower-cost retailer. IRI estimates that private-label products are, on average, 28% less expensive than their name-brand equivalents.

Amazon’s diapers were about 10% less per diaper than the priciest offerings from Procter & Gamble Co. or Kimberly-Clark Corp.—makers of Pampers and Huggies—but 25% more expensive than P&G’s Luvs and Target Corp.’s Up & Up brand, according to an analysis in December by Sanford C. Bernstein & Co.

It couldn’t be learned how Amazon may price its private-label food goods, when they may be released or whether they will be sold exclusively to Prime members, as the baby wipes are.

But it seems likely Amazon would sell them through its  Amazon Fresh grocery delivery service, available today in a handful of U.S. cities.

It also appears Amazon will be transparent about where its Elements products come from, as it has done with the diapers and wipes. The trademark filing mentions the slogan, “Every pack has a story.” Amazon’s page for its wipes details how they are produced by manufacturer Nice-Pak Products Inc., starting with the process of moistening them with purified water from the White Lick Creek Aquifier in Mooresville, Ind.

COMMENTARY:   A huge market opportunity awaits online retailer Amazon as it plans to launch its own private-label brands of perishable groceries including milk, cereal and baby food. However, the e-commerce giant must overcome challenges in quality, the distribution logistics of perishables and customer preferences that the firm hasn’t previously faced.

According to Amanda Nicholson, professor of retail practice at Syracuse University’s Whitman School of Management,  “There’s plenty of room for growth [in online grocery deliveries] … in a time-pressured society Twitter ,”   She noted that upscale supermarket chains like Wegmans have built that reputation over time, but her optimism came with a crucial rider:

"With food items, especially private-label brands, consumers need a sense of faith that this is going to be a good product, and that takes some time to build,” she said,“I don’t think Amazon has that automatic advantage at all.”

According to Wharton management professor Daniel Raff, Amazon will benefit from the refinement over the years in the business model for home deliveries of online grocery orders. He pointed to two critical factors for success — warehouse locations that can guarantee freshness of produce; and sophisticated routing and planning of transit schedules to ensure timely deliveries. He noted that Amazon has been building warehouses on the outskirts of major U.S. cities.

Nicholson and Raff discussed the opportunity Amazon faces in private-label food deliveries on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.) Amazon’s plans were first reported by The Wall Street Journal in late May.

Amazon already offers private-label brands in products including cables and batteries, but this is the company’s first attempt to extend that to perishables. As part of its plans for private-label food items, Amazon sought trademark protection in early May under its Element brand for products like coffee, soup and pasta, according to the Wall Street Journal report.  The U.S. market for private-label packaged goods was worth $120 billion in 2014, the story said, citing research firm Information Resources.

“There is plenty of room for growth [in online grocery deliveries]… in a time-pressured society.” – Amanda Nicholson

The Quality Threshold

Ensuring quality will be the biggest challenge Amazon will face in food deliveries, said Nicholson. She recalled Amazon’s abortive launch last December of a brand of diapers under its Elements brand. Amazon had to withdraw the product from its site a month later after customers complained of quality problems.

Unlike with delivering books or music, the quality bar is set much higher for food items, said Nicholson.   

“When we are talking about melons or fruit or private-label yogurt, most of us have very specific likes and perhaps dislikes.”

Also, in certain food categories like melons, avocados and other fruits that can easily become bruised, most customers may want to see what they are buying, said Raff.

He explained.  

“The secular change over the last dozen years or so in grocery merchandizing, and in the investments grocery store operators are making, has to do with the general shift in consumer preferences toward higher-quality fresh produce.  Vendors would be aware that customers who experiment with online grocery shopping would be very sensitive to the quality that is delivered. So it is probably worth it for the stores investing in the quality of such products in the beginning in order to generate consumer loyalty.”

Learning from Mistakes

Raff recalled the rise and fall of Webvan, an online grocery business based in Foster City, Calif. Launched in the thick of the dot-com boom in 1996, it went bankrupt five years later. Webvan became a part of Amazon in 2009 and focuses non-perishable groceries.

Webvan was “a great idea,” but it failed because of distribution problems, said Nicholson. Nevertheless, Raff said.  

"Its experience inspired entrepreneurial minded people.  It strongly suggested tha1t once people figured out how to do the infrastructure properly, something like [Amazon’s latest move] might be coming. We know now that this sort of service is commercially feasible.”

Nicholson pointed to FreshDirect, an online grocer based in Long Island City, New York, that was founded in 2002 and serves markets in New York, New Jersey and Pennsylvania and appears to have gotten its business model right. “FreshDirect keeps its edge by focusing on its food route,” she said. She noted that the firm’s founders have experience in the supermarket and grocery businesses, “which is helpful.”

“Vendors would be aware that customers who experiment with online grocery shopping would be very sensitive to the quality that is delivered.”–Daniel Raff

Follow the Money

Customer satisfaction is key to online grocery deliveries — but the business also has to make money. Nicholson said.  

“The crucial thing in home deliveries is [to ask]: Is it worth delivering?”

Clearly, each customer’s order has to cross a value threshold before it becomes worthwhile to the retailer, she added.

The arithmetic gets more complex with same-day delivery. Raff said that while “same-day delivery was cheap, prices [of products] were higher than they would otherwise be,” citing research by some stock analysts.

Raff also wondered how Amazon might use the customer data it collects. He recalled a controversy Amazon faced some years ago where it supposedly experimented with data on customer search behavior to adjust prices of goods “in a way that is [more] favorable to Amazon than … to the consumer.” He said that in the ensuing negative publicity, some found this to be “a somewhat more sinister side” of the company.

In any event, Amazon could be a winner with its grocery delivery business if it scores on two fronts, according to Raff. One is about persuading customers of the convenience, reliability and quality of its offerings, he said. The second aspect is about getting consumers “habituated with their orders arriving in hours rather than days later,” made possible with Amazon’s warehousing network and transportation infrastructure.

Raff said.  

“[Eventually], all categories of consumer goods will fit into this general mindset — not just music or clothing or food.  Amazon is really trying to be ‘the everything store.’”

Flat Growth 

According to private research firm IRI, private-label market penetration rates in dollars and units sold have not changed since 2011.    

Click Image To Enlarge

According to IRI, private-label market shares vary considerably by channel.   The grocery channel leads with a 22% market share, followed by Club chains (18.1%), Drug chains (16.3%) and Mass Supermarket chains (15.2%).

While pure-play private-label grocers like Trader Joe's and Aldi have made strong gains, and mass supermarket chains like Kroger's and Safeway are selling more private-label premium grocery products, not all grocers have faired well.  

According to IRI, more than half of package foods major categories have had flat private-label share growth since 2011.  This reflects the trend of overall flat consumer dollar and unit sales since 2011. 

Click Image To Enlarge

Amazon has to truly standout not only in price and quality, but in uniqueness as well.  It will be competing against some well established firms with loyal customers.  Amazon will have to provide a strong magnet to get these consumers to switch to its private-label consumer packaged goods and fresh foods.  Amazon will need to differentiate itself in other ways besides price, quality, freshness and delivery.  It needs to expand the market for private-label products, by offering products that are not presently sold under a private-label, otherwise it will have to rely on marketing wizardry to steal market share from existing venors of private-label products.  Some possiblities include gourmet frozen meals, fresh organic foods and organic packaged products.  The company needs to start promoting its Element private-label brand.  This means spending on advertising and promotions, and positioning its private-label products as "right-now" products that appeal to busy consumers who don't have time to shop or hate to shop.         

Courtesy of an article dated May 28, 2015 appearing in The Wall Street Journal, an article dated June 9, 2015 appearing in Knowledge@Wharton, and an article dated June 11, 2015 appearing in Market Realist

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STARBUCKS OPENS NEW ORLEANS STORE WITH THE LOOK OF A SPEAKEASY WHILE RETAINING THE OLD NOLA JAZZY CHARM

THE COFFEE COMPANY EVOKES EARLY 1900S MERCHANT CULTURE FOR ITS LATEST OUTPOST IN NEW ORLEANS'S FRENCH QUARTER.

Starbucks has opened a new store in New Orleans that's designed to channel the mystical feel of the city itself. Evocative of an early 1900s apothecary, the store is latest in Starbucks's portfolio of hyper-local shops aimed at being part of a neighborhood's culture, rather than disturbing it.

 A mix of local and Atlanta-based artists created a mural, wrought iron chandeliers, and a hanging mobile of brass jazz instruments. (Click Image To Enlarge)

Andrew Bello, a design director for Starbucks, says.  

“We discovered New Orleans’s history as an import-export shipping port.  There was a time [in the early 1900s] when it was the largest coffee importer in the area.”

For the exterior, the team preserved some original architectural details and used wrought iron, a material found on facades and balconies throughout the French Quarter. (Click Image To Enlarge)

Bello and his team ran with their imaginations, designing the space as if it were the home and store of an old-timey merchant. Floor to ceiling shelves sit behind the register. Back then, Bello says, “those shelves would be filled with boxes and bags and herbs and spices--and coffee.” Today, of course, they’re stacked with bags of Starbucks coffee.

To bring that to life, they built floor-to-ceiling shelves behind the counter. (Click Image To Enlarge)

The lettering is on the bathroom door--in part because the new outpost belongs to a growing portfolio of stores that have what Bello and Starbucks designers call, “local relevance.” 

The philosophy behind “local relevance” is that a trip to Starbucks can be a more faceted experience than just getting a reliable cup of coffee. Even simple actions like a customer posting a picture of the store to Instagram, or actually telling a friend about a visit to Starbucks, are measurements of this.  He says.  

“Hopefully customers discover something new when they return to the store.”

 

In this case, the design team imagined the space as an early 1900s-era merchant shop. (Click Image To Enlarge)

Any visitor that goes to New Orleans is going to walk down that street.  It bifurcates two parts of the city: the downtown business district, and the gentrifying warehouse district.  The goal? Let tourists be on vacation, and make locals feel at home, all in one place.

Back then, Bello says, 'those shelves would be filled with boxes and bags and herbs and spices--and coffee.' Today, of course, they’re stacked with bags of Starbucks coffee. (Click Image To Enlarge)

COMMENTARY:   This New Orleans Starbucks definitely retains the "old world" charm while showcasing today's upbeat speakeasy and dixieland jazz atmosphere.  I wonder if they will serve bourbon coffee with whipped cream.  I say do it, break from tradition, and whoo the drinking and happiness crowd.

Courtesy of an article dated December 13, 2013 appearing in Fast Company Design

FARM 432: A KIT TO GROW AND FARM BUGS AT HOME, TO EAT!

This is Farm 432. It’s sorta like an ant farm. But the bugs aren’t doing the farming. You’re farming the bugs.  (Click Image To Enlarge) 

DON’T THINK OF IT AS EATING BUG BABIES. THINK OF IT AS PROTEIN GARDENING.

As the population grows, so, too, will its hunger for meat. By 2050, meat production will need to surge by 50% to quell demand. The only problem is, producing so much (red) meat is already an environmental nightmare. And we simply might not have the resources to scale.

It’s a house to raise black soldier flies so that you can eat their larvae. (Click Image To Enlarge)

Meanwhile, Katharina Unger is planning to invite her friends over to a barbecue. (Really.) The University of Applied Arts Vienna grad has built a pretty impressive domestic insect-breeding concept called Farm 432. Over the course of 432 hours, with just a few food scraps, she can coax 1 gram of black soldier fly eggs into 2.4 kilograms of larvae protein. And if you listen to Unger long enough, her arguments are pretty convincing as to why we should all be growing fly larvae at home.

 

Unger explains.

“Black soldier flies themselves do not eat, they just drink. And they do not transmit any disease to humans.  Unlike normal house flies they usually do not sit on food and they do not sting or bite, either. They also fly very slowly, so in case one should escape it is easy to catch them.”

But the relatively gross idea has been packaged as a convenient consumer product. (Click Image To Enlarge)

Over their eight-day lifecycle, soldier flies need space to fly around, mate, and lay eggs. In response, Farm 432 has a bulbous sphere at the end, connected to the "fly fun park" nozzles. These nozzles were designed after insect-attracting plants like the Rafflesia, and serve several functions. They waft in food waste from another chamber, convincing the flies that this will be a safe place for their offspring to thrive. And they provide a spot to lay eggs. Eventually, when the larvae hatch inside, they’ll fall through a hole to the food source below.

The flies use the bubble area to live. They lay their eggs in the blue funnels. The eggs hatch into larvae, which fall into food scraps. And eventually, the larvae climb their way out… (Click Image To Enlarge)

Unger explains.

“There they feed on biowaste or whatever you feed them on and wriggle around for around 14 days.  They then want to clean themselves and find a dry and secure place to pupate, that’s why they climb up the migration ramp. This is when they fall into the collection bucket for harvest.”

…to end up here.  (Click Image To Enlarge)

From here, it’s bon appetit. The larvae have a nutty, almost meaty flavor, Unger says, and her favorite dish is a tomato larvae risotto. But as tasty as it may be, and as well as Farm 432 may work, Unger admits that the design challenge is only part of making such an idea a success.

She says. 

“With my design I am proposing a new lifestyle.  It’s about a potential new Western culture of insect eating and breeding. It’s about making people aware that there is a great variety of food on our planet that we rarely consider.”

It’s a convenient tray for cooking. (Click Image To Enlarge)

Through the process, 1 gram of black soldier fly eggs becomes 2.4 kilograms of larvae. (Click Image To Enlarge)

It’s an incredible ecological savings compared to beef.  (Click Image To Enlarge)

Read more here.

 

COMMENTARY:   This sure looks yucky to me, but if you are into eating insects for the nutrition, I could easily see where you could buy a dozen of these Farm 432 units and grow different bugs to suit your individual taste buds.  Nothig like bugs as a garnish for your favorite rice dish.  Yuck!!

Courtesy of an article dated July 29, 2013 appearing in Fast Company Design

WHAT GE'S INDUSTRIAL DESIGNERS THINK YOUR KITCHEN WILL LOOK LIKE IN 2025 TO SUIT DOMESTIC LIFESTYLES OF THE FUTURE

So what did they come up with, exactly?  A compendium of innovations that we've seen glimmers of in prior coverage on Co.Exist. (Click Image To Enlarge)

Smart refrigerators, faucets that detect bacteria on produce, and 3-D printed dishes are just some of GE's predictions for the kitchen of 2025. Don't pass them off as unrealistic: GE has been right before.

A typical product development cycle for corporate industrial designers lasts two to three years, which means today's designers are working on products that won't hit shelves until 2015 or 2016.

In GE's appliance unit, four teams of industrial designers were asked to dream up what kinds of products they might expect the company to release in 2025 to suit the domestic lifestyles of the near future. More conceptual than practical, the Home 2025 challenge invited designers at GE Appliance's home base in Louisville, Kentucky, to combine research on cultural and demographic trends--like an aging U.S. population, the decrease in demand for larger homes, and the increasing demand for fresh produce--as well as technological shifts to imagine how products should evolve to match a new American life. The results are both tangible and thoughtful.

"The kitchen is sort of disappearing," Lenzi says, at least in the sense of a territorially bounded space. "Now it's part of the overall environment. [...] Kitchen appliances need to become part of that overall connected system."  (Click Image To Enlarge)

While some critics have questioned the necessity of a Wi-Fi-equipped toaster, GE's project sheds some light on the motivations for why we'd even want to have interconnected kitchen systems. (Click Image To Enlarge)

Lou Lenzi, industrial design director for GE Appliances, explains. 

"Each group was assigned not just a living environment.  But we also asked the teams to break up and look at personas or do some scenario-planning."

Those scenarios include a house for empty-nesters, another for a young, tech-savvy couple, a third for young people living in an "emerging urban environment" like Detroit, and another for an adult taking care of an elderly parent.

As homes shrink, you can save space by finding appliances that do more than one thing, like an entertainment center that also has cooking capabilities, for example. (Click Image To Enlarge)

Or a refrigerator could be part of a system that takes inventory, suggests recipes based on what's about to go bad, curates shopping lists, and places orders for food delivery. (Click Image To Enlarge)

So what did they come up with, exactly? A compendium of innovations that we've seen  glimmers of in prior coverage on Co.Exist. While the teams focused on the whole home, their take on the kitchen was particularly interesting.

Lenzi says, at least in the sense of a territorially bounded space. 

"The kitchen is sort of disappearing.  Now it's part of the overall environment. [...] Kitchen appliances need to become part of that overall connected system."

That "system" is what you may have heard called the "Internet of things" (or the "industrial Internet" in GE-speak) by futurists and designers.

"You may set up a relationship with a local grocer or produce stand that would allow you to inventory-manage through the appliance," Lenzi explains (Click Image To Enlarge)

Deliveries would show up on demand and bring food directly into the home via an externally accessible fridge, so no one would need to be there to receive the order. Rinse produce in the sink, and the faucet's sensors would detect the presence of pernicious chemicals or bacteria. (Click Image To Enlarge)

While some critics have questioned the necessity of a Wi-Fi-equipped toaster, GE's project sheds some light on the motivations for why we'd even want to have interconnected kitchen systems. As homes shrink, you can save space by finding appliances that do more than one thing, like an entertainment center that also has cooking capabilities, for example. Or a refrigerator could be part of a system that takes inventory, suggests recipes based on what's about to go bad, curates shopping lists, and places orders for food delivery.

Other innovations focused on sustainability, like repurposing grey water from the dishwasher to circulate through other appliances, as well as educational apps to make home gardening easier. (Click Image To Enlarge)

GE is considering turning some of the 2-D renderings created for the project (and currently on display at the Cressman Center in downtown Louisville) into 3-D objects. (Click Image To Enlarge)

Lenzi explains. 

"You may set up a relationship with a local grocer or produce stand that would allow you to inventory-manage through the appliance."  

Deliveries would show up on demand and bring food directly into the home via an externally accessible fridge, so no one would need to be there to receive the order. Rinse produce in the sink, and the faucet's sensors would detect the presence of pernicious chemicals or bacteria. (No organic labels needed.)

Other innovations focused on sustainability, like repurposing grey water from the dishwasher to circulate through other appliances, as well as educational apps to make home gardening easier.

One particularly promising concept is for a technologically connected kitchen island. (Click Image To Enlarge)

Asked how much change is actually possible in a 12-year period, Lenzi replies that "in 2001, we did a kitchen-of-the-future project with Wired, and you saw the emergence of connectivity. And now we do have connectivity in our products." (Click Image To Enlarge)

Lenzi says.

"I think there's great value in this whole notion of personas and scenario-planning as we think about the future, and frankly speaking, I think this is just a great way to promote a dialogue about where we think the home is going on a larger scale."  

GE is considering turning some of the 2-D renderings created for the project (and currently on display at the Cressman Center in downtown Louisville) into 3-D objects. One particularly promising concept is for a technologically connected kitchen island.

Of course, we'll have to wait until at least 2025 to cook or clean with any of these appliances. Asked how much change is actually possible in a 12-year period, Lenzi replies that "in 2001, we did a kitchen-of-the-future project with Wired, and you saw the emergence of connectivity. And now we do have connectivity in our products."

More telling is a comparison between a similar project at GE in the 1960s. In a photograph, Arthur N. Becvar, the guy who had Lenzi's job 50 years ago, is sitting in his vision of the kitchen of the future. Appliances include an "electronic oven," "a frozen food locker," the "ice water and ice dispenser," and the "automatic plastic dishmaker." The first three--a toaster oven, freezer, and ice machine--are now standard in every kitchen. (Click Image To Enlarge)

A typical product development cycle for corporate industrial designers lasts two to three years, which means today's designers are working on products that won't hit shelves until 2015 or 2016. (Click Image To Enlarge) 

More telling is a comparison between a similar project at GE in the 1960s. In a photograph, Arthur N. Becvar, the guy who had Lenzi's job 50 years ago, is sitting in his vision of the kitchen of the future. Appliances include an "electronic oven," "a frozen food locker," the "ice water and ice dispenser," and the "automatic plastic dishmaker." The first three--a toaster oven, freezer, and ice machine--are now standard in every kitchen. The plastic dishmaker hasn't come around yet, but according to GE's designers, we'll finally get to make our dishes at home in 2025, using 3-D printer technology.

 
In GE's appliance unit, four teams of indsutrial designers were asked to dream up what kinds of products they might expect the company to release in 2025 to suit the domestic lifestyles of the near future. (Click Image To Enlarge)

 
More conceptual than practical, the Home 2025 challenge invited designers at GE Appliance's home base in Louisville, Kentucky, to imagine how products should evolve to match a new American life. The results are both tangible and thoughtful. (Click Image To Enlarge)

"Each group was assigned not just a living environment," explains Lou Lenzi, industrial design director for GE Appliances. "But we also asked the teams to break up and look at personas or do some scenario-planning." (Click Image To Enlarge) 

COMMENTARY:   The ideal kitchen "system" should incorporate smart technology, especially apps like a meal planner based on the specific needs and requirement of the consumer or household.  It should focus on a balanced diet and the nutritional needs of each consumer or members of the household.  Meals would be scheduled automatically throughout the week or month.   And the system would provide information about the fat, salt, calorie contents for each meal by serving size.    I also think that besides meal planning, the kitchen system of 2025 should include a meal budget, allowing consumers to establish food spending budgets.  The system would then plan the meals around that budget, insuring that spending is kept within those limits, but insuring optimal nutritial values for each meal.

Courtesy of an article dated August 26, 2013 appearing in Fast Company Exist

THE "PICTURE BOOK": AN INGENIOUS COOKBOOK THAT USES INFOGRAPHICS INSTEAD OF RECIPE INGREDIENT WORDS

EVER GET LOST IN A COOKBOOK’S LONG NARRATIVE OF INSTRUCTIONS? US TOO. ONE ILLUSTRATOR BOILED 50 RECIPES DOWN TO SIMPLE SKETCHES.

How do you make lasagna? Even though it’s not that complex of a dish, to spell out the methodology--the specific ingredients and the many small, easy steps of prep work--it would take me half a page of type or more.

But for designer/illustrator Katie Shelly, writer of Picture Cook: See. Make. Eat., the recipe for lasagna looks a lot different. It’s a simple sketch that deconstructs lasagna into its discrete components. So with a glance, anyone can learn how to layer cheese, noodles, sauce and meat to make the dish.

Click Image To Enlarge

Of course, illustration isn’t a new idea in cookbooks--drawings that show finder details of technique like dicing onions are mainstays in classic food tomes. Where Shelly’s illustrations become radical is their scope. Using a bare minimum of text, she depicts everything from a quickly blended Gazpacho to a 2-hour, 21-ingredient pho. The somewhat oddball idea came to Shelly when writing down a friend’s eggplant parmesan recipe over the phone.

Shelly tells Co.Design. 

“She started by saying ‘well first you get out three bowls …’ and so it was natural to just draw the three bowls in that moment, and then I stuck with drawing the rest of the recipe on this little scrap of paper.  That night when I got down to cooking, I pulled out the drawing of the recipe and found that it was really useable, more useable than a text recipe where you have to stop what you’re doing and read and re-read the steps.”

Click Image To Enlarge

From there, she pushed the idea further, drawing on a background in UX testing to create recipes and spot where her testers (friends) may may potentially go wrong. This honed her craft, so much so that you’ll probably be a little impressed by her subtle uses of iconography (like the number of flames below a pot slyly depicting relative temperature), but you’ll be downright shocked at her ability to make even the most involved from-scratch cooking look fun and approachable.

Shelly writes. 

“One of my goals for this book is to encourage people to just let go of rigid kitchen rules and be loose and free about cooking. The charm of the illustrations is great for its own sake, but it’s also performing a real function in helping make cooking feel easy, lighthearted, and do-able.  So what if you mess up? Once things get too serious, the drawings stop being inviting and start seeming intimidating. Like how people feel so oppressed by Ikea diagrams.”

Picture Cook won’t be released until October. But you can preorder it today for all of $11 on Amazon.

COMMENTARY:   I think this new cookbook is going to be very popular with cooking purists, and individuals who are learning how to cook.  I'm in.  For those of you interested in buying the new Picture Cook book, you can buy it at Amazon.com by clicking HERE.

Courtesy of an article dated April 30, 2013 appearing in Fast Company Design

FACEBOOK'S EPIC CAFE SERVES FREE FOOD 3X A DAY, LOOKS LIKE A SCHOOL LUNCH LINE AND CONSTRUCTION SITE, BUT THE FOOD ROCKS

Facebook's Epic Cafe (Click Image To Enlarge)

ROMAN & WILLIAMS HAS CREATED NOSTALGIC INTERIORS THAT MOST OTHERS CAN ONLY EMULATE. HERE’S THE LUNCHROOM THEY CREATED WITH FACEBOOK.

Facebook's Epic Cafe cafeteria greats staffers with the words EAT at the start of the waiting line lane (Click Image To Enlarge)

Google ruined everything. Microsoft gave out free soft drinks, but Google let employees eat gourmet food for free. How can you possibly differentiate mealtime in Silicon Valley with that act to follow?

Facebook's Epic Cafe knows how to put out the food fr Facebook staffers -- and there's plenty of it (Click Image To Enlarge)

Facebook's Epic Cafe food looks delicious. Here's one of the salad bars (Click Image To Enlarge)

Facebook aimed for cool. They hired Roman & Williams--the ultra-hip powerhouse firm behind landmark projects like the Ace Hotel--to create their Epic Cafe.  In reality, Roman & Williams is mostly the vision of husband-and-wife design team Robin Standefer and Stephen Alesch, who are largely credited with the trend of alluring, faux-nostalgic interiors, pieced together through an alchemy of heirloom furniture, found objects, warm woods, grommets, and occasionally, even flannel. Their look is what the New York Times calls the "Benjamin Button school of design," or a nostalgia for a time that never actually existed. Indeed, if interiors had an Instagram filter, it’d be Roman & Williams.

Facebook’s Epic Cafe is their Menlo Park eatery created by Ace Hotel designers Roman & Williams (Click Image To Enlarge)

Facebook's Epic cafe is full of reclaimed furniture and custom pieces, all which create a post-industrial space that’s reminiscent of a schoolhouse or factory (Click Image To Enlarge)

Everything is left a step unfinished, to give the Epic Cafe's space a feel of constant flexibility and iteration, like the Facebook platform itself (Click Image To Enlarge)

The meeting between Facebook and Roman & Williams was happenstance. Everett Katigbak and Ben Barry, who head Facebook’s Analog Research Lab, actually bumped into Standefer and Alesch in the lobby of the Ace Hotel. What eventually resulted was a collaboration on Facebook’s Epic Cafe, a cafeteria that sits somewhere between a schoolhouse lunch line and a half-finished construction site. The spa has all the carefully curated objects of a Roman & Williams design mixed with the “don’t you dare finish painting those walls!” mentality of Facebook’s corporate culture.Facebook’s Everett Katigbak tells me.

“[That culture] indirectly starts with the product, not that we leave it unfinished, but we leave the product open to iteration.  It’s a continual work in progress.”

Ben Barry and Everett Katigbak at Facebook's Analog Research Laboratory (Click Image To Enlarge)

Much of Katigbak’s job is ingraining Facebook’s culture into their buildings, designing interior spaces to ensure going to work at Facebook doesn’t feel like going to work anywhere else. So when Facebook opened its Menlo Park campus, Katigbak didn’t want one big design firm painting the grounds with a single stroke. Instead, he was inspired by Facebook’s roots, the tiny company that sprouted in Palo Alto, snagging a patchwork of buildings downtown to accommodate a quickly growing workforce.

Facebook's Epic Cafe has big, communal areas for socializing (Click Image To Enlarge)

Facebook's Epic Cafe also has quieter nooks for ideating  (Click Image To Enlarge)

Facebook's Epic Cafe also has some neat, vintage prints hanging around too. But there isn’t a piece of taxidermy to be seen (Click Image To Enlarge)

Katigbak reminisces.

“It was interesting to have to run to meetings across town, navigate through the city.  It had this feeling of energy we really liked and connected with.”

The Menlo Park campus itself is largely modeled to “feel like a city.” With the building serving as one blank canvas, employees were free (even encouraged) to claim their own spaces, creating a mini urban environment inside a corporate office.

And Epic Cafe had to feel like a social hotspot in this city--a place you wanted to go, meet, eat, and collaborate with friends in the company that you may not see in your normal office area.

Katigbak explains.

“On the general employee side, we wanted them to have something they felt proud of, a place ‘I’ get to eat as a destination, but flexible in a Facebook way.  They could add to it without changing the overall vibe of it.”

The resulting space is like your childhood lunchroom, reformulated for adults. It’s largely Roman & Williams, filled with postindustrial furniture (some discovered, some crafted), found print art (magazine clippings), exposed light bulbs, and plenty of rivets. But whereas Roman & Williams’s brand of alchemy generally finishes these components, Facebook’s culture demands they stay raw. It’s no pseudo-swank hotel lobby; the cafeteria is built on a concrete floor and topped with exposed rafters, like a construction site waiting for the laminate and drywall guys to show up already. Since it’s Facebook, you could probably carve your name in a chair, but since it’s Roman & Williams, destroying the cultural artefact would be sacrilege.

I asked Facebook if they’d used any tricks of social hacking in the space, much like Google had found eight-person tables were the perfect number to prevent cliques yet maintain conversations. Katigbak says.

“We don’t get that granular, to find the optimal metrics and measurements.”  

But he does see the value of communal seating in empowering “chance encounters,” and a few smaller tables have clearly been set up to allow two people to run a more focused discussion over lunch.

Indeed, the word that comes up again and again with Katigbak isn’t “synergy” or “networking.” And it certainly isn’t Google’s creed, which would probably be “optimization.” It’s simply “cool.” For however we may try to classify Roman & Williams, identifying the unifying threads or jealously criticizing its brand of quasi-retro chic, most of us agree, in this place and time, that it does feel “cool.” And Facebook’s cafeteria is pretty cool, too--for reasons a bit beyond mere association.

COMMENTARY:   What a novel idea:  A corporate cafeteria that is not finished, a work-in-progress, if you will, where staffers can add their personal embellishments to what is supposed to be the most popular spot on the Facebook's corporate campus in Menlo Park.  

However, I differ greatly when it comes to describing Facebook's Epic Cafe as "cool."  It's not cool at all.   It looks entirely too institutional.  The school cafeteria and unfinished construction zone look is most appropriate. To this I would add boring, bland, uncool, unFacebook, to name a few.  

If you are going to use the term "cool" to describe something, it should be a absolutely unforgettable, an explosion to the senses and memorable almost to the point of being historic. Facebook's Epid Cafe does not meet those standards.

Having said this, Zuck hired away executive chef Josef L. Desimone from Google in 2011, and under his able hand, has formed quite an impressive Facebook Culinary Team (see below):

Facebook Culinary Team Tony Castellucci, Chris Moss, Josef L. Desimone, and Virgil HIdalgo (Click Image To Enlarge)      

The Epic Cafe's menu is international in scale, befitting of a company with staffers from all parts of the globe. The food is highly ultra cuisine, very creative, tasty, healthy, there's a huge seletion of it, and it's 100% free to Facebook staffers, and served three times a day, and I don't think Facebook's hackers miss a meal.  Here are a few examples from the Facebook Culinary Team page:

 

Courtesy of an article dated December 13, 2012 appearing in Fast Company Design and an article dated May 18, 2012 appearing in Business Insider

 

MIT’S SUPER NON-STICK COATING THAT KEEPS KETCHUP, MAYO, JAMS AND JELLIES FLOWING OR ANYTHING ELSE THAT FLOWS

Watch never-before-seen videos of an amazing new condiment lubricant that makes the inside of bottles so slippery, nothing is left inside. This means no more pounding on the bottom of your ketchup containers--and a lot less wasted food.

When it comes to those last globs of ketchup inevitably stuck to every bottle of Heinz, most people either violently shake the container in hopes of eking out another drop or two, or perform the "secret" trick: smacking the "57" logo on the bottle’s neck. But not MIT PhD candidate Dave Smith. He and a team of mechanical engineers and nano-technologists at the Varanasi Research Group have been held up in an MIT lab for the last two months addressing this common dining problem.

The result? LiquiGlide, a "super slippery" coating made up of nontoxic materials that can be applied to all sorts of food packaging--though ketchup and mayonnaise bottles might just be the substance’s first targets. Condiments may sound like a narrow focus for a group of MIT engineers, but not when you consider the impact it could have on food waste and the packaging industry.   Smith says. 

"It’s funny: Everyone is always like, 'Why bottles? What’s the big deal?' But then you tell them the market for bottles--just the sauces alone is a $17 billion market.  And if all those bottles had our coating, we estimate that we could save about one million tons of food from being thrown out every year."

Check out what happens when you pour ketchup out of a LiquiGlide-coated bottle:

 

For point of reference, here’s ketchup coming out of a regular bottle. Keep in mind, this is the exact same ketchup. It’s so time-consuming and wasteful.

 

As Smith describes it,

"LiquiGlide is a surface that’s unique because it’s kind of a structured liquid--it’s rigid like a solid, but it’s lubricated like a liquid."

It works with many types of packaging--glass, plastic--and can be applied in any number of ways, including spraying the coating onto the inside of bottles. Now, thick sauces that would normally move like sludge seem to just fall out of LiquiGlide-coated bottles, as if they were suspended in space.  Smith says.  

"It just floats right onto the sandwich." 

One of the most significant challenges his team faced was making sure the coating was food safe, meaning his team could only work with materials the FDA had approved.  Smith says.  

"We had a limited amount of materials to pick from.  I can’t say what they are, but we’ve patented the hell out of it."

Here’s mayo coming out of the coated bottle:

 

As opposed to this:

 

Originally, Smith’s team, which has been working for years now on developing various types of surface coatings, was pursuing different aims.   Smith says.  

"We were really interested in--and still are--using this coating for anti-icing, or for preventing clogs that form in oil and gas lines, or for non-wetting applications like, say, on windshields.   Somehow this sparked the idea of putting it in food bottles.  It could be great just for its slippery properties. Plus, most of these other applications have a much longer time to market; we realized we could make this coating for bottles that is pretty much ready. I mean, it is ready."

As you can see.

Ironically, if LiquiGlide is a success, it will just mean Smith has to pound even more bottles of ketchup the old-fashioned way. He still has to perform the annoying task in product demos, to show a comparison between the LiquiGlide-sprayed bottles that work and the traditional bottles that don’t.   Smith says, laughing.

"It was never really a personal pain point for me, but I do hate struggling to get sauce out of the bottles.  I didn’t know about the tapping of the '57' until I started looking into this. It was all news to me."

MIT PhD candidate Dave Smith and his research team gather around to demonstrate the super on-stick properties of LiquiGlide (Click Image To Enlarge)

But he’s already close to experiencing the sweet taste of victory: Last week, LiquiGlide came in second place, out of 215 teams, in MIT’s $100k Entrepreneurship Competition. His team also took home the audience-choice award.

Smith is now in talks with a few bottle companies to market LiquiGlide, though nothing is official yet. It’s still early. The team hasn’t even come up with its own company name, nor been incorporated yet. And their lab is still a complete mess.

Smith says.  

"We have all types of sauces, jellies, and jams everywhere in our lab.  It’s like a closet full of condiments."

COMMENTARY:    That's what I call a neat invention.  The non-stick coatings industry is huge. Ketchup bottles is just the tip of the iceberg.  MIT stands to make a bundle from licensing this nanocoating.   Come on FDA, approve LiquiGlide--FAST!!

Courtesy of an article dated May 22, 2012 appearing in Fast Company Exist

HOW NATASHA CASE'S COOLHAUS ICE CREAM VENDING CONCEPT HAS MADE MOBILE FOOD VENDING CHIC AND CREATED A NATIONAL BRAND

The food truck phenomenon has taken the country by storm. From New York to Los Angeles, the number, the variety, and the quality of food trucks are on the rise. 

In 2011, the mobile food industry in the United States was estimated to be at $630 million. I think this sum dramatically underestimates the size of the industry. I believe that the mobile food industry in New York City alone is at least $450 million. The National Restaurant Association stated in 2011 that food trucks are the single fastest growing sector of the restaurant industry.

If you have any doubts, you can see this for yourself on the streets. Fans are queuing up across the country for tasty food from local trucks. According to an American Express survey, the percentage of respondents who had visited a food truck doubled, from 13 percent in August 2009 to 26 percent in July 2010.

From Food Network’s The Great Food Truck Race (a cross-country food-truck trek) to the Cooking Channel’s Eat Street, media coverage on popular television shows reflects the food truck phenomenon. Zagat’s inclusion of food truck for the first time in its 2011 New York City Restaurants guide has helped make food trucks an integral part of contemporary city life.

CoolHaus food trucks are smallish, but very stylish, and the food is gourmet class (Click Image To Enlarge)

The following interview is with Natasha Case of Coolhaus, the first gourmet branded truck with a national reach, on how she built her brand and her food-truck business. Coolhaus operates four trucks and a shop in Los Angeles, two trucks in Austin, two trucks and a cart in New York City, and two trucks in Miami. They also have a successful retail product that they sell in Whole Foods Market.

Natasha Case, founder of Coolhaus

DAVID WEBER: What are the best and worst things about street vending?

NATASHA CASE: The best thing about street vending is the creativity and flexibility that food trucks allow. Food trucks allow entrepreneurs to breathe new life into old food concepts. They can take risks that brick-and-mortar restaurants cannot. Food trucks are on the cutting edge of innovation in hospitality. They are all about enthusiasm and adventure. The uncertainty is the hardest thing about food truck vending. The trucks are very prone to break down and we have repairs almost every week. It is challenging to stay on top of breakdowns. Having trucks that cannot vend puts a big strain on management and overhead. We just opened a brick-and-mortar shop in Los Angeles. The shop is much easier to oversee because everything is stable. Because they are remote, trucks need to rely on technology and honesty.

What was your biggest lesson after you started street vending?

We started April 2009. The first lesson we learned was how to manage production. When we were first selling we made both the cookie and the ice cream for our ice cream sandwiches. We knew we’d need a better means of production if we wanted to grow because we didn’t have the resources at our commissary in Pasadena. We went to co-packing at the start. We reached out to a number of co-packers for custom cookies and ice cream. We’ve built up great relationships for suppliers who can grow with us.

What is one thing you would recommend to someone thinking of opening a truck?

Take the time to do your research. There is an illusion that you can start with nothing and make a fortune. There is oversaturation in the market in Los Angeles. I see trucks opening who aren’t putting enough forethought into developing their business, their brand, and their clientele. Before an entrepreneur opens a truck they should ask themselves, am I different enough? Success on the road is about brand building.

Freya Estreller, left, and Natasha Case operate a coolhaus ice cream sandwich truck by the American Museum of Natural History in New York City (Click Image To Enlarge)

How have your operations had to change in different markets?

As we’ve gone to more cities, the biggest change has been developing our corporate team. The primary change has been more management with specific expertise. We have an executive pastry chef who oversees our food production to be sure that things are being done properly. We now have opening teams who are specialists in the food industry and who have experience opening new markets to train the initial team in each city.

What is your process to open to new markets?

As we go to more cities we are learning the right questions to ask at the start of the process to discern what is different about each market. Over time you build up better intuition. We ask about health regulation codes as they pertain to our product right at the start. It’s also important to learn where municipal boundaries end. A suburb outside a city might seem tempting, but even though the demographics are good, the reason no one is vending there is because the regulations are different and don’t allow you to operate. Developing a start-up manual has improved our launch process. Even though the rules are different, most of what we do is the same each time. We’re planning to open in San Francisco this spring. People know us in San Francisco, so it will be easier than in Miami.

Coolhaus ice cream sandwiches are to die for (Click Image To Enlarge)

What market has been the hardest to operate in?

New York City is the craziest. The fact that you can be arrested for not having a mobile food-vending badge is unbelievable. Just take a moment to think about going to jail for making an ice cream sandwich. Where does that happen? Only in New York City. We are licensed by the NYC Deptartment of Parks to vend in Central Park, and the NYPD comes almost weekly to try and shut us down. New York City has extremely strict laws, and there is a lot more vendor-versus-vendor conflict in NYC, but because there are so many people, there is also more money to be made.

How long did you work the trucks until you hired more staff?

I left my other job a month after we started, so I was on the truck full time for a year. As we grew, I spent less time on the truck and more time developing the brand and managing the growth of the company.

What types of technology do you use to manage your business?

We use a POS system to see product mix. We originally set up the Paysaver POS just to use it for processing credit cards. Over time we started using more of the features, and having access to the product mix is very useful. In the store there are security cameras. We haven’t quite figured out how to do that on the truck yet. However, we use social media to keep tabs on our operations. We ask customers about their experiences and to send photos of their favorite sandwiches. We see photos posted on Twitter and feedback from Yelp. If the sandwich looks melted or doesn’t have the right proportions, we can follow up with the team that served it to ensure quality and consistency.

What incentives do you use?

We give bonuses to corporate staff for meeting financial goals. We give a commission for sales for private events. We do pay more than most trucks. We pay from $13 to $15 per hour in Los Angeles, and I think we get what we pay for. However, more than paying high wages or bonuses, we try to make our team feel like they are a part of something important and that what they do matters. It is very important that our team feels appreciated.

How did Coolhaus end up licensing the brand so early?

We were approached by people from Austin to license the Coolhaus brand. Our original plan was to go to New York because we were more familiar with the market. Austin was interesting because it was an opportunity to try a new market without taking the capital risk. The Austin trucks are now owned by Coolhaus again because the licensees moved on. However, it was a good experiment and it gave us the opportunity to grow at a time when we couldn’t have otherwise. Ultimately, the whole situation worked out well, but we probably tried to do too much too early. We could have let the company mature. At the point we did the Austin licensing deal we didn’t even have a lawyer. Managing a licensee or a franchise is hard to do unless you are in the franchise business. There is much more involved than you might expect.

What did you learn through the licensing process?

Trying to explain how to run a Coolhaus truck to someone on the other side of the country made us realize how much of the business was in our heads. It triggered us to write all our manuals. When we made the deal we weren’t working with the co-packer as we are now, and we didn’t have the ability to ship them our ice cream. They were producing their own ice cream to our specifications locally, but it was impossible to supervise the product. In general, it was a nightmare. If you are taking your brand national, having central hubs of production is essential. In every market we also have locally made items.

How has selling at Whole Foods Market helped your brand?

The transition from food trucks to wholesale was relatively seamless because we already had our co-packing relationships in place. It is becoming more important financially as the scope of the distribution of our products increases. At the beginning we were in three Whole Foods and it was almost more work than it was worth. We were putting so much time and effort into it for such limited revenue, it didn’t make much financial sense. However, there are some nonquantifiable aspects to having your product in Whole Foods. It shows the legitimacy of your product to your customers in that it meets the Whole Foods criteria of being natural, healthful, and sanitary. Now we are in 22 Whole Foods Markets in southern California and it really contributes to the business.

How is running a restaurant different from running a food truck?

The Coolhaus store was a way to capitalize on those customers in Los Angeles who don’t use Facebook or Twitter or don’t want to chase down a food truck. Startup costs are a lot more, but for us the profit margins are actually better. We use the store as our corporate headquarters and the base for all the Los Angeles food truck operations.

--Author David Weber is the cofounder of the Rickshaw Dumpling Bar and the founder and president of the NYC Food Truck Association. Excerpted with permission of the publisher John Wiley & Sons, Inc., wiley.com, from The Food Truck Handbook: Start, Grow, and Succeed in the Mobile Food Business by David Weber (c) 2012 by David Weber.

COMMENTARY:   Coolhaus is one cool ice cream concept.  I love the uniqueness of the concept. Natasha Case has made mobile food dispensing chic and classy. The Coolhaus trucks are almost too cute to be ice cream trucks. But, its not all about the truck, but the impeccable service and quality of those ice cream sandwiches.  Boooo!! to the New York City Police Department for trying to shutdown mobile food vending trucks.  Great job Natasha!!      

Courtesy of an article dated April 16, 2012 appearing in Fast Company

 

HOW RED MEAT, AND A DISGUSTING MEAT ADDITIVE CALLED 'PINK SLIME', IS KILLING AMERICANS BY THE MILLIONS

A NEW STUDY SUGGESTS SOME TERRIFYING RISKS THAT COME WITH EATING JUST A LITTLE RED MEAT. BUT RED MEAT IS AN ALARMINGLY LARGE PORTION OF THE AMERICAN DIET.

No meal seems quite so American--or even quite so mouth-watering--as a nice thick porterhouse steak, or a hamburger straight off the grill. The only problem is that these meals appear to be killing us.

That was the recent finding of a study that showed that with each additional 3-ounce portion of red meat you eat each day, you get a 12% greater risk of dying in a given year, a 10% greater risk of cancer, and a 16% greater risk of cardiovascular disease. Let me repeat that, because it’s absolutely crazy: A 12% greater risk of dying in a given year, a 10% greater risk of cancer, and a 16% greater risk of cardiovascular disease.

If you just saw a bunch of meaningless words and numbers in the paragraph above, here’s the gory details laid out in one infographic. (The numbers for early death and cancer are slightly different; this is presumably because the designers used an older study.) The truly scary part is that not only is red meat dangerous, but Americans, more than virtually every country on Earth, love red meat:

Click Image To Enlarge

Perhaps the most quietly alarming detail in the infographic above is the figures about processed meat. And it squares with the most recent study available--the same one I cited above found that the 12% risk of dying jumps to 20%. Your risk of cardiovascular disease rises to 21%, and your risk of cancer rises to 16%. That’s right: The cancer risk resulting from eating a hot dog everyday is 60% greater than from a hamburger.

The infographic then tries to posit a reason: Something called pink slime:

    Click Image To Enlarge

This is where the data is starting to tip to shaky ground: Pink slime, though it does appear in many processed meats, hasn’t been thoroughly studied for its health effects. Nonetheless, that recent study about red meat has essentially caused a collapse in the industry. Which is something of a red herring (pun intended): I suspect that when the furor about red-meat dies down, we’ll all go back to our usual ways, happy to now avoid a little pink slime where we can. Not so fast. Red meat is really the problem.

COMMENTARY:    I seem to recall that back in the 90's there was a red meat scare, and several steak houses like the Sizzler, and fast food restaurants serving hamburgers suffered declines in business, and some of them even had to close locations or shutdown.  Well, it now appears that the warning that red meat is dangerous to us was all true.  

Out of curiosity I researched the Average Annual Per Capita Consumption of Meat, and the following chart confirms that red meat consumption is down on a per capita basis, and chicken consumption is substantially up.   That's a good thing, but red meat is so dangerous that even if you eat red meat just a couple of times a week, that's all it takes to do longterm damage to your health.

Courtesy of an article dated March 28, 2012 appearing in Fast Company Design