Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

[FRED]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

Our Dec. 2008 forecast:

By Q4 2009, and Q1 2010 at the latest, pricing power will return to surviving retailers. We will see lower quality products and fewer discounts, followed by rising prices.

Actual:

Clothing Sales Sagged in December
Dec. 6, 2009 (WSJ)

Clothing stores and department stores discounted less and sold fewer items last month, a combination that undercut sales but will likely translate into higher fourth-quarter profits.

More observations in Inflation snapshots: December 2009.

[c1ue]

Re: Crafty Ways Restaurants Cut Costs

They left out what I call the 'Olive Garden' strategy: 2-2 ounce chicken breasts on a pound of pasta.

[mmr]

Crafty Ways Restaurants Cut Costs

Apparently, the only commodities that are deflating these days are portion sizes.

http://online.wsj.com/article/SB1000..._smallbusiness

Remember the old home-buying adage "location, location, location"? Relying on studies that track "eye flow" across menu pages in elaborate arrow-filled diagrams, Moll counsels his clients to spotlight higher-margin items in prime menu real estate. The Asian stir-fry, with ingredients that cost as little as 24 percent of the menu price, holds pride of place at the top right corner, while the grilled salmon burger (cost of ingredients, $2.78; price, $9) is intentionally buried at left center, the menu equivalent of Siberia. "The menu drives everything," says Moll—from an eatery's decor to the length of time it takes to execute a single dish. In fact, some potential recipes at Organixx have been vetoed just because they couldn't be put together by a cook standing in a single spot, with all the ingredients within arm's reach.

Indeed, the biggest cost cutting usually happens behind the swinging doors. To help keep food costs within a healthy 24 to 35 percent of overall expenses, Moll brought in an on-site drill sergeant. Mary Putman, who paces the kitchen prep area, pokes at plates to make sure bread crusts are intact and salad mounds don't lean too far to one side. When red peppers triple in price, she buys more zucchini to sub into the stir-fry and salads. If a line cook takes more than six minutes to prepare an order, she points sternly at her watch. Most important, she makes sure they're measuring every ounce of food instead of just eyeballing ingredients. Constantly nagging them to "quit heaping the scoop," Putman says a big part of her job "is pulling food off the line."

Which may leave some diners, well, a little hungrier than others. While all of Organixx's sandwiches cost $9, some are a little less generously proportioned. Eyeing the egg salad? You'll get an eight-ounce scoop. But order the rock shrimp salad and your filling weighs only five. (The reason? Moll's firm suggests that each dish cost between 22 to 30 percent of what it ends up selling for—and eggs are cheaper than shrimp.) Erwin Chang, the owner of Organixx, acknowledges "it's a very delicate decision" to change the portions, but it's not hard to see his point of view as he describes the challenges of running a restaurant in this economic climate — especially when all those organic ingredients and other green touches come at a premium.

And hey, at least he's not holding back on the water. That's a strategy Moll recommended to another of his clients, Mici Handcrafted Italian, a cheerful, contemporary joint half a mile down the road from Organixx. Eager to expand to a second location, this family-owned pasta and pizza eatery hired National Restaurant Consultants to help shave operating costs. But Mici's owners were loath to change or cut back on menu items like its famed hand-rolled meatballs, so Moll had to turn to the eatery's beverage lineup to find savings.

In addition to tweaking Mici's wine list, Moll came up with a 10-point game plan for fountain drinks. Selling some 13,000 units a year, sodas still weren't delivering any profit, according to co-owner Michael Miceli — even though they typically cost the restaurant only a dime a glass. Some of the most effective moves Moll recommended include cutting out the middleman syrup supplier and offering only one size drink instead of three. Goodbye, costly cups.

But one tip comes with a spritz of controversy: Don't automatically serve patrons water, so they're more likely to order soda, beer or wine. Helen Rosner, who blogs about the restaurant industry at MenuPages.com, calls the practice "one of the craftiest I've heard of"—and says she's seeing more eateries do it. Victor Gielisse of Culinary Institute of America, on the other hand, calls it "the socially responsible thing to do given our environment today." For his part, Miceli simply says, "We ask them what they want to drink. If they want water, we give water." It certainly hasn't hurt the bottom line; implementing this and other tips from Moll's 32-page "operations analysis" has goosed revenue by 50 percent a week. In the world of kitchen cost cutting, that's more than a few pennies.

[Tybee Island]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

To add my own observation. I was in for car service last week of my Porsche.

I was astounded at the deals the Dealer was offering on 2009 models and the cars that were just coming in off lease. Boxsters for $45K, Cayennes for $60K all brand new 2009 models.

I can tell you that the 2009 Carreras were marked down from $121K to $85K and when I got in one just to take a look at the car, two salesman jumped me to ask if I wanted to take a test drive. I think if I had asked to take the car home for the weekend and run it on the interstate at 130 miles an hour for a few days they would have said "Yes," and slipped a case of 15 Year old scotch in the trunk for me just for good measure.

I think that luxury autos and boats will all fall far further in that the inventory is immense.

Lastly, I have a friend who was interested in picking up a luxury RV for his family to tour in. This guy is well off and has a brilliant credit score. When he asked for financing, they said that no financing was currently being offered. This was on a 2009 model $130K RV! He offered them $70K cash and will know later this week if they take it. I told him that he offered them too much. When gas goes back above $3.50 + a gallon, they will be begging him to take it for $50,000.

[metalman]

Re: Supply shortage fueling used car prices

M-Man, you actually buy that all that inventory has been eaten by the American cookie monster

er... ok... er... maybe not... :eek::eek::eek:

[don]

Re: Supply shortage fueling used car prices

but that is exactly the forecast... demand falls from unemployment, cut incomes... but supply falls more after the going-out-of-business period. supply crash... high unit prices. get it?

the forecast says fire sales are over. Q3 you get higher prices. your report confirms it.

not across the board, tho. i still see cheap stuff out there. not food.

M-Man, you actually buy that all that inventory has been eaten by the American cookie monster

[metalman]

Re: Supply shortage fueling used car prices

I don't refute any of the above BUT in regards to cars,

Apparently the warehouse clearing event has transpired and yet prices have significantly shot up. What gives?

but that is exactly the forecast... demand falls from unemployment, cut incomes... but supply falls more after the going-out-of-business period. supply crash... high unit prices. get it?

the forecast says fire sales are over. Q3 you get higher prices. your report confirms it.

not across the board, tho. i still see cheap stuff out there. not food.

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

I'm equally as curious, I have to turn in a lease in 10 months and want to pay cash for a great deal now

[jk]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

I love my Lowa's in their traditional width (which runs a tad narrow, as suits me.) I see they have now added "wide widths", perhaps in response to the complaints that their normal width was a tad narrow. I can't say if their wide would fit you, but it's a dang good brand and worth a try in my opinion.

i've got pairs from 2 different manufacturers, both ordered a half size larger than normal, on the way. if those don't work, i might give lowa's a try. thanks for the tip.

[ThePythonicCow]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

did you find any you like? the NBs are too narrow for me, and I'm struggling to find any that will do the job. thanks

I love my Lowa's in their traditional width (which runs a tad narrow, as suits me.) I see they have now added "wide widths", perhaps in response to the complaints that their normal width was a tad narrow. I can't say if their wide would fit you, but it's a dang good brand and worth a try in my opinion.

[ThePythonicCow]

Re: Supply shortage fueling used car prices

Thanks for the good news, bart. I just inherited a used car that I don't want. Looks like this will be a better time than some to resell it.

[don]

Re: Supply shortage fueling used car prices

Merged your thread with this one. Events conform to this forecast on this thread from Dec. 16, 2008:

Advice to readers: take advantage of the early 2009 Great American Fire Sale and go out and buy all the generators, chain saws, washing machines, fine linens, and other durable goods you’re going to need for the next few years because by the end of 2009 most of the inventory may be sold through, many retailers will be shut down, and replenishment of stocks of the survivors will likely be meager; our models say that the goods supply will decline more precipitously than the supply of money available to pay for them. That spells severe stagflation.

I don't refute any of the above BUT in regards to cars,

Quote:

Originally Posted by don A few months ago it was widely reported that the national used car supply had doubled. We all saw the pictures of a significant over stock of new vehicles at debarkation points, stacked up on test tracks, warehoused on ships, etc. It's no secret that consumer car demand has plummeted. Has all this turned on its head because rental car businesses are keeping their vehicles now instead of their traditional low mileage turnover? How are these factors reconciled with these postings?

Those cars are still there, the consumer does not have the credit available to purchase them.


Okay, so what is it? Is supply and demand suspended due to oligarchic pricing? Apparently the warehouse clearing event has transpired and yet prices have significantly shot up. What gives? On a recent East Coast business trip I experienced hefty price increases for rental cars and when I got back to the West Coast read an article that across the board charges was the norm. That sounded like simple industry collusion. Fewer rentals, charge more. Sort of like the local county building department and the price of permits. Is something akin afoot in auto?

[vinoveri]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

re: supply and choice being down, albeit on a much cheaper item. i have been shopping for new hiking boots. having wide feet, i relied in the past on dunham, which was purchased by new balance years ago, and made about 10 models of boots in wide sizes. now dunham no longer makes boots at all, just shoes, and new balance makes 2 models of hiking boot.

did you find any you like? the NBs are too narrow for me, and I'm struggling to find any that will do the job. thanks

[jk]

Re: Fed cuts dollar, Fire sales vs FIRE sales, Duh-flation, and Bezzle shrinks again - Eric Janszen

re: supply and choice being down, albeit on a much cheaper item. i have been shopping for new hiking boots. having wide feet, i relied in the past on dunham, which was purchased by new balance years ago, and made about 10 models of boots in wide sizes. now dunham no longer makes boots at all, just shoes, and new balance makes 2 models of hiking boot.

[cobben]

Re: Supply shortage fueling used car prices

Similar situation in Sweden, buying a new car is "always" a bad deal, but over the next few years may be less of a bad deal than normal as long as volume stays down.

The abers are that demand may not pick up again above current low levels any time soon, the potential overhead supply glut of vehicles sold in recent better years may be delayed but will eventually come on-line, and the joker would be cheaper electric cars appearing much sooner than anyone now expects.