While I’ve been busy, there has been some news, much of it on issues I’ve been following:
- At his sentencing hearing, the Houston Chronicle reports that Allen Stanford almost edged up to an apology at his sentencing hearing, and then took it back. ”He had tears in his eyes and said, ‘I’m so sorry,’” said Angela Shaw, one of the thousands of investors who lost billions of dollars in worthless certificates of deposit. “But then he said, ‘This is wrong and you’ll have to sue the United States government. They did this.’”‘ Stanford’s lawyers “set a combative tone by accusing prosecutors of misleading the public in describing the Stanford case as a ‘Ponzi scheme’”– and argued for a 10 year sentence, suggesting that the Maddoff case was causing prosecutorial over-reaction. The prosecutors noted that, while Madoff had skimmed off a mere $250M, Stanford had pulled $2B from his scheme. Stanford doubled down every way he could on asserting his innocence, stating, ”Whether I’m a scapegoat or whether I just became the thing used to deflect, I don’t know.” The prosecution the maximum of 230. Judge Hittner plit the difference between the prosecution 230 and the defense 10 at at 110 years. At 62, he’ll be eligible for a half-way house at, what, age 153 or so.
- My immediate reaction to the 110 year sentence was to recall the Laura Pendergrast Hold is up for a Fall trial. There’s no one else for her to testify against, and I had to wonder what she was going to do? According to another Houston Chronicle report today (about a week after Stanford’s sentence), she recognized it was way past time to fold, apparently, and is going to enter a plea that will produce a 3 year sentence.
- On the Eater blog, they’ve grabbed John Currence during the Big Apple Barbecue Block Party and asked about Southern Food and Thomas Keller’s remarks hostile to locavores. John continues to represent in the best way.
- Before they got to Chess Records, Muddy Waters, Little Walter, and Baby Face Leroy recorded some electric Chicago blues, including a two-sided single of “Rolling and Tumbling.” Unreleased material and takes have been discovered on acetates thought long lost, and an English label has released two 45s from what they’ve found. Yes, that’s right, 45s. You can order them from the label online, or perhaps find a record store. Record store? Do you have a turntable? h/t Scott Barretta.
- From Pass Christian, we learn that loggerhead turtles have been found nesting in Mississippi for the first time in decades. Go turtles, go!
- I was out on the Square the night Jeremy Liggins put on that LSU helmet and announced he was headed that way. Somehow, I’m feeling that karma may be involved in the reports that he’s academically ineligible and headed to Gulf Coast Community College, plus that he’s pushing 300 lbs (at quarterback).
Liggins? Academically ineligible for LSU? For LSU? This is a joke … right? I don’t get it … but I know you’re joking. Academically ineligible for LSU. That’s a good one.
Concerning the Currence interview, I refuse to believe Big Bad Breakfast has a lower profit margin than McDonalds. Lower volume and less profit per square foot, sure. But margin, nope, don’t believe it. At least not in the way I define it, which is the amount paid for my meal versus the cost of providing it.
I’m not complaining really, and enjoy eating at BBB from time to time. But if you ask me who has the better value, the Beacon, BBB, or McDonalds, without question it’s the Beacon.
Well, I know Currence is paying more for his kitchen crew than those in a McDonald’s are paid, and would be surprised if he’s not paying more for materials; those are a huge proportion of costs for a small business, particularly restaurants. The economy of scale McD’s has in both purchasing and production are a gigantic thing, also. Further, he’s got to do more labor for essentially every part of what he’s delivering than any McD’s has to do.
Yes, he’s charging considerably more, although he’s also serving a lot more on a plate than one gets in McD’s (to a fault…).
But in any event, I don’t see how you could be so sure you know that, at least given what I know about his operation.
NMC, well, let me amend, that if he’s making a profit at all I believe he’s got a higher margin. But again, my point was a quibble on the use of the term, and I suppose there is more than one way to use it.
But all I am saying is that when I spend $12 on breakfast at BBB I believe he makes a higher percentage of profit than McDonalds does when they sell me the McDonald’s big breakfast for $5. Maybe I’m wrong. But I freely admit I’m not factoring in the volume factor.
If you were to figure “margin” a different way, purely by total of breakfasts sold in a morning versus costs of serving said breakfasts, then I do believe Currence’s margin would be lower.
And to be honest, I am not fully accounting for the fact that Currence has a dedicated portion of a building that is for breakfast only while McDonald’s flips their menu at 11 a.m. and starts flipping burgers. So the fixed costs make up a much greater portion of the BBB meal than of the McDonald’s one. So there are a lot of ways you can calculate these things.
When you consider that at BBB, *one* customer is eating *one* pig’s rear end, as opposed to McDonald’s, where half of a pig’s rear end is cut up, added to, injected, spread out and pressed into a tray full of unrecognizable “sausage” patties that serve a dozen customers, it’s not a difficult claim to accept. Similarly, BBB’s bacon is raised (?), cured & smoked locally. In a smokehouse on-site. Not in a factory en masse and then shipped across the country.
From their menu: “…orange and grapefruit juice is squeezed fresh daily…eggs [come] from a variety of cage free local suppliers…dairy products, when available,…from the Brown Family Dairy in Yocona…cattle are all organic and grass-fed…jellies, jams, and preserves are made fresh daily with a selection of fresh fruits and berries…whenever possible, we source local produce…if ever we offer catfish…it’s Mississippi Delta Farm-Raised Catfish.”
REAL food isn’t cheap. And there’s a reason the companies who produce and/or sell food that has been injected with additives and preservatives and hormones do so: it stretches a little bit of good food a long way, making it MUCH cheaper per unit, and jacking up their profit margins.
If McDonald’s didn’t have the higher profit margin, it wouldn’t have started running mom-and-pop places out of business years ago.
unsure about everything,
Again, it depends on how you define profit margin, but I agree with your point.
It’s hard to allocate fixed costs. My point was that BBB might make a profit of $3 per $12 breakfast served while McDonalds might make only 75 cents on their Big Breakfast, so BBB would have a bigger profit margin. BUT, due to differences in volume McDonalds likely makes a higher profit. As I noted, the allocation of fixed costs affects the way this is calculated, too.
Of course, maybe McDonalds has both more volume and a higher margin. My guess would be no, but who knows?
Oh, and I much prefer BBB to McDonalds! Still think the Beacon is a better value.
Wait a minute. If you acknowledge his material costs are higher and his labor costs are higher, what gives you a reason to say he’s got a higher profit margin? At that point, unless you think food and labor aren’t by miles the greatest proportion of costs in the restaurant business, it’s just math. It’s not a matter of naming or semantics.
If what I see online is right (a big breakfast, which I’ve never heard of, costs around $3.5) you are suggesting that McDonalds (well, the franchisee) makes about 30% on a big breakfast. I’m not really believing it’s that high….
Actually, checking on the web, I learn that McDonald’s annual profit runs around 19% for the corp., while they expect franchisees to make about 10%. The standard rule of thumb in the restaurant industry is a profit of around 6-10%. I couldn’t find cost percentages for places without alcohol; those with spend about 30% on food (more in “fine dining), 33% on alcohol, 20% on labor, leaving only 17% for everything else (rent, utilities, etc). And, as I said, I’m sure Currence is outspending on labor (he pays better) and food (he buys better) a McDonald’s franchisee.
If all you want is a McDonald’s Big Breakfast … by all means patronize McDonald’s. You and McDonald’s deserve one another.
If want a Beacon breakfast … Beacon is ready when you are.
If you want a top of the line Big Bad Breakfast … there’s only one place that can satisfy you.
Percentages be damned. Gimme a BBB.
I always consider the restaurant’s margin when I decide where I’m going to dine. In fact, that’s probably the primary reason I freguent mom and pops and not chain restaurants: everytime. I’m doing it just to keep them in business as long as they serve good food. I’m of the opinion that there are plenty enough people to go to the chains, but as for me (and mine), I’m going to try and contribute to keeping the really good places in business. Like BBB.
P.S. I’m positive I’ve never chosen McDonald’s over BBB on any of my trips to Oxford. In fact, I don’t even know where the McD’s is located.
Open thread?
Okay, here is Robert Johnson 75 years ago today, in Dallas:
“McDonalds has both more volume and a higher margin” than most any other restaurant chain out there. Ray Kroc was the Henry Ford of Restaurants. In MBA school I wrote a paper in McDonald’s Just In Time delivery system which preceded Japanese and American factories by decades! A good out of print book to read on the company is “Behind the Arches,” it used to be at the local library here. For all the business acumen admiration I have for the company, I do not feed my children there at all willingly. It is my fast food of last resort. You see when I took an intermission from college, I became an Assistant Manager for a McDonald’s. In 1986, a cheeseburger, priced at $0.45, cost the restaurant $00.6 in supplies (with $00.1 for the Kraft Single) and $0.01 in labor to produce. Carbonated beverages about $0.02. So pardon me while I go prepare my locally sourced, pink slime free, breakfast.
Once again, CRS,(isn’t that a disease? I can’t remember) the simple and profound philosophy of Mr. Ben wins again.
Let me just add that I was wrong (that hurt) on one thing, in that my comment was treating a plate of food like a widget. I had already mentioned this a couple of times in an above post. In other words, I was not accounting for the cost of providing a seat in which to eat one’s food, which in the case of BBB is a major expense. I avoid McDonald’s hamburgers like the plague but will eat breakfast with the kids there when on the road. We generally gobble it down in 10 minutes versus more than an hour at BBB. So this is a major difference that I really didn’t account for.
I also said that I like BBB and eat there from time to time. We have friends drive in from out of town and we go there. But it is expensive and in my view the Beacon has a fine breakfast at about half the price. BBB is a luxury item while the Beacon is more of an everyday item. Oh, and I love salt, which I consider to be a basic food group, but the bacon at BBB is so salty my wife can’t eat it. I’m surprised it’s not too salty for 80 percent of the patrons.
CRS – Nota Bene -my calculations did include overhead (fixed and variable) like capital investment and utilities. We eat at McDonald’s too, I just try to minimize it as I don’t want my kids to have “Supersize Me” Syndrome.