Marketplace - American Public Media
McDonald’s hasn’t been doing so hot lately. Same-store sales dropped in the third quarter of this year, which helped drag profits down 30 percent. Its CEO said the company’s facing “formidable” headwinds.
Large ships don’t turn easily, but one of the changes the company’s announced is a more regional focus, breaking the country into four zones (instead of its old three) to better respond to the individual tastes of customers in different parts of the country.
But for years, McDonald’s succeeded with a "one size fits all" approach.
“When we look at what has made McDonalds a strong brand, it's consistency, convenience, affordability and strong fast service,” says Darren Tristano, with food-research firm Technomic.
However, he says diners today are more interested customization, like choosing what goes in their burrito at Chipotle.
This is especially important to millennials, says Andy Brennan, a food analyst at IBIS World.
“Millennials want something different,” he says. “They want to feel like things are customized toward them, they want the ability to choose, and they want high quality things, so unfortunately, McDonald’s doesn’t fit the bill for any of these requirements.”
“The marketplace today is increasingly dynamic and diverse,” Mike Andres, McDonald’s USA President said in a statement. “These changes will enable us to better leverage and support our local market management structure so that we are more nimble in response to and anticipation of the local customer needs and market conditions in a relevant and timely way.”
“The same things that worked nationally, don’t work nationally now,” agrees John Gordon, a food industry analyst with Pacific Management Consulting Group. He says a menu item like spicy chicken wings may play well with customers in Detroit, but miss with customers in Salt Lake City.
Gordon says this regional push is a small step for McDonald’s, but symbolic of the way it needs to decentralize—and a sign that bigger changes may be coming.
The Supreme Court is expected to announce this week whether or not it will hear the latest challenge to the Affordable Care Act—the King versus Burwell case. That case asks whether the Affordable Care Act should be taken literally. UPDATE: The court decided against hearing the challenge.
The ACA specifically grants insurance subsidies for policies bought on state exchanges. Now the question is: “Can the Internal Revenue Service say, 'All right, even for people who’ve purchased insurance through the federal exchange, they can also get the tax credit,'” says Miller Baker, a partner at McDermott, Will and Emery.
Another big ACA case involves something called the Origination Clause, which requires all tax bills have to start in the House of Representatives. This case could face long odds.
“I believe that there has only been one successful Origination Clause case in history, and that was over a century ago,” says Timothy Jost, a professor at Washington and Lee University Law School. Jost says opponents of the healthcare law will have to prove it’s a tax bill. And he says it did originate in the House, but was overhauled in the Senate.
There are other lawsuits that challenge specific aspects of the healthcare law—from contraception to the delay of the mandate for employers to insure their workers—but these aren't likely to overturn it, experts say.
Pecan Pumpkin Instant Oatmeal (with "rich pumpkin flavor")
Pumpkin bar baking mix
Pumpkin pancake and waffle mix
Pumpkin cream cheese muffins
Mini ginger pumpkin ice cream mouthfuls
Pumpkin pie mochi ice cream
Pumpkin bread pudding
Pumpkin cornbread croutons
Have we reached peak pumpkin? How does one flavor take over the marketplace?
Kantha Shelke, a food chemist and principal at Corvus Blue, says that one big reason pumpkin has become popular is the cost.
"Pumpkin spice is an affordable pleasure. Anybody can have it. And it takes you back to the holidays and you don't have to travel anywhere," Shelke says. "You can sit at your desk and go anywhere instantly. And I think that is something that no other food can give us today and that it why pumpkin spice is so popular in the western world."
Flavors like pumpkin have become easier for food companies to re-create as well. "We are becoming more adventurous because food companies have done a tremendous job of delivering exactly the same notes. If you closed your eyes you would actually think there was a pumpkin pie baking right next to you. We couldn't do that a few years ago. We can do that today."
What flavor could be the next pumpkin? Shelke says think spicy.
"I think we're going to see more peppers. Because while people get used to this nice pumpkin pie spice flavoring, they now want a small kick to it. That kick can come from peppers. And peppers are growing in leaps and bounds. People like peppers. People think that the capsaicin, the heat in the pepper, is good for them."
This week, guest host Barbara Bogaev sits down for a virtual brunch with Neil Irwin, a senior economics correspondent at the Upshot for the New York Times, and Shannon Bond, a media correspondent for the Financial Times.
This weekend's reading list:
PBS Newshour: From guns to book, 11 midterm ballot measures to watch
The Washington Post: America's top fears: public speaking, heights and bugs
Wall Street Journal: U.S. economy grows at steady clip
More than 30 million U.S. homes lack high-speed internet, and as David Crow from FT finds, that has a big impact on inequality in the country:
The majority of families in some of the US’s poorest cities do not have a broadband connection, according to a Financial Times analysis of official data that shows how the “digital divide” is exacerbating inequality in the world’s biggest economy.
Barack Obama has pledged to close the digital divide, and in 2010 the president unveiled a national broadband plan with the aim of giving “every American affordable access to robust broadband” by 2020.
But the new figures from the Census Bureau, which collected data on internet use at a sub-state level for the first time last year, show how hard it will be to hit that target in the next five years. There are still 31m households in the US without a home or mobile broadband subscription.
Bonnie Robinson Beck from Larchmont, New York, has always wondered why butter cubes are long and skinny in the east, and short and squat in the west. Where do the two sizes meet, and why did this come about?
Until we got this question I had no idea this was a thing. But then I moved to Los Angeles, and it's true: I grew up with long, skinny sticks of butter in the east… and out here they are short and fat…
As we've learned, there is an expert out there for absolutely everything. The University of California Davis used to have a Dairy Research and Information Center. I say "used to have" because it was basically one guy who's now retired. His name is John Bruhn, and I called him up.
He said that the West Coast used to be very far behind in terms of dairy production. In his words, "In the 1960s the West Coast was [deficient] in terms of milk production to make...dairy bi-products like cheeses – and butter in particular. All our milk went to fluid needs. Whole milks, low fat milks and non-fat milks, for example."
Basically there was enough milk to drink, and that was about it. But it changed quickly – in fact, California was on its way to becoming the number one dairy producing state.
However, because the butter industry started so much earlier in the east than it did in the West....
"...the size of the cube you see is a result of newer equipment purchased at the time to package the butter," Bruhn says.
Now, that kind of answers the question, but when you stumble upon the nation's foremost dairy research institution, you've got to go further. So I did some digging deep in the annals of UC Davis's archives, and I found this old research paper written in 1948 by a researcher named Milton E. Parker. Turns out, the reason so many items in the grocery store come in a sealed bag inside of a cardboard carton is because of a guy named Frank Peters. He created that design for a line of crackers called "Uneedas" back in 1889.
It was revolutionary. It kept the crackers fresh and stopped them from breaking.
Like everyone else, the butter industry thought the "Peter's package" idea was great. For a long time, butter had been shipped in wooden tubs and scooped out into cheese cloth dipped in ice water, then handed to customers in a ball – not the most appetizing sell. This new packaging made it clean and more appealing. Plus, customers could tell they were getting the right amount.
Butter was traditionally sold a pound at a time, so they made the box to fit a pound. A restauranteur in New Orleans wrote a letter to his butter supplier, Swift and Company in Hutchinson, Kansas, and asked if he could get ¼ pound sticks. He was a big buyer so they complied, the idea caught on, and that's when the stick as we know it was born.
A lot of people continue to be passionate about butter. In fact, since 2007, Land O' Lakes actually started making both sizes to sell in different parts of the country.
And finally, for the record: The long and skinny sticks of butter are called Elgin, because that's the company that made the machines. The other ones are called "Western Stubbies."
Eric Hesse is a fisherman based in Cape Cod. Here's how he describes his job:
When I started, there were hundreds of boats that would go out especially in the winter chasing codfish. But there aren’t really any codfish left.
They were severely depleted by overfishing and it’s made for kind of a bleak picture. There’s no telling when it’s going to come back. We’ve started to look for alternatives and the dogfish is one of those that’s really hard to ignore since the ocean is full of them.
Dogfish is a good tasting fish but a hard one for us to market. The name isn’t particularly attractive and right now the only market for dogfish is in Europe. In Italy, it’s spinarolo and in Britain and Spain and France, it’s fish and chips…or fish and chips.
It’s great that we have a market. It’s unfortunate that the market we have results in a very low price to the boats here on the order of 15 to 20 cents a pound to the boat. It’s hard to make a go with those prices.
My kids are about to go off to college. And from the time they were about 4 years old, they said 'we’re going to be the best fishermen ever!' They haven’t said that the last few years because they’ve seen that it’s been getting harder and harder and there’s not a lot of excitement or great moments anymore. I think the next generation probably enjoys fishing as much as I did or any other generation did. I think if the dogfish took off and we had domestic markets, there is room for younger people to get involved.
It’s one of the greatest jobs you can have. You can’t beat the view, nobody tells you what to do, and the harder you work, historically, the better you do. It’s a great way to go about making a living when there’s something to catch.
Hear more stories in our Disappearing Jobs series:
This week, we want to hear how things that could be considered vices have affected your financial life. Cigarettes, video games, pot...whatever your predilection, we want to know.
In a no-frills gym, on 16th street in Manhattan, a group of young athletes is getting down to lifting some serious weights. The guys here are strength training, and amidst the concentration, sweat and grunting, as legs and arms are clenched and unfurled, you can practically feel the tiny muscle fibers tearing. The teenagers here are part of Xavier High School's rugby team, and they are serious about their workout.
If they work hard enough, some of them could end up at the Olympics one day playing rugby.
Rob Spenser, dressed for Halloween outside his job at a café serving Australian food. Until recently, rugby has been seen as something of a novelty in the U.S.Sally Herships
For the first time since 1924 (when the USA beat France to take the gold) rugby is going to the Olympics. And in case you suffer from American-itis when it comes to the world of international sports, i.e, your knowledge of rugby does exist, but is abstract – then let us offer you a description from 16-year-old, Jack Palillo, a junior at Xavier High School:
“It’s a game played by gentlemen, but it’s a ruthless game,” he says. "The people that play the game, they’re pretty scary and mean. But after every single game, usually you have some kind of reception. And the people who are your enemies five minutes ago, you’re eating lunch with them."
Palillo plays 15-a-side rugby. The teams playing at the Olympics will use seven players. But either way, rugby is a cross between football and soccer. You can’t throw the ball forward, and the players don’t wear helmets. And for American Pro athletes there’s another difference, which even high-schooler Palillio is aware of:
“You’re definitely not getting paid as much,” he says.Sixteen-year-old Jack Palillo, sweating after his workout calls rugby players “animals.”Sally Herships
While it packs stadiums elsewhere, rugby simply isn't a big deal in the U.S. Since the announcement that the sport would be played in Rio de Janeiro in 2016, tiny bubbles of anticipation and excitement have started to percolate through the industry, but depending on whom you ask, it can be hard to tell what kind of difference the news has made. At the Times Square office of Michael Principe, CEO of The Legacy Agency, a sports marketing and management company, the decor is all-American. Football, basketball, and baseball memorabilia fill his office, but there's only one rugby item - a lone jersey, framed and hung on the wall.
"Candidly, we didn’t spend a ton of time thinking about rugby five years ago. We didn’t spend a ton of time thinking about it three years ago,” says Principe.
But now the Legacy Agency is thinking about rugby. When a sport goes to the Olympics, "it's a big deal."
Notes Principe, when the Olympics goes out to TV viewers around the world, NBC and other sponsors will spend ungodly amounts of money on broadcast rights and commercials – "billions of dollars."
And this is an extra-special case.
"It’s not often that the United States is considered a developing market," says Principe, "an emerging market, but with rugby, it is."
But ask the folks who run the national rugby team, and they say finding funding is a different story.
“There was a perception around the world that the minute the game went Olympic, suddenly everybody would be throwing tons and tons of dollars at all the big Olympic countries,” says Nigel Melville, CEO of USA Rugby, the national governing body for the sport.
Melville says the Russians and Chinese both threw government money at their rugby teams, but in the U.S., not so much.
"The biggest challenge over here is there is no government funding," says Melville of finding money to subsidize an Olympic team, "it’s reliant on sponsors and fundraising.”
Melville says the athletes training for the Olympics get a stipend – but it's only about $20,000 a year. As for the Eagles, there’s a donate button on the team's website.
There is a small payment for team members, but it's not enough to live on, says Mike Petri, who, when he's not working as a science teacher, or coaching Xavier High's rugby team, plays scrum-half. Petri says he considers himself a professional athlete in the way he approaches the game, but not in the financial sense, but he says, he's very hopeful for the future of the sport in the states. Being part of rugby now, he says, is like working for NASA.
"Realizing that we could send people to Mars," he says. "Personally, I’m probably not going to be the person that goes to Mars, but if I were in NASA I'd be really excited and really pumped for the guys who did get to go."
But there's another draw beyond salary for 16-year-old Xavier High School team member John Patterson to playing rugby.
“It’s kind of associated with [the] foreign, but yet manliness, so, that’s always good,” he says.
Rugby, while exotic to some Americans, still possesses a familiar allure.
"When we play," says Patterson, "we're right by the bus stop, and everyone stops and watches."
No matter how bad or good your financial situation is, what's one thing you will always spend money on? Do you feel guilty?
According to a poll released this week by Bankrate.com. Two-thirds of Americans are watching what they spend each month.
Last week we asked listener’s to tell us their stories of what they will not give up – even when their budgets are tight. Many listeners wrote in.
Nanette Karapetian, a Psychoanalyst in Los Angeles, spoke to Marketplace Weekend about your guilty pleasures.
Retailers, who were expected to hire more than 700,000 seasonal workers this holiday season, are increasingly relying on online outreach to reach potential workers.
FedEx, which combined with UPS planned to hire 150,000, says it’s relied heavily on social media this season.
“Word of mouth is always a popular way to get more people on board,” says FedEx spokesperson Bonny Harrison. “We also highly target on… various career websites, and you’ll see this year that we’re using social media very heavily to try to promote and advertise the fact that we have these jobs open.”
Companies looking for holiday seasonal workers are casting a wide net and getting creative with their recruiting efforts this year, says Ellen Davis with the National Retail Federation. That’s because unemployment is down, and there are fewer people looking for seasonal or temporary work.
“What we’ve seen on a national level is retailers really using their recruiting efforts by email and even leveraging their own social media channels,” Davis says.
Companies are also getting creative. Retailers, for instance, may approach potential candidates who might be looking for a second part-time job or who can be enticed by the potential of getting employee discounts during the holiday shopping season.
But once the applications start flowing in, much of the work heads to the local and regional levels, Davis says. “And what you then start to see happening is on the local level… managers will collect applications, go through them, interview and hire candidates.”
It’s a divide-and-conquer strategy. If you have to hire lots of people at once, empower local managers to hire a few each.
"Meeting the person who’s going to make the decision, in this case it’s often the store manager, is critical,” says John Challenger of the Chicago-based job placement firm Challenger, Gray & Christmas.
But for those big hiring drives, such as UPS which has held regional recruiting and interviewing events in Chicago in which it processed hundreds of applicants at a time, Challenger says it’s still mostly about matching up open positions with applicants' past experiences.
The study ranks Internet service providers in a few ways, says Nick Russo, a policy analyst at the Foundation. But the most interesting for consumers is the speed you can get for $40 in the cities.
“Seoul, Hong Kong and Tokyo rank in the top three,” Russo says.
San Francisco is number six but LA, New York and Washington are at the bottom of the list. That means a lot of Americans are basically paying more money for slower service. Why is that?
Christopher Yoo, a professor at the University of Pennsylvania’s Law School, says it’s simple.
“Seoul, Hong Kong and Tokyo are all the result of massive government subsidies,” he says.
Those countries have invested about $300 million for that fast, affordable service, Yoo says. But that’s not going to happen in the U.S., where Congress is looking to makes cuts in the budget for internet services
Al Hammond, a professor at Santa Clara University’s School of Law, says there’s another force at play.
“I think it’s the lack of competition,” he says.
Hammond says, unlike other countries, the big Internet service providers in the U.S. aren’t required to rent out their broadband pipes to smaller ISPs. That means people in some cities are limited to one or two choices for internet service. And Hammond says some smaller cities are trying to provide cheaper, faster service to their citizens but the big ISPs are fighting that effort.
If you're craving a pumpkin spice latte but are tired of waiting in line to get one, you're in luck.
Howard Schultz, the CEO of Starbucks, said world's biggest coffee company is going to roll out a delivery service. The service will be available through the Starbucks mobile app starting in the fall of 2015.
"Imagine the ability to create a standing order that Starbucks delivered hot or iced to your desk daily," Schultz said.
We are, Mr. Schultz. We are.
Leigh Gallagher, an Assistant Managing Editor at Fortune magazine, and Cardiff Garcia, from the blog FT Alphaville join Kai to talk about the week in review.
Listen to the full conversation using the audio player above.
Just days away from midterm elections, depending on where you live, you might be getting bombarded by political ads on TV and radio. Meet one of the people behind the curtain.
Jeff Trueman runs a company called High Gravity Sounds. He works with producers and post production houses to create custom sound design. This time of year, he's busy producing music for campaign ads.
Listen to the full story in the audio player above.
It used to be that if you really wanted to scare economists and the public, you need only mention one terrifying word: inflation. But really, inflation is a lot like candy. A little bit here and there makes your life so much better, and — as millions of kids are bound to find out this weekend — too much leads to ruin.
One of the goals of Quantitative Easings I through III was to stimulate inflation up to a point; 2 percent was the Federal Reserve's stated goal. And even though inflation never quite reached that target, QE is ending.
Now Japan is picking up the torch. For decades, the once booming economic powerhouse has been suffering from stagnation, or to put it another way, a lack of inflation.
“Japan wants inflation,” says economist Justin Wolfers. “Last night they announced that they were going to buy even more bonds because they aren’t getting as much inflation as they wanted.”
So why do Japan, the U.S. and Europe want to stimulate inflation? Because inflation, in the right amount, is a sign of economic growth. In a healthy economy, wages increase steadily. In turn, businesses raise prices and that leads to inflation.
At the moment, wages in the U.S. and Japan are down when adjusted for inflation and lots of people are still looking for work. “Those of us that have jobs probably don’t feel comfortable asking for a raise, and all those people looking for work are willing to accept work at fairly low wages,” says Wolfers. “So all of that puts downward pressure on wages.”
Typically the first thing a government can do to boost the economy, cut unemployment and raise inflation is lower interest rates. But, says economist Josh Bivens, “the short term interest rates that the Fed controls directly, have been stuck at zero since about 2008 and interest rates can’t go below zero.”
Which is why the Federal Reserve and now Japan have turned to the more unconventional tool, buying trillions of dollars in bonds.
But these tools don’t get used in a political vacuum. People disagree about how much stimulus to inject into the economy. That makes finding the right amount of stimulus harder than getting a kid to sit still after eating a bag of candy.
It's Halloween, and at "Marketplace" we're getting in the spirit. Marketplace Morning Report Producer Katie Long has been working on her costume:October 31, 2014
There are plenty of stories to read and numbers to watch today — Japan's stimulus, the ongoing legal drama surrounding Ebola quarantines, the impending midterm elections — but since it's a holiday and a Friday, we're going to stick to only the spookiest numbers today.
To get us started, Quartz is featuring the ten scariest economic charts out there. From European unemployment to student debt, keep repeating to yourself "it's only a chart, it's only a chart..."
Here are some other spine-chilling stories we're reading today.2
That's how many people have died from accidentally eating THC-infused edibles since Colorado legalized medical marijuana use. Denver police have put out a PSA warning parents about the varieties of edibles that look like typical Halloween candy, the New York Times reported. There haven't been any reported cases of people passing out edibles, and some Marijuana advocates say the claims are alarmist. Others are pushing for tighter regulation of the treats.
One of the best trick-or-treating neighborhoods in the nation — Noe Valley, San Francisco — according to a study by Zillow. In last week's "Dear Prudence" column over at Slate, Prudie ripped into a self-professed one-percenter for griping about children from outside the area coming over to trick-or-treat. It's a well-known phenomenon, also explored in a Washington Post column Thursday. The conclusion: don't spend Halloween dressed up like Scrooge.
The price of Starbuck's "secret" Halloween treat, a "Franken Frappuccino." The unholy concoction is a green tea Frappuccino with three pumps of white mocha sauce, three pumps of peppermint syrup and mocha java chips, the LA Times reports. [Shudder]
Like a Halloween ghoul jumping out of nowhere with a pile of candy, Japan's central bank today announced its radically increasing its economic stimulus program. It's an effort to stop deflation and to counter act a hike in the sales tax that depressed consumers in Japan. Up went Japan's Nikkei stock index by 4 point eight percent—That's the like the Dow jumping 825 points. And there were other consequences. More on that. Plus, the two biggest cinema chains in the U.S. reported dismal summer profits this week, even though summer is supposed to be prime movie-going season. We look into the flailing movie theater industry. Plus, we've been calling our sources to see what might next Tuesday's mid-term elections mean for the economy, jobs and businesses.
Exxon Mobil and Chevron report earnings on Friday, and life for Big Oil has been neither light nor sweet lately. Crude prices are at near four-year lows, and that’s not even the whole story.
Even before oil fell below $100 a barrel this fall, big companies were cutting investments and unloading assets. The business is getting more expensive as oil gets harder to find.
“No cheaper, no easier, as the oil company CEOs like to say,” says Steven Kopits of the consultancy Princeton Energy Advisors. “Where they go in deep water, for example, is smaller fields and deeper and more challenging wells. So costs have tended to rise over a period of time.”
It’s true: shale oil from fracking is getting cheaper to produce. But big companies rely on big fields. And now, oil sells for just $85 a barrel. Several majors saw profits fall a third over last year.
The good news: many of them also refine oil. And that’s profitable.
“Companies that have refineries are going to get a boost from refining margins, which is going to offset their upstream losses to a certain extent,” says analyst Amrita Sen of the London research firm Energy Aspects.
Still, low prices mostly hurt companies. And crude could stay south of $100 a barrel for awhile.
The two biggest cinema chains in the U.S. reported dismal summer earnings, not surprisingly, on the heels of a lackluster summer for films.
Revenue was down for films from $4.85 billion in summer 2013 to $4.05 billion this summer, and consequently Regal and AMC announced drops in earnings of 15 and 9 percent respectively.
That’s problematic because summer is when studios work to lure lots of eyeballs with big blockbusters.
"July was really the killer,” says Keith Simanton, managing editor of IMDB which keeps track of box office numbers through its website BoxOfficeMojo.com.
Year over year, July 2014 was down 38.5 percent. Last time it was down that much was in 1995, when "Waterworld" was the big July premiere.
“A number of films did reasonably well,” Simanton says, "but were not the gigantic smashes that was hoped or supposed.”
“Hercules," for example, brought in $99 million domestically and had a production budget that Box Office Mojo estimates at $85 million.
With the bad summer box office news, Regal Entertainment Group, which is the nation’s largest cinema chain, said it’s considering selling itself.
"It’s about the last thing I expected to hear in my lifetime,” says Barton Crockett, a media equity analyst with FBR Capital Markets.
Crockett says Regal might actually be in a position of strength at the moment, because this past summer wasn’t as much a trend as a part of a larger cycle. For one thing, there are high expectations about the slate of movies scheduled for release in 2015.
“It’s kind of smart at one level to think about selling into what seems to be a lot of investor enthusiasm about a strong 2015,” Crockett says.
That enthusiasm includes high hopes for the two films the comic book powerhouse Marvel plans to release next year: “Avengers: Age of Ultron” and “Ant-Man.” Both films are slated for summer 2015.