New Fast Food has Social Impact

A few months ago I wrote a blog talking about the decline of the fast food giant McDonald’s and its attempt at rebranding the company after months of declined sales. This week I read an article about a duo on the opposite side of the spectrum. Restaurateurs Roy Choi and Ryan Patterson are opening up restaurants in the roughest parts of L.A that double as soup kitchens as well. All of their items will be $8 or under (with many in the $1-2 range), be made with fresh and nutritious ingredients, food stamps will be accepted and in addition no soda will be served. On a larger scale this could be the type of trend to help bring neighborhoods together, provide cheap delicious food, and eliminate the food deserts in many impoverished areas.

The food deserts in major cities are a well documented, and growing problem in the United States. Convenience stores and fast food are many times the only option for people. The negative health effect of eating at the two is a problem being tackled by many, including the first lady’s healthy eating initiatives. One of the solutions to this problem that has been tested is delivering fresh fruits and vegetables. The issue is that it’s a short term and one time solution. The problem at hand is not solved. There is not a supply of affordable, healthy food. Having trucks laden with fresh fruit come once a month is not the answer to the problem. Sustainable food sources are the key, and these two guys are trying out their new plan to help make a more sustainable solution.

This sustainability of food is why this new concept is so revolutionary and exiting. They don’t necessarily have a complete business plan but they have all the tools to make it work. Choi started the food truck craze in L.A with his famous Korean tacos and is knowledgeable about street culture while Patterson is a Michelin rated chef. Their combination of affordable, healthy food serves a need nobody has been able to tackle yet. They understand the tremendous ambition of attacking this issue by themselves and setting their sights on groundbreaking change nonetheless. They are not concerned about money for themselves, but want to serve a greater purpose in the areas of the restaurant. They specifically chose two of the roughest neighborhoods of L.A to demonstrate their concept. With the help of their team of investors, and a successful crowd funding campaign, a true revolution in fast food could be possible. If this concept proves successful, It would be interesting to see how the model would work in Chicago perhaps.            

A Thought on Class Conflict

As some of the tension and protest in Ferguson and Baltimore recedes (or has it?), many are giving renewed thought to the state of racism in our society today. Numerous conclusions, including this powerful Time magazine cover from earlier this month, have been made draw comparison to the Civil Rights movement of the 1960’s. However, another underlying cause to the issue is class.

Whether or not this is the true cause I don’t know but we can all acknowledge a few things. Here are some of the typical associations about African-Americans relative to whites. They’re poorer than whites, more likely to go to prison, more likely to be on welfare, and more likely to be unemployed. Many of these issues have a historical basis, and while the civil rights movement improved liberties and economic situations for many, class didn’t necessary change as radically. When we look at the root of these problems the racism contributes to the history, but the current situation is based more on social class. Combine that with systemic racism from years prior and the situation isn’t promising. When your parents are poor, in jail, unemployed, or on welfare, your economic and educational opportunities in the United States are dramatically reduced. This makes it much more likely that you will repeat the behavior of your parents, and thus determining your social class.

According to the American dream, with a little elbow grease, grit, and work ethic you can create yourself and be as successful as you like. In fact, this very ideology is part of the problem. Just as some wealthier whites display downward classism towards other whites who they consider “rednecks” or “white trash”, they might have similar feelings towards many blacks. They are poorer, and Americans tend to discriminate against poor people because they sometimes blame poor people for staying poor and not climbing out of poverty.

To what extent class is the true cause I am not sure, but with as each new generation comes statistics showing people have greater levels of racial acceptance e.g. more approving of inter-racial marriage, as well as intellectual equality between races. These generational shifts could signify a “less racist” population every decade or so. If a decrease is racism is the case, maybe our feelings as a nation about class need to be further examined as we attempt to sort out the issues stirring this unrest.

Should There be a Cap on Salaries for Executives?

One Side of the Coin

After watching the Inequality for All documentary on wage inequality in the U.S, I was curious about the specifics of the wages and what was being done to reduce the gap. Executive pay in comparison to typical worker pay skyrocketed from an average of 20 times in 1965 to 296 in 2013. Even after the financial crisis of 2008, top executives are comparatively making more than ever by all accounts. Protest efforts from workers, and potential restrictions from the SEC have faded into the background as pay increases virtually unrestricted. In order to help restore a healthier balance we need the some sort of legislation as a cap for salaries.

Unless specific legislation is passed to even out, or proporciate the gap between the median worker and top executives, nothing is going to change on its own. Rather, I suspect the gap will only increase according to the current trend. The plan was to embarrass companies by highlighting their wage gaps, and it has not worked in the slightest. “The increased pressure for more disclosure was motivated by public shaming,” said Regina Olshan, head of the executive compensation practice at Skadden, Arps, Slate, Meagher & Flom. “The idea was somehow that the companies would be ashamed and change their ways.”

When this didn’t work the SEC tried to enact a rule to rectify the situation.

In 2013 The Securities and Exchange Commission proposed a specific pay-ratio rule for companies to disclose the average annual total compensation of their employees and compare that number with the amount awarded to the chief executive of the company. This would go on the overview disclosure seen by investors.

The Result: Heavy lobbying from the financial services industry and top media services kept the bill from advancing further. According to the Business Roundtable, (representing CEO’s lobbying efforts) “As an initial matter, we do not believe that the proposed pay ratio rules will provide investors with useful or accurate information.”

While the stats are difficult to calculate and could be potentially skewed, the usefulness of the information is crucial in the shaming tactic that was initially intended. According to the companies of many top paid executives, executive compensation is highly dependent on performance. However, only half of top 10 hedge funds outperformed S&P's 500-stock index in 2014, yet their managers fared exceedingly well, with the top 25 earning $11.62 billion in compensation.

Lastly, the other significant explanation for the wages of CEOs is to attract the best talent. The attracting of talent is on a relative scale as I see it. If more and more companies push the envelope for payment, the rest will follow. If the wage gap was much more even in the 1970’s, were companies then attracting lesser talent? I doubt it. It’s all proportional to what the norm has become and without proper regulation the current model could spiral out of proportion.

State of Georgia Steps Into College Football

Finally, there is some good news this past week in college football, (if you are in favor of keeping the amateurism of the sport).

The state of Georgia has taken its own steps to help control the illegal payments to college players. New legislation aims to punish those who pay athletes, and tempt them with benefits while they are in school.The new legislation is named for, and shaped around, Georgia running back Todd Gurley, who signed autographs in exchange for payment earlier this year. Gurley obviously knew about this NCAA rule restricting that type of action. It is made obvious to all athletes, and especially high profiles ones such as him where the rule is actually relevant. However the punishment if he were to be caught was not enough of a deterrent. He knew of the potential consequences and broke the rules anyway. Hence lawmakers have now taken it into their own hands to help regulate the violations in college football. This time they moved to protect the universities, and penalize those who are involved in these illegal activities with student-athletes.

Usually the legal system does not have much interaction with these violations(rather leaving it to the NCAA), but Georgia felt it was necessary to step in. This is extremely important to the universities as well because they have a way out of the mess now. They don’t have to take down banners and gets wins taken away after scandals. Now they have a more significant penalty in place to help deter people who could potentially involve athletes with these activities.

Barry Fleming, the man who drafted the bill, had this to say about its intent.“We plugged it into a law about alumni being overzealous. Now it's a misdemeanor of a high and aggravated nature. It can be up to a year in jail and a $5,000 fine. On the civil side, the university can sue the person who does this for any damages sustained, like losing a TV contract, not going to bowl games.” Often times illegal activities are a joint operation between universities and boosters, but this law targets those outside the school to help keep any temptations for the schools and athletes away.

This new law aims to discourage NCAA rules violations moving forward. Only the state of Georgia will enforce this rule as of now, but hopefully other states will follow suit and enact similar laws to help discourage the glaring violations that go along with college football.

Duke Leads Final Four Teams in Graduation Rates That Don't Reflect Real Graduation

As the winner of this years March Madness tournament, Duke’s men's basketball team is at the top when it comes to their success on the court. However, the amazing part of this year is that they also led the way in academic success. Duke was able to graduate more of its players than any of the other Final Four teams competing. If Duke is able to win, and graduate players, it should set a standard for the rest of the NCAA. It can be done, and it should be rewarded and celebrated.

That is the narrative they want everyone to hear. It’s a load of garbage, too. This is like being the best of the bad. They are by no means leading the NCAA.

A school’s graduation rates are usually assessed in one of two ways. The U.S. Department of Education’s Federal Graduation Rate, and the NCAA’s Graduation Success Rate.

According to the more generous GSR, 100 percent of Duke’s men’s basketball team who started there in 2007 graduated. While that’s supposed to be impressive, it is really irrelevant because the FGR numbers tell the real story. Only 67 percent of male basketball players who began their playing career at Duke graduated from the school within six years. This is so low for the type of school Duke is. A top private university with very generous funding, future hall of fame coach, and access to the nations best recruits arn’t doing too well. You’d think they would have higher standards.

As long as most schools hide behind “fake” numbers, and the NCAA stands by, nothing is going to change. There needs to be more of a push from fans to help get the athletes educated who go to these schools. We keep tuning into the tournament every march and more money is made, and in turn justifies the current system to those involved.

New Energy Drinks Target Young Gamers

Many Americans adults love to get the next best supplement that will help improve their lives. Whether that’s a new vitamin to help their eyesight, or an easy fix to lose weight, people can’t get enough. Many are even willing to accept the potential health hazards that can go along with these products. However, even though Americans love their supplements and additives, it becomes a sticky subject when it comes to youth. In recent news, energy drink spinoffs are targeting gamers with a new alternative to traditional energy drinks. However, by virtue of going after gamers their target market contains a large portion of kids under eighteen.

Let’s face it; energy drinks with lots of caffeine and sugar are bad for you. That’s what kids are taught in school and what their parents probably reinforce. Large amounts of caffeine have been linked to slowed brain development, bad sleep patterns, and irregular heart rate in children. In the culture surrounding gamers though, energy drinks maintain a strong foothold, even to the degree of special flavors like Mountain Dew Game Fuel specifically targeting them.

One of the two companies, G Fuel, markets itself as a secret sauce to help enhance focus and endurance. Its main advertising point is that its drinks are sugar free and vitamin infused. Sounds great, right? Well G Fuel forgot to mention that it has more caffeine than both Monster and Red bull, a staggering 150 milligrams in 12 oz. (for reference a cup of coffee has 95 milligrams in 12 oz.) They have successfully sidestepped sugar as America’s enemy number 1 in food, but the new path isn’t better. As mentioned earlier, the caffeine context proves just as hazardous as sugar it its own right.

It seems as if the FDA needs to pass some sort of restriction towards today’s young buyers. Earlier this year a report from congress scrutinized energy drink producers for their “recklessness” Previously, major energy drink companies have agreed to stop marketing to kids under twelve years old due to negative health effects. Is this enough though? Adolescent medicine specialists have said many parents don’t truly understand the adverse effects of these drinks and therefore it is up to the FDA, or even congress, to help regulate. Or perhaps we could sit back and let the targeting of kids continue for a nice profit.

UNC Faces Lawsuit for Guiding Student-Athletes to Be Just Athletes

Another top university leaves student athletes behind while making millions off them. This January, news of a class action lawsuit from two former University of North Carolina athletes surfaced to the school's horror. According to the lawsuit, the school, and by association the NCAA, had not “safeguarded and provided a meaningful education to scholarship athletes who agreed to attend UNC- and take the field- in exchange for an academically sound instruction.” This is just one of the latest developments in an array of bad press for UNC concerning its academic practices regarding athletes. Academic scandal is a blow to any school's reputation, but this is a school with a very highly regarded academic reputation that has been in trouble multiple times in the last year. The responsibility to provide them with a first class education is completely sacrificed for athletic eligibility and success. Most of these players don’t play professional sports successfully after they graduate. What are they supposed to do then?

These “shadow classes” were run through the Afro-American studies department and required minimal work to achieve a good grade. Students did not have to go to class, meet with professors, or do any assignments. All that was required was a final paper that was usually graded highly without being read.The focus of the institution has shifted entirely. It is a flawed system where the revenue stream is more important than their education.The multi-million dollar T.V contracts that football and basketball teams are part of must be worth more than the student-athletes themselves.

It’s one thing if a recruited athlete struggles to succeed at the school they attend. But it is an entirely different situation when the school places them into joke classes with one paper for a final grade. Many of these students were considered “under qualified” for the university's usual academic standards, however they do provide a service to the school in the sports they play, which generates a good portion of the yearly revenue. There is a trade off that needs to be maintained. The school has a responsibility to them, and this is an absolute disgrace to lead them through without educating them as they would with any other student. If the students don't care enough, that's fine, but the administrators have a duty to do their job regardless of economic influences.

(Photo is of a Final Exam paper that received an A-. Please excuse photo quality, it is the best available.)

Where Is Rory’s Rival?

With his success last year, Rory Mcllroy has solidified himself as golf’s face. Picking up hardware at the Open Championship, and also the PGA Championship three weeks later, has him slotted at #1 in the world, with four majors at the age of 25. However, as he rises to the top, golf fans are looking for a rival to challenge him. Where is his head to head competition that everyone wants to see? Tiger’s fading, Phil’s aging, Bubba’s gone cold recently, and a few younger players have been playing well recently, but not consistently enough to emerge as a challenger. People need some excitement among the top finishers. Not another win by eight strokes.

Throughout the sport’s history, Golf has been limited to only a few constant rivalries similar to what other sports enjoy. The tour format limits players when it comes to consistently succeeding, and having players face off one-on-one with the tournament on the line. There are not end of the season playoffs, frequent overtimes, or conference rivals. Not very often do players at the top of the sport have the playoff holes that electrify viewers. Jack Nicklaus-Arnold Palmer, Nicklaus-Tom Watson, Tiger Woods-Phil Mickelson, those are the great rivalries people usually think of when it comes to golf. Without one present, fan interest can stagnate, and they simply get bored watching one guy cruise to the finish line. Last weekend we found our new challenger.

All of the buzz was not about Rory, or anyone most people have heard of. Young Jordan Speith broke out to an early -8 and immediately demanded all of the attention. This weekend I was lucky to catch a glimpse of who could be Rory’s new foe, and the newest golf name that many Americans would know by the end of the week. He finished in second place last year, but being only 21 years old, the prospect of another run for him really ramped up interest nationwide. This was his chance to prove last year wasn’t a fluke and that he could carry a lead. He had all year to think about watching his lead slip away in 2014. This time around he would not make that mistake.

Jordan captured the spotlight quickly and it never left. Speith kept his composure throughout and never lost his lead. This is the type of player golf needs right now. He’s young, confident, and composed. Both him and Rory let their game speak for themselves and limit any ego that goes with it. He finished -18 for a tied Masters record with Tiger, and won by four strokes that afternoon. He has received all of the recognition he deserves and I don’t think his success is going to halt anytime soon. Lets see how Rory can respond to a newer challenger to his spot atop the globe. If he can elevate his game, it will be a fantastic show watching them go at each other.

Jay-Z and Friends Need More Money

As I watched Wisconsin vs. Kentucky this past weekend, I saw a star-studded commercial featuring many of the nation’s most popular artists: Jay-Z, Madonna, Kanye West, Beyoncé, and many others were all present. They all exiting their cars in designer clothes, trying to seem as important as possible while walking in slow-motion. They gathered around a large conference table and panned the camera to reveal all the famous faces. At its end viewers are shown one word, Tidal. Immediately after, I did exactly what the advertiser pitched that every American would do. I hopped on my phone to figure out what Tidal was and why so many A-list musicians were involved.

Upon further research I found that Tidal is the latest music service provider to hit the market. As if there were not enough players in the market, now Jay-Z and his partners are making their latest business venture apparent to a very large audience and plan to battle dominant providers like Pandora and Spotify.

These are the things I discovered that make Tidal different from its competitors: higher quality sound, two paid subscription options, music recognition function (a la Shazam), and promised "exclusive content". Assuming most people who are interested in this service are already subscribed to competitors, why would they switch over? It would be considerably more expensive when Tidal's two packages are listed at $9.99 and $19.99 a month with no free option as Pandora and Spotify provide. It also has more royalties towards artists built in. Tidal is relying most heavily on celebrity endorsements to help attract press, and until they provide something dramatically different from their competitors I believe it will be difficult for them to gain a foothold.

Tidal has been active since October and due to a late arrival to the scene they needed a boost like this commercial to gain more mainstream attention. But there is really little room left for them. These artists are banking heavily on their personal endorsements and I don’t think much will come of it. The only major difference is the change is bitrate. Tidal advertises CD quality sound better than the compressed files we have grown accustomed to. Other than customers that are drawn purely from the celebrity endorsements, only audiophiles utterly obsessed with the sound quality of their music will be clientel. Moreover, studies have shown that most people cannot hear the difference anyway.

Growing up as someone moderately interested in music, I have learned that my generation, and the one ahead of me, are very cheap when it comes to music. Many are reluctant to pay iTunes a dime, and download all of their music illegally. Some choose to abuse the free trial system on services like Spotify by changing their email repeatedly for new trials. Others still find the cheapest ways possible to get all of the music they want without paying. Are people really going to pay $19.99 a month for music quality they might not even hear? No, and unless Tidal is going to provide some extraordinary “exclusive content,” it may remain not only late but altogether out of the game. 

Thank you to Bill Gates and Michael Bloomberg

A combination effort from the Bill and Melinda Gates Foundation, as well as Bloomberg Philanthropies has lead to launching a fund to help low and middle-income countries fight legal battles with the tobacco industry. Around the world smaller, developing countries cannot afford to fight long, expensive legal battles with the wealthy tobacco companies and have to abandon their efforts to warn the public of the health concerns involved with tobacco products.

According to the World Health Organization, 80% of the world’s 1 billion smokers live in low to middle income countries. Over 5 million people die each year due to tobacco related illnesses. While some developed countries have made major progress in recent years in decreasing smoking rates, percentages in developing countries are on the rise. Now more than ever we need to try and halt the growth. The two foundations are taking a stand and it is just the beginning.

In an interview with Bloomberg, he explained their plan of action. Finding and directing legal help for these countries to fight the battles they cannot fight by themselves. In addition, they expect a number of other groups to join their cause. Their initial starting sum is at $4 million, but he said that is merely a number.

“We just picked $4 million just to say, ‘O.K., here, let’s start it.” He later said, “The fact that there is a fund dedicated to taking on the tobacco companies in court sends a message that they are not going to get a free ride,” Mr. Bloomberg said. “If they say that’s not a lot of money — yes, well, take a look at who’s behind it.”

When Bill Gates is part of a philanthropic effort, people don’t see lack of funding as an issue. At the same time Bloomberg has attributed $600 million to fighting tobacco since 2007. They are acknowledging that, and using it to their advantage to try and push back at the tobacco companies. An additional part of their work is supplying discounted or even free lawyers to help combat the companies and helping draft laws to avoid further challenge.

This foundation is giving a countries a way to fight back against trade litigation where they otherwise could not. I think it is really important to challenge these companies power where smaller countries cannot afford to defend themselves and have their major legislation directed by international corporations. Hopefully the promised funding will be able to make substantial impact, and achieve the overlying goal of educating the public and checking the power of these tobacco companies .

Can McDonalds Escape Their Downward Spiral?

For half of the 20^th century and into the 21^st McDonalds has been an American staple as well as a worldwide chain. It still maintains its position as the world’s largest food chain, but its numbers have steadily declined for the past 5 years without any sign of promise. Growing trends of upscale, fast burger chains promising higher quality food for a slightly greater price along with non-burger chains like Chipotle have killed business. Their underlying struggle is their image that has proved very tough to change as the market moves towards more health consciences “fast food” options.

 

Another CEO Steve Easterbrook has taken over, and he has the difficult task of trying to appeal to the leaving faction of customers, or their traditional customer. The majority of their business consists drive-through patrons ordering their signature Big Mac, but a growing portion of consumers are taking their business to other options. McDonalds has tried to counter this problem in the past with products like the Angus Deluxe Burger or Egg White McMuffin with little success.

While I don’t think the McDonalds brand is dying anytime soon, I do believe they are to a point where their image is beyond redefinition. A combination of bad publicity, including documentaries like Supersize Me, have convinced most everyone who can afford it to avoid the golden arches. How they try to adapt will likely be a tell to how their competitors respond to the changing market as well.