Crowded Hollywood club scene turns bearish

On every news medium we are reminded of the carnage in global markets. Banks are collapsing, governments are making epic financial contributions to the private and public sector and job cuts are increasing. Commercial and personal financing is harder to source and the amount and terms somewhat sharp compared to the last few years. Confidence is low and inflationary pressures have been driving up energy and food prices. Businesses are naturally concerned about surviving and the next few years are clearly not going to be an easy ride.

Most all of our clients – from hotels and casinos to bars and restaurants, are challenged like everyone else. The economic reality is inescapable. However whilst doom and gloom may be the flavor of the month, and for many months to come, that is not the only thing we see.  Arguably, a recessionary environment can provide a platform for innovation and economic growth through entrepreneurialism and creative thinking and we encourage our clients to take novel approaches to countering the downturn.

We are all suffering. Companies will continue to suffer and the insolvency practitioners are clearly going to be kept busy for much of 2010. People are spending less and selectively as disposable income is depleted or conserved in most economic groups. A difficult economic climate requires considerable ingenuity and the ability to look at things differently. And in looking at things differently, the reality is that there are many opportunities out there – opportunities not just for new business but also to improve existing businesses. When things are at their most difficult, you cannot just maintain – by doing that, you’ll in fact move backwards – you have to grow.

Along with a long list of sectors taking a beating, the world of hospitality and leisure is suffering. Bankers are calling in loans, rents negotiated in the ‘good times’ can be stifling and cash flow is constantly under pressure.

With thousands of sites standing empty, landlords and business owners must contemplate other sources of revenue generation to counter their existing challenges. What can they do in this climate if there are less customers, no customers, low spending customers or a business with a model that is currently untenable? Look at your stock, your financials, your customer base, your payroll and your marketing. Look at your margins – in your overall business all the way down to individual services and products. Take this opportunity to look at what makes you money, what draws in the customers and what is essential to the underlying business to ensure that when times improve, you have the infrastructure and team in place to handle that. At times, make tough decisions because you need to be lean to operate in this climate.

The message we give to our clients is be cautious but don’t be inward and conservative. Look outward and look differently at your business model, at your job remit and/or your skills and work hard to seek out where the prospect lies.

There cannot be any “sacred cows” or unchangeable tenements of your business, you have to look and relook at all aspects of the way things are done within your business.  Whether it’s redefining your customer, your product, your delivery method and or your staff, you’ve got to make the changes that make you undeniably viable; you cannot rest on past results or simply what’s worked for years.  The manifest of “Doom & Gloom” is not a given and in fact is only a reality if you allow your business to be stagnant and ignore the need to constantly evolve when times are toughest.

BY COURTENAY EDELHART, Californian staff writer
cedelhart@bakersfield.com | Wednesday, Apr 28 2010 12:29 PM

Frozen yogurt shops are back.

In the 1980s, they were as ubiquitous as big hair and ripped up sweatshirts.

Now it seems they are enjoying a renaissance. Bakersfield has two new ones so far this year, and a third is set to open downtown next month.

“The yogurt craze happened in the ’80s, again in the ’90s and again now,” said James Sinclair, a principal at Los Angeles hospitality consultant OnSite Consulting. “It’s almost every 10 years like clockwork.

“The key reason for this explosive growth and what seems like a yogurt brand in every available corner, strip mall and random location is actually purely economics,” he said.

The barriers to entry to this industry are so low that any time there is a depressed real estate market, yogurt stores spring up in all the newly affordable commercial real estate space, Sinclair said.

A yogurt store doesn’t require a lot of upfront expenses, he said. Inventory and equipment are fairly cheap, and it doesn’t take much time to train management and staff.

“An operator can open in almost no time at incredibly low cost,” Sinclair said.

With so many eateries going under in the soft economy, there also are good deals to be had on restaurant equipment, said Peter Siegel, founder of BizBen.com, a Web site for buyers and sellers of small businesses.

Then, too, it’s a simple matter of timing.

“Yogurt, ice cream and other cold food places tend to open just before summer, just like you see more coffee shops opening up right before winter,” Siegel said.

The frozen yogurt industry has done a really good job of marketing itself in franchise networks, too, Siegel added. Chains are attracting people interested in franchises by stressing strong profit margins and the low cost of the product at a time when consumers are watching their spending, he said.

That was one of the draws to the business for Churros and Yogurt, an independent frozen yogurt shop that opened March 25 at Valley Plaza mall.

“It’s a good, healthy treat and it’s affordable,” said Raoul Biteng, who started the store with business partner Logan Bui.

Churros and Yogurt offers eight flavors of yogurt and 27 toppings, including fresh fruit and candy, as well as, of course, churros.

Biteng said he chose to start out in the mall because of the built in foot-traffic there, but would like to expand to other areas and eventually sell franchises.

Another newcomer, Love Yogurt, opened in a strip mall this month at 6077 Coffee Road north of Olive Drive. The owner did not respond to repeated requests for an interview.

BurrBerry Frozen Yogurt is scheduled to open in a week or two in the Moronet Professional Building, 1514 18th St.

Attorney Bruce South is opening BurrBerry Frozen Yogurt downtown with wife and business partner Pam Boucher.

They thought downtown would be a good location for a yogurt shop.

“We sat out there for an hour one day and just counted the people walking by, and there were 130 pedestrians,” South said. “That’s a lot of potential foot traffic.”

Along with yogurt, the 1,300-square-foot store will sell low-fat pastries and a full line of gourmet coffees.

BurrBerry Frozen Yogurt is trying to differentiate itself from the competition by attracting the health conscious, South said.

“We want to provide a nutritious alternative to the Snickers bar in the afternoon,” he said.

So no high-fat yogurt flavors such as chocolate, and candy toppings will be gone in favor of such offerings as granola, fresh fruit and coconut.

The yogurt selection will be burrberry tart and a rotating flavor of the month. Or consumers can buy a swirled blend of the two.

Ice cream shop Cold Stone Creamery, which has three locations in Bakersfield, discontinued frozen yogurt at one point only to bring it back.

Frozen yogurt is not a fad, said general manager Violet Garcia.

“Customers are much more health conscious now, wanting the low-calorie or low-fat selections,” she said. “So many people are watching what they eat.

“I think we’re going to keep it around for a while.”

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Will Your Texting Policy Stand Up in Court?

By Minda Zetlin

A new Supreme Court case casts a shadow on employee text messaging rules. The case involves an employer sued for reading an employee’s (highly sexual) text messages, even though he sent and received them using company-owned equipment.

You have a mobile workforce, so you issue mobile devices to your employees. You pay for their mobile service and make sure their equipment is working. Since it’s intended for business, you have the right to read employees’ text messages. What’s more, you have a policy that says so, in so many words. All employees must acknowledge this policy when receiving their Blackberry devices or other smartphones.

Legally, you might think you’re well covered — and you might be wrong. In Ontario, Calif., police officials reviewed an unusually large number of texts sent by a police sergeant named Jeff Quon. They found hundreds of sexually explicit texts. Quon sued, arguing that his bosses had no right to read the texts. The case made its way up the food chain to the Ninth Circuit Court of Appeals, which ruled in favor of the cop. Recently, the U.S. Supreme Court agreed to hear the case, with a final ruling expected this summer.

Whatever the court eventually rules, this is unlikely to be the last employment case involving text messages, and employers find themselves setting text and other communications policies in an increasingly confusing world. “Technology is changing fast and the courts are left to catch up,” notes Jason C. Gavejian, an associate at Jackson Lewis LLP. “The biggest challenge is the interplay between federal law, and state and local law,” he adds. “In one New Jersey case, the courts ruled that employers have an obligation to make sure employees are not viewing child pornography. That requires monitoring. Now the Supreme Court may rule that monitoring is illegal.” If it does, the two rulings will be in direct conflict, and employers in New Jersey will have to choose between disobeying state and federal courts.

It should be clear by now that setting an appropriate policy governing the use of mobile devices is a very serious business. But many small companies don’t take it seriously enough, says Michael McAuliffe Miller, partner in the labor and employment group at Eckert Seamans Cherin & Mellott, LLC. “The biggest mistake companies make is that they have no policy on texting and mobile communications,” he says. “Or else, they have an off-the-shelf policy that they’ve downloaded from the Internet. Then they’re inconsistent about enforcing the policy, especially with employees everybody likes.”

Develop a policy on texting

If the above is a good description of how not to handle texting policy, what’s the right way to do it, especially in light of the Quon case? Unfortunately, there’s no one right way, but here are some steps that may help:

Have the right people create policy. “In many companies we consult, these policies are set by an IT person,” notes James Sinclair, principal of OnSite Consulting, a hospitality industry consulting firm that specializes in helping financially troubled companies regain profitability. “I’m a big believer that these should be management decisions.” Top management should set mobile communications policy, with input from legal counsel.

Update the policy often. Especially any time you provide employees with new types of devices. “One of the issues in the Quon case is that the police force’s policy had been written to apply to e-mail, not texts.”

Reduce expectation of privacy. “Employers should have a policy that says employees have ‘no reasonable expectation of privacy.’ That’s the key phrase,” Miller says. The policy should be distributed to employees at regular intervals, and they should be asked to acknowledge their agreement. “Some employers make that consent interactive,” he adds. “It could be part of the employee’s log-in process.”

Specify who can change policy — and who can’t. In the Quon case, the police force had a formal policy that said texts weren’t private. But a lieutenant told Quon informally that if he paid for any texts beyond the 25,000 characters a month on his pager plan, no one would read his texts. “You should have in your policy that no one but a designated senior official of the company can change the policy,” Miller says.

Train managers about the policy. “You want to make sure managers get proper training so that when they inform employees about the policy they’re doing it in a uniform fashion, consistent with what the company wants to accomplish,” Gavejian says.

Specify how equipment is to be used. This is a tricky question. You can’t define unauthorized use too narrowly, Gavejian says. For instance, if you write a rule against sexually explicit text messages, it won’t apply to sexually explicit images. Instead he suggests a rule that company equipment be used only for business communications. At the same time, he acknowledges, such a rule may not be realistic. “You can’t stop someone from sending a message home saying ‘I’ll be late for dinner,’” he notes. “I don’t think there’s one universal policy everyone can apply. It has to be analyzed on a case-by-case basis, and depending what technology you’re using.”

Keep messages on your own servers. This is a potentially costly solution that isn’t right for every small company. But, because its clients’ data is always highly confidential, OnSite Consulting chose to route all e-mails and Blackberry messages through its own servers. “We worked with our general counsel and did a lot of research,” Sinclair explains. “By default, if you’re going through our server, you’re accepting our terms and conditions, and the messages are automatically copied and audited.”

This solution may become more popular in the wake of the Quon case: One of the questions at issue is whether his employer had the right to demand his text messages from their pager company, and whether the pager company was right in acceding to that demand. OnSite’s server is hosted and maintained by a hosting provider, but it does physically belong to OnSite. “We made it a priority and spent a significant sum for a technology we can’t see or directly use and that does not contribute to our return on investment,” Sinclair says. “But it provides another layer of protection for our clients.” It also provides a real-world model of how to most safely handle employee communications. “We have to do it,” Sinclair says. “We can’t walk in there as a consulting company and have a less-than-perfect system ourselves.”

The next big ‘thing’ is more often than not an old fashioned and tried and tested ‘thing’ with a shiny new layer of gloss and some lessons learnt thrown in to the pot. The same applies in management and in my view, the coming business year will see a greater focus on employee incentivisation, specifically how giving executives and/or employees some sort of shares in a company can be the key to unlocking your business’s potential. What greater way to motivate each and every staff member than by giving them all a little piece of the pie?

Employees share option schemes (ESOPs), pension plans (such as the USA’s 401k) or Enterprise Management Incentive Schemes (UK) are common in publicly traded companies across the globe. Share price data is publicly available information and those shares are therefore tangible and easy to buy and sell. Equivalent schemes in private companies are less widespread however a practical program for the business with a notional trading platform and ‘shares’ for staff is certainly implementable.

The economic challenges we are all facing compound the view that current incentives are inappropriate and can lead to problems triggered by a lack of short, medium or long term accountability for corporate decision making. Bonuses are generated by short term deliverables which may not be in the best interest of the company and a logical replacement to this practice is a more long term, golden handcuff arrangement. Share schemes are a safe and fair way to motivate staff whilst ensuring their goals are entirely aligned with those of the whole company.

The USA has typically led the way for such private share schemes, typically known as phantom stock options or stock appreciation rights (SARs). One of the founding fathers of such practice was UPS, founded in 1907. Until its listing on the stock exchange in 1999, the company was broadly owned by non management, management and supervisory personnel – a practice established by Jim Casey in the 1920s when he gave staff the opportunity to purchase company shares. UPS regularly ran a stock purchasing program before the IPO where staff could trade shares. In January 1997 the price was set at $29.25 and by March 1999 it had risen to $47.

In November 1999, the Company offered 10% of its stock to the public for the first time and on the first day of trading, the stock closed at $67.25. Not only did employees benefit until 1999 with the phantom scheme but with the IPO, they had a second and larger windfall with an even more liquid platform on which they could trade their shares. Hard work and loyalty were repaid twice over.

Why should you offer shares to your staff? It motivates employees, improves firm performance, fosters innovation and promotes sound financial health. It promotes staff loyalty and attracts and retains a high caliber of staff who want to have a vested interest in their future. To give staff the status of part owner of a business is a very powerful motivator.

There is of course a cost in implementing such schemes because you will undoubtedly need advice from specialists. There are accounting and tax issues at play here and it is critical to ensure that the framework you build takes into account local tax issues, accounting implications for your balance sheet and other miscellaneous issues such as ensuring that you allocate enough stock to a trust so that future employees can benefit, ensuring the vesting period is appropriate. Yes they cost money but perhaps the money spent on rolling one of these out would be made back, and several times over, by an all round improved performance by staff.

OnSite Consulting is a nationwide hospitality and consulting company to the casino, hotel & restaurant market. Providing immediate solutions for sites seeking turnaround, insolvency and concept repositioning. www.onsiteconsulting.com

Newest hot spot for a $78 steak: A shopping mall

by Megan Finnerty – Oct. 26, 2009 12:00 AM
The Arizona Republic

Malls are destinations for spending on new shoes, jeans and purses.

But now Valley residents are asking themselves if they’re ready to go to the mall for a $78 steak and a fancy cocktail.

Modern Steak opens today at Scottsdale Fashion Square with all the opulence of a high-end steakhouse – mirrored ceilings, glittering chandeliers and even a concierge desk. There are cozy leather booths for canoodling couples and an airy patio for those who prefer to be more conspicuously observed.

But the patio is topped with a white-metal awning that blocks the view of the parking lot. And, while diners at interior tables hear a trendy music mix, those who sit overlooking the mall get Muzak.

Yes, it’s a glamorous steakhouse, and it’s across from Banana Republic. But several signs say this might be just the right fit.

Dozens of high-end shopping centers across the country have added elegant dining during the past few years, and it’s worked when the restaurants are as swanky as the stores, says hospitality consultant James Sinclair. Malls want the new customers, and restaurateurs want the critical mass of prospective diners.

“More retail outlets are pursuing destination dining, name restaurants and name chefs, opening up the market for diners, tourists, dates, not just people going to the mall,” said Sinclair, president of Los Angeles-based OnSite Consulting.

Shopping at Scottsdale Fashion Square is decidedly luxurious: Shoppers might spend $975 on a sleek trench at Burberry or drop $395 on a Comme des Garçons dress shirt at the new Barneys New York.

The mall is one of America’s 10 most profitable, with $618 in sales per square foot vs. the national average of $420, according to a study by U.S. News and World Report and Green Street Advisors, a Newport Beach, Calif., investment-research firm.

Similar upscale dining-shopping mixes can be found at other top malls such as the Forum Shops at Caesars Palace in Las Vegas, with a Sushi Roku and a Spago, or the Ala Moana Center in Honolulu, with a Morton’s the Steakhouse.

So, when rebuilding the east wing as part of the Barneys expansion, mall-owner Westcor invited longtime Valley restaurateur Sam Fox to develop something to “wow customers,” said Greg Cochran, Westcor’s vice president of leasing.

“We want it to be one-stop shopping . . . the movies, bookstore, department stores and a unique dining experience. It keeps them in the mall longer,” he said.

Fox says it’s the perfect location. He has already been successful with Olive & Ivy (the destination for the trendy over-35 set) at the Scottsdale Waterfront, and the fast-casual pizza chain Sauce (six locations Valley-wide).

The corner of Scottsdale and Camelback roads is close to luxury resorts, expensive homes and similarly style-conscious restaurants. And that’s a mix that’s already proven successful for restaurant-and-retail pairings at less traditional Valley malls. Phoenix’s Biltmore Fashion Park has always been as much about dining as shopping, anchored by foodie favorites like Christopher’s Fermier Brasserie, now updated as Christopher’s & Crush Lounge. Kierland Commons is home to upscale eateries including Mastro’s Ocean Club, NoRTH and the Greene House. The latter two are also Fox’s.

But those are both outdoor shopping spots, not traditional malls, and neither has a restaurant with two “Conspicuous Consumption” wines at $140 per bottle.

So, at the 9,420-square-foot Modern Steak, Fox has tweaked some steakhouse conventions to speak to the mall crowd. During the day, it’s ladies-who-lunch friendly, with an $11 Cobb salad, a $10 Margherita pizza and a $15 maple-bacon-glazed salmon, placing it just a few dollars above the food court’s Pita Jungle.

Dinner is pricier but familiar, with an $18 warm Maine lobster salad, a $95 seafood tower, and that $78 HeartBrand Akaushi 8-ounce filet.

It’s the decor that makes this place as fancy as the sequined camisoles at the nearby J. Crew – and as appealing.

“It has to be used by all kinds of people . . . so it has to be gorgeous, welcoming, lush, vibrant and gracious,” Fox said.

Fox worked on the designs with Phoenix architect and interior designer Catherine Hayes, creating a space for everyone.

Older customers will like that many of the chairs have arms. Men will appreciate the extra-big stools at the bar. Moms will enjoy the stroller-friendly wide aisles and the airy brightness of a room finished in shimmering drapery, blue lacquer walls and a custom, white latticework ceiling. And fashionistas will swoon over the breathtakingly pink women’s restroom.

Eric Schaefer, writer of the Valley food blog Eric Eats Out, said he’s impressed with Modern Steak’s distinctive vibe.

“The common perception is that we don’t need another steakhouse,” said Schaefer, 36. “But (Fox is) making it a little more friendly, a little less stuffy, a little hipper and better for a wider range of price points.

“Bottom line, I would pay $70 to eat a steak anywhere if the food was good.”